SAN JUAN – The Puerto Rican government’s lack of liquidity almost left the island’s ambulances, patrol cars, fire trucks and other public vehicles out of gas this Monday, a threat finally dispelled thanks to a renegotiation of the country’s debt to French oil supermajor Total.
The head of the Legal Department at Total Petroleum Puerto Rico Corp., Denise Rodriguez, told EFE on Monday that, finally, the company agreed to keep the government’s fleet running while the government looks for ways to reduce its debt, which currently exceeds $16 million.
This was yet another practical example of how the liquidity crisis at the Treasury Department of this U.S. commonwealth directly affects government services to the island’s citizens.
“A friendly accord was reached that will keep our fuel supply coming,” Rodriguez said, adding that the Puerto Rican Treasury will pay Total the amount of $3 million on Monday, and is committed to making another payment of $4 million before the end of January.
Government Cabinet chief Grace Santana confirmed the details of the deal Monday in a statement to the media.
The objective is to keep the debt to the oil company below $10 million, the limit Total set on the line of credit it conceded to Puerto Rican authorities.
Rodriguez recalled that the French company started operating in Puerto Rico eight years ago when it became the government supplier, a relationship it has every intention of maintaining.
The agreement highlights the serious liquidity problems weighing on Puerto Rico, which defaulted last week on $37.3 million due to holders of non-General Obligation bonds.
Gov. Alejandro Garcia Padilla said his administration had to prioritize among competing obligations and that incurring a $37.3 million default allowed the government to pay public employees and issue income tax refunds.
Puerto Rico’s financial liabilities total nearly $73 billion, a sum Garcia Padilla has declared “unpayable.”
The governor’s administration is appealing to the U.S. Congress to extend Chapter 9 bankruptcy protections to Puerto Rico.
Total sent a missive to the Puerto Rican government on Dec. 31 warning it would cut off its gasoline supply if it failed to trim its debt with the oil company to below $10 million.
Treasury Secretary Juan Zaragoza said Monday the government sets aside between $200 million and $230 million every month to pay suppliers, and noted that paying Total was essential because otherwise police cars, fire engines and ambulances would have been unavailable to do their work this Monday.