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CARIBBEAN BUSINESS
Pipe Dreams
Will AFI be "the mouse that roars"? Born
again agency heads efforts to rescue island from water woes
by Florencio Marina
March 1, 2000
Copyright © 2000 CARIBBEAN BUSINESS. All Rights Reserved.
The little-known, $2 billion Puerto Rico Infrastructure Financing
Authority is taking on Puerto Rico's water supply problem. Its
mission is to fix the infrastructure to help the island's water
utility deliver reliable service into all our homes and businesses--and
avoid further damage to our ability to market the island as a
solid investment destination.
It commands a $2 billion budget and has been charged with fixing
some of Puerto Rico's most serious infrastructure problems, starting
with the island's "comatose" water supply system. But
ask the man on the street what the Infrastructure Financing Authority
(AFI by its Spanish acronym) is, and you'll probably get a blank
stare.
AFI was created in 1988 as a subsidiary of the Government Development
Bank for Puerto Rico (GDB), but it was not used until 1998. That
year, Gov. Pedro Rossello signed an executive order reactivating
the entity and named Carlos Pesquera as AFI's executive director.
Pesquera turned the reborn agency into a fast response financial
and management team to oversee the development and maintenance
of infrastructure. Because of its critical condition, most of
AFI's current projects pertain to the island's water system.
"We are what I call the government's trauma centerfor
agencies in trouble," Carlos Vivoni, AFI's second Executive
Director told
CARIBBEAN BUSINESS in an
interview last December, shortly before leaving this position.
"We stabilize the patient and eventually move on to others
in need, once the crisis is overcome and he can fare for himself.
For now the comatose patient has been the water utility infrastructure.
Tomorrow it could be something else."
People tend to confuse AFI with the Puerto Rico Aqueducts and
Sewer Authority (Prasa), according to Miguel Cordero, who was
named Executive Director of AFI in January of this year. He explained
in a recent exclusive interview with CARIBBEAN
BUSINESS that AFI acts as massive infrastructure and
development support to Prasa, which remains responsible for supplying
water service to 99% of Puerto Rico's residents.
In 1995, Prasa partially privatized the management of its operations
through a contract with the Puerto Rico Water Company (PRWC).
In 1999, the contract was expanded to give PRWC a more complete
control of the water utility's operation. PRWC is the offspring
of the French enterprise Vivendi, a company with extensive experience
in infrastructure management in Europe (it runs 20% of the British
railway system, for example). Early reports indicate that PRWC
is making substantial progress in improving water service on the
island. At a forum last week, Vivendi Operations Director Guy
Jacques Barlett said that water service complaints to the Ombudsman
had been slashed in only one year from 1,500 in January, 1999
to only 750 a year later.
Interestingly, AFI is not directly involved in the North Coast.
Superaqueduct, the most visible and controversial water infrastructure
project to have been developed by the Rossello administration.
The superaqueduct, which will bring water from the Dos Bocas Lake
in Utuado to the San Juan metro area, is the sole responsibility
of Prasa (See sidebar).
For average folk across the island who have suffered the woes
of unpredictable or non-existent water supplies. AFI may mean
that there is hope for water at the end of the pipe after all.
"I think our greatest accomplishment so far is giving
the people a sense of hope and salvation. I feel their trust regarding
the functioning of our infrastructure," said Cordero, who
also continues to serve as Executive Director of the Puerto Rico
Electrical Power Authority (Prepa).
Not water alone
Although AFI is currently busy developing and improving the
island's water service infrastructure, its legal mandate is broad
enough to handle other kinds of infrastructure problems. In fact,
it is also lending the local Department of Housing a much needed
hand with many victims of hurricane Georges by helping the agency
build new homes for them based on the most rigorous safety standards.
The project is called Nuevo Hogar Seguro (Safe New Home).
AFI manages $2 billion in capital improvement programs. Of
that, $1 billion was funded with the proceeds from the 1998 sale
of the Puerto Rico Telephone Company to the GTE/Banco Popular
consortium. Another $800 million will come from island government-backed
financial obligation bonds issued by the GDB. The remaining $200
million will come from various other sources, including Puerto
Rico legislature appropriations and federal funds.
There are enough funds to finance the AFI-Prasa initiative
until at least the year 2001, said former AFI Executive Director
Carlos Vivoni. Cordero stresses, however, that as AFI completes
the water infrastructure projects now under its care and winds
down its day-to-day involvement with the water infrastructure
system, provisions must be made to ensure that Prasa has enough
funds and resources to handle the development and maintenance
of future infrastructure projects and to solve possible emergencies.
