Fiscal board approves new LNF supply deal with New Fortress

By THE STAR STAFF

The Financial Oversight and Control Board approved the new liquefied natural gas (LNG) supply agreement between the Puerto Rico government and New Fortress Energy (NFE) on Thursday, following a review of the terms of the LNG Toll Agreement requested last week.

“This new agreement that we reached with NFE and that the Board is approving today is part of the energy transformation we are promoting, which includes diversifying energy sources and ensuring continuity of supply, among other things, to stabilize the system and with the goal of providing residents and businesses with cost reductions on their electricity bills,” Gov. Jenniffer González Colón said in a written statement.

The oversight board had granted conditional approval on Nov. 28, subject to technical clarifications regarding the terms of the contract. The Public-Private Partnerships Authority addressed those requirements on Nov. 29, allowing for the final validation of the agreement on Thursday.

According to information released by the government, the approved contract represents a substantial reduction in costs and duration compared to the preliminary proposal submitted by NFE in 2025. The new agreement establishes:

* A base term of seven years, with an option for three additional years, instead of the 15 years originally proposed.

* An estimated cost of $4 billion, representing a reduction of some $16 billion compared to the initial proposal.

* Reductions in supply charges, including a 22% decrease for temporary units (from $10.29 to $7.95) and maintaining the price at $6.50 for the San Juan 5 and 6 units.

According to official data, the new rates would allow for savings of more than $54 million annually and more than $375 million accumulated over the term of the contract, which would directly impact the cost of generation.

The agreement also eliminates the exclusivity clause that prevented the island government from diversifying its natural gas suppliers. The modification will allow the government to purchase fuel from other suppliers in the event of interruptions or defaults by NFE.

The new contractual structure incorporates operational protections in bankruptcy or receivership scenarios, guaranteeing the government’s right to use the dock, the regasification infrastructure, and the gas distribution system.

Likewise, if NFE is unable to supply fuel, the government may use the San Juan terminal through a tolling agreement of $0.50/MMBtu to ensure continuity of service.