Puerto Rico Advances In Airport Sell-Off Plans

June 27, 2011

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Puerto Rico has won approval from airlines at San Juan's Luis Munoz Marin Airport, a key step in selling the rights to run the Caribbean's busiest airport, the governor said.

In a bid to lower a big deficit, the US commonwealth last week agreed to a USD$1.08 billion private concession to operate two toll roads. The deal is the first in a planned series of public-private partnerships (PPP) the government hopes will jump-start its economy by providing additional revenue.

Governor Luis Fortuno told island business leaders that officials this week would begin the process to solicit private investors to run the airport after securing the required 65 percent support of airlines operating at airport.

"For the first quarter of next year, we will have an a PPP operating at the Luis Munoz Marino International Airport. That's where we are going." Fortuno said Friday before the Puerto Rico Chamber of Commerce's annual convention.

After lining up qualified bidders, the island government will solicit proposals later this year, the governor said.

If a deal is reached as part of a federal pilot programme, it would be the first full-sized airport under the US flag to be privately managed.

David Alvarez, the executive director of the commonwealth's Public-Private Partnership Authority said last week the PPP could become a template for other government entities seeking private capital for public infrastructure.

Last week, Fortuno's administration said it selected Autopistas Metropolitanas de Puerto Rico, a consortium including Abertis Infraestructuras and Goldman Sachs Infrastructure Partners for a 40-year highway concession contract.

The group's upfront payment of USD$1.08 billion was 12.5 percent more than a competing bid and 20 percent more than the government's internal estimate of USD$902 million.

Nearly all of the proceeds from the highways PPP will be used to retire bonds and other long-term debt, according to government officials.

The Fortuno administration has cut a USD$3.3 billion deficit it inherited in January 2009 to USD$616 million for the 2012 fiscal year, starting July 1, and wants to completely eliminate it next year.