Oversight board approves gas pipeline from San Juan Terminal to Palo Seco plant.

Palo Seco Power Plant in Toa Baja

By THE STAR STAFF

The Financial Oversight and Management Board for Puerto Rico has approved, with observations, a proposed $47 million work order between the Puerto Rico Electric Power Authority (PREPA) and the U.S. Army Corps of Engineers for major infrastructure work related to the Freedom Connection Project, which includes a major natural gas pipeline. 

In a letter dated April 9 and addressed to PREPA General Counsel Alexis G. Rivera Medina, the oversight board’s general counsel, Jaime A. El Koury, stated that the board completed its review of the proposed work order pursuant to Section 204(b)(2) of the Puerto Rico Oversight, Management, and Economic Stability Act (PROMESA).

The work order falls under a memorandum of agreement (MOA) between PREPA and the Corps of Engineers, executed on Feb. 25 of this year, and is designed to support project management, planning, and construction services for PREPA’s thermal generation assets. The work is part of the federally funded Freedom Connection Project, backed by the U.S. Department of Energy (DOE).

According to the oversight board, the proposed work order is the first issued under the 10‑year MOA and includes preconstruction services, early procurement activities, early construction packages, and the construction of a 4.2‑mile natural gas pipeline connecting the San Juan Terminal to the Palo Seco Power Plant. The maximum payable amount under the work order is $47 million, with a projected completion date of Dec. 18, 2026.

PREPA certified that the full cost of the work order will be covered by federal DOE funds, and the oversight board determined that sufficient budgeted funds exist for fiscal year 2026 to cover the contract, based on PREPA’s submission. The funds are allocated under a designated federal account, according to the board.

The oversight board emphasized that its review was limited to determining compliance with PROMESA’s contract review requirements, including whether the contract promotes market competition and aligns with PREPA’s certified fiscal plan. The review does not constitute a legal or procurement compliance review, nor does it involve due diligence or background checks of the contracting parties.

The board noted that any material changes to the work order or amendments, extensions, or additional work orders under the MOA must be submitted for further review and approval prior to execution.