Fiscal board official was assured that NFE’s stoppage of fuel deliveries was pressure tactic

A New Fortress Energy liquefied natural gas supply ship returns to port in San Juan on Tuesday. (Facebook via U.S. Coast Guard Sector San Juan)

By The Star Staff

Robert Mujica, the executive director of the Financial Oversight and Management Board, provided significant testimony before a congressional subcommittee on Capitol Hill in Washington on Wednesday regarding the recent actions of New Fortress Energy (NFE) in relation to liquefied natural gas supplies for Puerto Rico.

Mujica revealed that NFE’s abrupt decision to suspend liquefied natural gas (LNG) deliveries to the island last Saturday was not merely a business move, but rather part of a coordinated threat against the Puerto Rican government. The action was reportedly intended to exert pressure on government officials to approve a highly lucrative contract that would grant NFE exclusive rights to supply gas to Puerto Rico for a period of 15 years.

Mujica’s statements were informed by his discussions with various government officials who have been directly involved in the negotiations concerning the contract. Among those officials were Josué Colón Ortiz, the island’s energy czar, who oversees energy policy for Puerto Rico, representatives from the Public-Private Partnerships Authority (P3A), which manages public-private initiatives on the island, and members of the Regulatory Compliance Services Corp. (RCSC), the organization responsible for negotiating contracts with private operators of Puerto Rico’s electricity grid.

During his testimony, Mujica emphasized the urgency of the situation.

“In our thorough evaluation of the proposed contract, we requested additional time for further analysis and consideration,” he said. “Unfortunately, our request for more time was denied. Instead, we were informed that the terms of the contract had been negotiated under the intimidating threat that fuel would not be supplied to the power generation units that had existing contracts if the new 15-year agreement was not ratified. If these statements hold true, it constitutes a reprehensible violation of ethical conduct that endangers the welfare of the people of Puerto Rico, as it deprives them of essential fuel resources necessary for their energy needs and attempts to manipulate our negotiations for this critical contract.”

Mujica’s testimony came during a hearing of the Subcommittee on Indigenous and Insular Affairs, which had been convened to review and assess the oversight board’s management and oversight capabilities under the Puerto Rico Oversight, Management and Economic Stability Act, commonly known as PROMESA.

Separately on Wednesday, Gov. Jenniffer González Colón said her government is in negotiations with NFE to grant them an emergency contract to supply gas to the terminals the company unilaterally decided not to service.

“They unilaterally canceled the service contract for the 14 temporary emergency generation units. So, out of 14, we were able to convert five to diesel, meaning we only have five of those plants operating,” the governor said at a press conference. “What this means is that we have nine plants that are currently shut down because we don’t have natural gas [for them]. We are, yes, in talks, being very proactive, to reach an agreement through an emergency contract with this company that has the ship there, that has the gas there, and that before Tuesday was regularly supplying them with the existing contract, which they canceled last Thursday.”

“We are waiting for the fiscal board to approve an emergency contract so that New Fortress and [NFE subsidiary and power plant operator] Genera can review the terms and, at the very least, supply us with this natural gas for these 14 plants, and thus not shut down Puerto Rico,” she added.

González Colón said signing the emergency contract does not imply that NFE will indirectly collect the $12 million the company claims the government owes it, which was the excuse for canceling the gas supply last weekend.

“The emergency contract is for the purpose of ensuring that we cannot receive supplies and cannot pay for anything without a contract,” she said. “... In reality, at this time, they are the only ones who can supply us in an emergency situation. The vessel is there, but the prices aren’t like they’re going to charge me 10 or two times the value; we’re talking about the same terms and conditions as the previous contract.”