The Comptroller's Office detailed that PREPA spent $ 62,205,965 on the cancellation of the Gasoducto del Sur.
An audit by the Puerto Rico Comptroller's Office revealed that the Electric Power Authority (PREPA) disbursed $ 192 million in non-profit projects, for which the agency issued an adverse opinion on the fiscal operations of the public corporation related to capital improvement projects. .
Specifically, PREPA invested the $ 192 million in the purchase of land or development of projects that were not built or were not completed.
Through a press release, in which the audit findings are summarized, the Comptroller's Office detailed that PREPA spent $ 62,205,965 on the cancellation of the Gasoducto del Sur, disbursed $ 31,911,596 on the Vía Verde project – which never started – and paid for purchases and services for $ 85,533,332 for the conversion of units at the Cambalache, San Juan, Palo Seco and Aguirre plants, which it later canceled .
Regarding the Gasoducto del Sur, the audit report highlights that, after two years of the cancellation of the contract, the Aqueduct and Sewer Authority (AAA) disbursed $ 51,855,640 for the acquisition of some of the assets and for the credit line it assumed from PREPA.
Of those assets, AAA sold 35 pipes to PREPA for $ 45,500, since they could not be used to transport water. The Comptroller's auditors confirmed that said tubes were in disuse and deteriorated in Warehouse 5 of the Palo Seco plant, in Cataño.
On the other hand, the audit –of six findings– also indicates that PREPA acquired, in 2011, two wind turbines for $ 3,714.21. One of the turbines is installed to serve AAA's wastewater treatment plant, near Kennedy Avenue in San Juan, and the other is stored in Palo Seco. The auditors found that the installed equipment also presents technical problems , according to the statement.
In 2011, likewise, PREPA acquired six plots of land and buildings adjacent to the central offices of the public corporation, in Santurce, for $ 2,140,960, which are now abandoned and in disuse . “In fact, the land and structures are not registered in the Authority's accounting system,” said the Comptroller.
“From the examination carried out on the minutes of the Board (of PREPA's Government), we found a lack of details and documentation on the considerations and negotiations to cancel contracts, or the methods of selecting contractors. These situations are due to the fact that convenience and feasibility studies were not carried out, the associated costs and the economic impact on PREPA were not considered. Furthermore, the Board did not require the impact studies, nor did it protect the best interests of the Authority, ”the Comptroller added.
According to the audit report, contrary to the laws and regulations in force on contracting, PREPA did not request proposals from at least three professionals for any of the services contracted in the development of Vía Verde. In addition, payments were identified prior to entering into contracts, and it was found that the executive director had not submitted a contract for an amount greater than $ 500,000 for approval by the Governing Board. From 2009 to 2012, PREPA had signed 15 contracts and seven amendments.
The Comptroller's Office noted that PREPA did not provide the auditors with evaluations of the administrative, operational and financial capacity of a contractor to develop Vía Verde, which was paid $ 12,576,262 . In addition, it spent $ 393,630 on advertising and planning services, in excess of what was contracted.
Other audit findings include that PREPA's Governing Board had not updated its “by-laws” with the new provisions of Law-83 of the Electric Power Authority, it had not evaluated compliance with the governance standards of the industry, nor had it held public meetings between March 2016 and December 2018.
“The audit reveals that PREPA failed to comply with the principles of transparency and accountability established by Law 57-2014 on Energy Transformation and Relief. As of December 10, 2019, the Authority did not have written norms or procedures to govern the processing of the information that by law is required to publish, and it had not published 188 contracts and amendments for $ 1,940,566,845 on its website, which were noted in the Registry. of the Office of the Comptroller of Puerto Rico ”, is established in the statement.
The Comptroller's Office drew attention to the fact that, after 78 years of having established PREPA as a public corporation, the Accounting Division does not have a manual of accounting rules and procedures . Furthermore, deficiencies were observed in the account system in the PREPA Chart Accounts, which has not been reviewed since 1989. “These situations prevent the maintenance of reliable financial information and affect reasonable decision-making,” said the agency.
The audit report was signed by the Director of Audit Affairs, Edna Velázquez Díaz, and covers the period from January 1, 2010 to December 31, 2018.