OVERSIGHT BOARD APPROVES $2.85 BILLION CONCESSION AGREEMENT WITH PUERTO RICO TOLLROADS
Contract Provides New Funds to Maintain and Improve Puerto Rico’s Non-Toll Roads; Enables HTA to Eliminate its Debt; Includes Requirements for TollRoads to Improve Puerto Rico’s Toll Roads and Bridges; Key Element of Transportation Infrastructure Reform
San Juan, PR – October 17, 2023 – The Financial Oversight and Management Board for Puerto Rico welcomes the agreement between the Puerto Rico Public-Private Partnerships Authority (P3A) and the Puerto Rico Highways and Transportation Authority (HTA), and Puerto Rico Tollroads LLC to operate, maintain, and improve the Puerto Rico toll roads currently managed by HTA.
The Oversight Board reviewed and approved the proposed concession agreement, a critical element to improve Puerto Rico’s roads by providing a clear incentive for more efficient maintenance of toll-roads and significant new funding for investments in non-toll roads. PR Tollroads, a subsidiary of Abertis Infraestructuras SA, will pay HTA a concession fee of about $2.85 billion, considerably more than the minimum P3A had required under its request for proposals (RFP) from all bidders. The concession fee will enable HTA to pay off its about $1.6 billion outstanding debt, including the about $360 million loan from the Government of Puerto Rico, under the redemption provision of the HTA Plan of Adjustment.
In addition, the concession fee will provide an estimated $1.1 billion in new funding. The Oversight Board supports the creation of a trust that invests these surplus proceeds in road maintenance and other long-term investments of transportation projects and transactions. The people of Puerto Rico depend on solid and well-maintained roads to get to work, take their children to school, get groceries, visit friends and family, and for businesses to deliver goods and services and stock warehouses.
“The P3A agreement is a big win for Puerto Rico,” said the Oversight Board’s Executive Director Robert F. Mujica Jr. “Puerto Rico’s toll roads attracted several highly qualified applicants in a public and transparent bidding process that provides Puerto Rico with substantial new funding. This money comes from Puerto Rico’s road system and should stay with Puerto Rico’s road system.”
“We congratulate P3A and HTA for a highly successful private-public partnership process that led to an attractive agreement, promoting market competition and complying with the HTA Fiscal Plan reforms and the HTA Plan of Adjustment that cut HTA’s debt by more than 80%,” Mujica said.
Puerto Rico’s roads do not meet the needs of residents and businesses, and lag national standards for quality, safety, and reliability. Consistent underspending made the problems worse. Today, less than 20%of Puerto Rico’s highways are in good condition, compared to a median of 84% in the U.S. overall.
Under the concession agreement, PR Tollroads agreed to invest in improved roadways and improve safety, including upgrades and repairs to drainage, signage, barriers, guardrails, and lighting withing the first two years. Over the next seven years, PR Tollroads agreed to major reconstruction and improvements to road surfaces and bridges. Other major improvements have to be completed within the next 12 years. This should bring Puerto Rio’s toll roads to a “State of Good Repair” as defined by the Federal Highways and Transportation Authority.
PR Tollroads will operate PR-20, PR-52, PR-53, and PR-66. The concession agreement will allow HTA to focus its resources and available federal and Commonwealth funds to prioritize investments in the remaining non-tolled roads.
The agreement limits increases in tolls to a maximum annual percentage equal to the U.S. Consumer Price Index plus 1.5%, consistent with the HTA Fiscal Plan. The concession agreement also provides for revenue sharing between PR Tollroads and HTA if toll revenues exceed amounts calculated pursuant to the RFP and defined in the concession agreement.