Bonds

WAPA expects approval of bill to retire $285M liability

The U.S. Virgin Islands Water and Power Authority expects the islands’ governor to approve a bill that would pave the way for the authority to retire a $285 million liability.

WAPA Spokesperson Shanell Peterson said she expects Gov. Albert Bryan Jr. would this week sign the bill providing initial funding to settle a debt with its fuel supplier Vitol.

The USVI Senate Friday amended a governor-sponsored bill for the islands to take out a $100 million letter of credit that would, among other things, support retiring the debt. Bryan had sought a $150 million letter of credit.

$45 million would to be used as initial payment for the settlement agreement between WAPA and Vitol. WAPA officials said the authority would ultimately give Vitol $145 million.

WAPA, under the deal, would receive ownership of propane storage facilities, allowing it to use more propane as opposed to the more expensive diesel fuel it sometimes uses to provide energy.

In early April Virgin Islands Public Finance Authority General Counsel Kye Walker said Moody’s Investors Service said WAPA’s debt to Vitol was a credit negative for the Virgin Islands government.

In December, Fitch Ratings cited WAPA’s dispute with Vitol over the capital lease obligation and Vitol’s decision to stop supplying WAPA with fuel, for downgrading the authority’s senior bonds to CC. WAPA has about $207 million in bonds, $341 million in long-term debt, and $1.098 billion in total liabilities outstanding.

The $100 million line of credit would also be used for territory government contributions on federally funded disaster recovery projects.

Friday’s bill, which the Senate passed 11-4, requires the authority to hire a turnaround company to advise it. The company would provide regular reports to the Senate.

As of Thursday morning, the governor had not received the bill, according to Boyd Sprehn, general counsel for the Virgin Islands Public Services Commission.

The office of Gov. Bryan did not respond to a request for a comment.

In Bryan’s January state of the territory speech, the governor said he would make fixing WAPA a priority.

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