On Sunday, Director of the Puerto Rico Electric Power Authority (PREPA), Ricardo Ramos announced the cancellation of the $300m contract it had with Whitefish Energy Holdings that was set to bring back power to the island.
Puerto Rico since making a deal with Whitefish Energy, a two-year-old company based in Montana, USA, has received criticism for the $300m contract from members of US Congress and the Federal Emergency Management Agency (FEMA).
Officials in both Washington and San Juan have argued over how a two-year-old company managed to secure a contract with a huge client such as Puerto Rico whose power grid was completely ramshackled by Hurricane Maria.
Puerto Rico had the opportunity to opt for mutual aid arrangements but instead opted to outsource the small private company.
An ambiguous deal from the start
PREPA Director Ramos said that the power authority had reached a deal with Whitefish Energy before the hurricane hit. He said that he spoke with at least five other companies who could be suitable for the task to rebuild the island's power grid. He also said that FEMA had approved of this, which FEMA denied.
FEMA said that it has not approved any reimbursement requests from the power authority for money to cover repairs to the island's Electricity Power system. The contract said the utility would not pay costs unallowable under FEMA grants, but it also said, “The federal government is not a party to this contract.” It was solely determined by the Puerto Rican government.
FEMA has raised concerns about how Whitefish got the deal and whether the contracted prices were reasonable.
“There’s nothing illegal here ... Of that, we’re sure,” he said, adding that he welcomes a federal investigation. “The process was done according to the law," he said according to an Associated Press release.
More troubles for Puerto Rico?
PREPA Director Ramos said that he had not talked with Whitefish executives about his announcement according to The Associated Press. "A lawsuit could be forthcoming," Ramos warned.
Governor Ricardo Roselló had asked the power authority to make this announcement because the contract had become a "distraction" and that attention had to be refocused on restoring power.
"I am making this determination because it is in the best interest of the people of Puerto Rico," he said at a news conference.
The current work by Whitefish teams will not be interrupted by the contract cancellation but the cancellation would delay pending work for up to 12 weeks if no alternatives are found.
A spokesperson for Whitefish Energy, Chris Chiames said that the company was "very disappointed" in the governor's decision. He added that significant work had already been completed, including a project that will soon lead to 500,000 people in San Juan getting electrical power.
"We will certainly finish any work that (the power authority) wants us to complete and stand by our commitments," he said.
Some stores, restaurants, medical centres, and a few private residences are running on generators but most of the island - 70 percent, are still without electrical power, more than a month after Hurricane Maria struck.
The cancellation is not official until the utility's board (PREPA's board) approves of it. It will come into effect 30 days after.
