Fiscal board extends LNG contract with NF Energía for 7th time

By THE STAR STAFF

For the seventh time since July, the Financial Oversight and Management Board has extended the contract between Genera, as agent to the Puerto Rico Electric Power Authority (PREPA), and NF Energía for the provision of liquefied natural gas (LNG) for the Palo Seco and San Juan temporary generation facilities.

The oversight board had to approve another extension because the Public-Private Partnership Authority (P3A) has yet to complete the procurement process for LNG.

The original contract, approved by the oversight board on July 17, stemmed from an exigency declared by Genera on July 16 due to an emergency need for the provision of LNG.

Genera indicated that the exigency was the result of delays in the request for proposal (RFP) process for an LNG provider, the current reserve margin, the risk posed by the hurricane season, and the need for immediate action to alleviate or avoid serious harm, both financial and otherwise.

However, the oversight board noted that although the exigency period ends on Sept. 13, the P3A has yet to submit a contract for the provision of LNG.

“As of the date of this letter, the [P3A] has not submitted, on behalf of Genera, any proposed contract to the Oversight Board for review and approval resulting from the ongoing competitive procurement processes for the provision of LNG,” the oversight board said.

Accordingly, the oversight board ordered that, no later than Sept. 10, this Wednesday, the P3A provide the status of the multi-site and the exigency competitive procurement processes and indicate whether any extension to the exigency period will be requested.

The original contract has the same terms and conditions as the previous contract for the provision of LNG, which expired on July 11 of this year. It contemplates the purchase of British thermal units of LNG at a price determined by the formula (1-0.27) x diesel price/5.8.

It has a maximum payable amount of $9.7 million and a term from its date of execution of July 17, 2025 to July 25, 2025.

The first amendment to the contract, approved with observations by the oversight board on July 25, increased the maximum payable amount by $6 million to $16.2 million, and extended the term to Aug. 1. The second amendment to the contract, approved with observations by the oversight board on Aug. 1, increased the maximum payable amount by $6.4 million to $22.7 million, and extended the term to Aug. 8. The third amendment to the contract, approved with observations by the oversight board on Aug. 8, increased the maximum payable amount by $5.5 million to $28.2 million, and extended the term to Aug.14. The fourth amendment to the contract, approved by the oversight board on Aug. 14, increased the maximum payable amount by $7.3 million to $35.6 million and extended the term to Aug. 22.

The fifth amendment to the contract, approved by the oversight board on Aug. 22, increased the maximum payable amount by $6.1 million to $41.8 million and extended the term to Aug. 29.

The sixth amendment to the contract, approved on Aug. 29, increased the maximum payable amount by $6.1 million to $48 million and extended the term to Sept. 5.

The proposed amendment, which constitutes the seventh amendment to the contract, increases the maximum payable amount by $5.7 million to $53.8 million and extends the term to Sept. 12, 2025.