(Bloomberg) -- The head of Puerto Rico’s public power utility resigned amid questions about the effort to rebuild an electricity system devastated by Hurricane Maria and concern about the agency’s leadership jeopardized much-needed aid from Congress.
The executive, Ricardo Ramos Rodriguez, gave no details about the reason behind his immediate departure in the 53-word statement from the Puerto Rico Electric Power Authority. But remarks from Governor Ricardo Rossello to reporters Friday made it clear the resignation was welcomed.
“There was a series of distractions, and the decision was made to go in a different direction,” Rossello said.
The upheaval is part of an effort to keep aid flowing to the U.S. commonwealth of 3.4 million people, which was driven into bankruptcy in May by its unpayable $74 billion public debt. Hurricane Maria ravaged it in September, and more than 100,000 residents have fled as the lack of electricity has stymied the recovery and economy. On Friday, the power authority was generating only about 40 percent of the electricity needed.
Tumbling Debt
With many still lacking basic services and its economy slowed to a halt, prices of Puerto Rico’s benchmark bonds have tumbled to fresh lows as investors speculate that any payouts will be less than anticipated. The commonwealth is considering suspending debt-service payments for five years, a lawyer for the territory’s federal oversight board said this week, in the first indication of how the devastation caused by Hurricane Maria will affect creditors.
How Puerto Rico Managed to Dig a Deep Financial Hole: QuickTake
Prepa, which is also operating in bankruptcy, has floundered in the face of the disaster that destroyed its dilapidated grid.
Ramos this week faced intense questioning before a U.S. Senate committee about a $300 million contract Prepa awarded to a little-known company based in Whitefish, Montana -- Whitefish Energy Holdings -- to fix the grid immediately after the storm. The company had few obvious qualifications to perform the work, and the contract had a provision that prohibited audits.
The deal, which has since been canceled, became a flashpoint. Representative Rob Bishop, a Utah Republican and chairman of the House Natural Resources Committee, lectured the governor at Tuesday’s hearing on the need to close what he called a "credibility gap."
Puerto Rico can scarcely afford distrust in Washington: The commonwealth has asked lawmakers for $94 billion in federal aid it says it needs to rebuild. Rossello said in a letter to President Donald Trump released Monday that the electric utility alone needs $18 billion.
But on Friday, the White House asked Congress for a $44 billion aid package that also includes funds for Texas and Florida. Opponents rushed to call it inadequate.
Dark Nights
“The Trump Administration’s request does not come close to meeting the needs of victims of recent natural disasters,” Senate Appropriations Committee Vice Chairman Patrick Leahy said a news release. “This is wholly inadequate and downright insulting, especially for the people of Puerto Rico who, eight to ten weeks after Hurricanes Irma and Maria, are struggling to get the lights back on and are looking to Congress for help.”
Emails and phone calls to representatives of Puerto Rico’s governor and non-voting member of Congress weren’t immediately returned. Jose Luis Cedeno, a spokesman for the fiscal control board overseeing the bankruptcy, declined to comment on Ramos’s resignation or the size of the aid package when reached by telephone.
San Juan Mayor Carmen Yulin Cruz said in a telephone interview that Ramos’s departure “is a first step to making sure that there is a plan that is feasible, that is doable and that is credible.”
Sudden End
Long after the Whitefish affair reached Washington, Ramos defended its hiring. But then Rossello stepped in to cancel the contract. Asked whether he’d lost confidence in Ramos, he demurred, saying there were active investigations into the matter. On Friday, the governor’s administration said in a news release it would recommend Justo Gonzalez as Prepa’s interim director.
“We could see this coming,” said Ramon Cruz, a former member of the Puerto Rico Energy Commissionn, the regulatory agency that oversees Prepa. “There are still many questions that remain unanswered.”
