PUERTO RICO: PATHWAY TO THE FUTURE Opportunities of an Economic Transformation

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1 PUERTO RICO: PATHWAY TO THE FUTURE Opportunities of an Economic Transformation Rebuilding Puerto Rico Mr. Omar J. Marrero, Esq. Executive Director Puerto Rico Public-Private Partnerships Authority & Central Recovery and Reconstruction Office February 15, 2018

2 Disclaimer The materials contained in this presentation are for informational purposes only. This document does not constitute an offer to sell or a solicitation of an offer to buy any securities. This document is a summary of certain matters for discussion only. You may not rely solely upon this document in evaluating the merits of a project, investment venture, or any business referred to herein. This document does not constitute and should not be interpreted as either a project recommendation, investment advice or any other recommendation including legal, tax or accounting advice. Future results are impossible to predict. Opinions, figures, estimates and market trends offered in this document constitute a preliminary assessment and are subject to change without notice. Data on this document are based on current market conditions but should not be relied upon without further assessment and verification. This presentation may include forward-looking statements that represent opinions, estimates and forecasts, which may be subject to significant uncertainties, many of which are outside the control of the Puerto Rico Public-Private Partnerships Authority, the Government of Puerto Rico and its agencies and instrumentalities.

3 Overview of Puerto Rico One of the largest economies in the Caribbean with great opportunity for reconstruction 3.4 MM US CITIZENS US Territory 35 Miles 35 MI L E S 100 MI LES 100 Miles $105.0 BN* GDP 2016 Source: Puerto Rico Planning Board. * Gross Domestic Product in current or nominal terms (not adjusted for inflation) 3

4 But located in the Hurricane Path On September 2017, Puerto Rico was hit by two major hurricanes Category 4 & 5. Hurricanes delivered an unprecedented blow to Puerto Rico with estimated damages of approximately $94 billion. Hurricane effects only comparable only to Katrina (2005), Ike (2008), and Andrew (1998). 4

5 Rebuilding Strategy is linked to Infrastructure Puerto Rico s Infrastructure Reconstruction strategy is based on the interaction of two major actions: CENTRAL RECOVERY & RECONSTRUCTION OFFICE Deployment of Federal funds Housing and Hard Hit Sectors Centralized Execution Transparency & Accountability TARGETED PRIVATE INVESTMENT Strong PPP Program Transformation Energy Sector Strong Governance & Transparency Procurement Best Practices 5

6 Rebuilding Plan - Top Priorities Infrastructure Rebuilding Strategy focuses on the following area priorities: Housing Infrastructure (transport, ports, social infra, others) Utilities (energy, water, telecomm) Health (hospitals, primary care, wellness) Economic Development Sectors that enhance competitiveness 6

7 Critical Elements of Recovery Plan The recovery places emphasis on the following critical elements: Resiliency Innovation Private Sector Transparency Sustainability 7

8 Centralized Recovery Structure in Place GOVERNOR OF PUERTO RICO STAKEHOLDERS COMMISSION FEDERAL AGENCIES P3 AUTHORITY CRRO DIRECTOR FAFAA Procurement Compliance, Audits LEGAL COMMUNICATIONS, SECTOR ENGAGEMENT & TRANSPARENCY DATA MANAGEMENT AND REPORTING GRANTS MGMT. & OVERSIGHT All Recovery Funds in CRRO All Recovery Operations in CRRO Designation as SDRC Transition GAR Responsibilities to P3 Complies with Executive Order 8

9 Swiftly Working to Deploy Federal Assistance Approved direct emergency funding*: $11 Billion: CDBG grants for housing, support local businesses and rebuild infrastructure including repairs to energy grid. $4.9 Billion: Federal Medical Assistance. $900 Million: tax revenues to PR and USVI and Economic Opportunity Zones. $519 Million: replace Army National Guard facilities in PR and USVI. $274 Million: FEMA, Labor and Agricultural support among others. * Funding approved for Puerto Rico and USVI. Estimated figures subject to revisions. 9

10 Private Investment in Infrastructure Program Targeted and transformative investment program that seeks to invest over $5 billion in 10 years: Proven Public-Private Partnership Program: Comprehensive legislation & framework. Successful PPP precedent projects in airports, toll roads, and energy. Aggressive pipeline: 5 RFPs for 2018 and over 20 Unsolicited Proposals received. Full transformation of energy system: Generation and T&D to receive significant private investment and expertise. Luis Muñoz Marín International Airport Only Full PPP Airport in U.S

11 Private Capital Across Infrastructure Sectors Ongoing projects for 2018 in infrastructure and services sectors Project RFPs for 2018 Ferry O&M P3 Higher Ed P3 Water Metering ecitation P3 Parking/Streetlight Accepted Unsolicited Proposals Maritime Ports Energy Storage Hydro Energy Peak Unit Safety Training 11

12 New Energy System for Puerto Rico On Jan , Governor Rosselló Announced the Full Privatization of Energy Generation and Concession of Transmission & Distribution PHASE ONE Formulation and submission of legislation. Market consultation. Request for Proposals and Competitive Processes PHASE TWO Procurement process and proposals. Evaluation of financial, economic and technical aspects of proposals. PHASE THREE Complete any pending negotiation items. Complete commercial and financial close. Ensure effective transition period. 12

13 There are Challenges and Advantages Challenges Lengthy process from obtaining to deployment of funds. Bankability of P3 Projects. Weak credit and risk premium assigned to PR. Weak economy = weak project revenue streams Advantages Strong leadership and team with sense of urgency. Accessing certain federal programs that offer loan guarantees. Fiscals plans and budgetary discipline in place. Well structured projects to ensure feasibility. 13

14 PUERTO RICO IS OPEN FOR BUSINESS