FEMA’s Award of Billions in Aid to Puerto Rico Could be the Beginning of an Infrastructure and Manufacturing Expansion

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The aid package finances the repairing and rebuilding of the territory’s electrical grid system

By Lawrence L. OstemaJohn F. HaleyCarlos LoumietFranco Furmanski

The White House announced an $11.6 billion aid package to Puerto Rico on Sept. 18 to aid it in its recovery from Hurricane Maria, which devastated the island and its infrastructure in September 2017. The funds will be granted by the Federal Emergency Management Authority (FEMA) to the Puerto Rico Electric Power Authority and the Puerto Rico Department of Education.

Of the total amount, $9.6 billion will be granted to the Puerto Rico Electric Power Authority in an effort to help  repair and rebuild its electrical grid system, including its transmission lines, substations, buildings and general grid improvements. The other $2 billion will be granted to the Puerto Rico Department of Education so that it can focus on restoring school buildings and educational facilities across the island.

These grants represent some of the largest awards in FEMA’s history for any single disaster recovery event.

Juan Carlos Iturregui, a  prominent member of Puerto Rico’s legal and business community and former Partner with Nelson Mullins, stated the following about the recent grants:

“Notwithstanding  the federal government’s erratic responses to Hurricanes Maria and Irma in September 2017, the US Congress has authorized unprecedented, large-scale funding and long-term recovery and rebuilding plans for Puerto Rico. After a long period of fumbles and red tape, strategic infrastructure projects, including those benefiting the Puerto Rico Electric Power Authority and Puerto Rico Aqueducts and Sewers Authority, are now going forward. Those projects alone will surpass $14 billion. Other sectors of the Puerto Rican economy and its infrastructure will see a gradual cascade of significant funding from 2021 to 2026, which combined will likely exceed another $30 to $35 billion, based on what has already been authorized by the U.S. Congress.”  Mr. Iturregui added, “The return to the U.S. of biopharma and manufacturing from abroad that we are witnessing will also benefit Puerto Rico’s long-established  pharmaceutical and manufacturing expertise, as global companies in this sector move production hubs from Asia back into the U.S. and take advantage of Puerto Rico’s cheaper costs and significant tax advantages. In fact, some significant deals are already  in their advanced planning stages.”

With regards to future opportunities in Puerto Rico, Mr. Iturregui added, “There will also be compelling joint venture opportunities for proven international infrastructure development companies to combine forces with leading construction firms in Puerto Rico in these huge rebuilding efforts.”

Nelson Mullins’ Caribbean Infrastructure Practice Group will provide updates as contract opportunities become available.

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