Saturday, November 12, 2011
Puerto Rico Launches Major Privatization Program
Reason Foundation's Annual Privatization Report 2010 states that "Since taking office in January 2009, Governor Fortuño’s administration has taken bold actions to address the U.S. Commonwealth’s chronic deficits and unsustainable debt, including eliminating approximately 22,000 government jobs, dramatically cutting expenditures and passing a broad-ranging new law in 2009 inviting private investors to modernize or develop new roads, ports, water systems, electric plants and more." While this form of privatization serves as a short-term solution, the long-term effects of allowing foreign investors to gain control of vital infrastructure can be devastating. The 2009 law (Act No. 29) will allow "any government agency to enter into public-private partnerships (PPPs) with private firms for the design, construction, financing, maintenance or operation of public facilities." This Act authorizes legislators to enter into 50-year leases with private entities with possible extensions of up to 25-years. With minimal upfront investment an investor could gain control over Puerto Rico's infrastructure for 75-years with little return to the commonwealth's coffers.