Puerto Rico’s electrical utility is running out of money and time to negotiate a deal with its lenders, part of a broad reckoning for an island that relies on Wall Street to finance some of its most basic functions.
The Puerto Rico Electric Power Authority must repay $146 million to Citigroup over the next two months for a credit line used to buy oil to generate electricity. It is also uncertain whether the authority will be able to renew a $550 million credit line from Scotiabank for fuel purchases, people briefed on the matter said.
With the power authority’s lenders growing increasingly skittish, analysts and investors expect the utility will be forced to restructure its debts to avoid crippling power shortages for Puerto Rico’s 3.6 million residents.
The likelihood of a restructuring increased after Gov. Alejandro Garcia Padilla hurriedly signed a new law into effect over the weekend allowing public corporations like the power authority to seek protection similar to what bankruptcy provides. Representatives for Citigroup and Scotiabank declined to comment.