Cordero's vision
Freshly installed at AFI's helm replacing Vivoni, Cordero feels
the most essential challenge for the entity is, like with any
other, to define its vision in terms of the problem at hand and
work diligently toward successfully completing the mission. "The
important thing is the desire to get things done and work on it
with anticipation," Cordero said.
That is precisely what he did in 1993 when he took over Prepa
and eventually reduced the frequent power outages that had become
commonplace in previous years.
Cordero is confident that by the year 2003 or 2004, most island
residents will have experienced a dramatic difference from the
water supply inadequacies they have endured for years. He predicts
that about 75% of those affected by water shortages today will
see definite solutions. "I believe the important thing is
for people to feel the impact of what you do, because you can
plan and work a lot but that means nothing if there are no concrete
results backing it up," he said.
Action plan
AFI groups more than 600 projects under five major categories,
four of them aiming to improve our water supply and one helping
the Department of Housing to develop housing for the people displaced
by the ravages of Hurricane Georges in 1999 under the Safe New
Home program. At a AFI forum last week, Cordero said that, following
his experience in Prepa, he intends to accelerate the bidding
and contracting processes underway in the next six months to prevent
electoral year politics bogging down the agency's ambitious agenda.
*Immediate Action Program
Within this category there are 490 AFI projects of various
sizes and levels of complexity with a common denominator: positive
immediate impact to affected communities.
At an average cost of $350 thousand per project, AFI has earmarked
a total of $173.9 million for projects under this program, which
seek to bring immediate relief to rural and marginal locations
where water is barely available.
Projects in this category range from a $34,700 rehabilitation
of a water pump station to benefit 4,000 residents of the Jagueyes
Sector of Aguas Buenas to the construction of a $3.5 million,
3.0 million gallon-per-day Mavilla River water treatment plant,
which will benefit 60,000 people in several communities in Corozal,
Naranjito, and Toa Alta.
There is also a $5.5 million investment in a new raw water
pump station and an 11-mile pipeline for Humacao's Central Roig.
This project will supply much needed water to Las Piedras, Yabucoa,
and Humacao.
Another example is the Santa Rosa de Lima community in Mayaguez,
which is enjoying water for the first time in its 15-year existence
since fall of 1999 thanks to an IAP project.
Of 490 projects in the IAP roster, 157 are located in the
island's northern region at $56.1 million, 95 in the San Juan
area for $27.3 million, 79 at $30.3 million in the southwest
and 159 for $60.2 million in the east. As of January 31, 2000,
aggregate value of completed construction stood at $39.9 millions,
or approximately 23% of the total.
*Strategic Projects
These are the big-ticket items. Their purpose is to add significant
capacity to the island's overall water supply. At a total aggregate
investment of $1.5 billion, these projects will directly benefit
a total of 2,515,000 people.
There are 11 strategic projects: Villalba's regional aqueduct,
the northwest regional aqueduct, northeast aqueduct, east-central
regional aqueduct, Cidra's water filtration plant, Guayama's
regional aqueduct, Canovanas' water filtration plant, the northern
coast interconnection to the Superaqueduct, Dorado's regional
waste water treatment system, Fajardo's regional waste water
treatment system, and Mayaguez' new waste water treatment plant
(See chart).
The Dorado and Mayaguez projects disinfect sewer water for
release into the sea, while the Fajardo project does the same
in the Fajardo River.
*Special Projects
AFI is investing $77.4 million to replace the Carraizo dam's
six water pumps and its eight gates with newer, more effective
ones (see sidebar).
The Martin Peña pump and the Puerto Nuevo incinerator
will also be renewed.
*Environmental Compliance
AFI is working to make sure Puerto Rico's six primary water
treatment plants (in Arecibo, Aguadilla, Bayamon, Puerto Nuevo,
Carolina, and Ponce) comply with EPA regulations. The 301(h)
section of the Clean Water Act allows the release into the ocean
of water disinfected under Biological Oxygen Demand and Total
Suspended Salts parameters, among other criteria. The purpose
of AFI's involvement is to ensure the adequate infrastructure
is in place to assist Prasa in complying with these requirements.
*Safe New Home
Construction of 592 new homes for victims of Hurricane Georges
has already begun in Toa Baja, Ponce, and Canovanas in coordination
with the Department of Housing. They are being built in strict
compliance with FEMA's guidelines. Another 539 units will be
developed in Toa Alta, Cabo Rojo, Guaynabo, and Coamo.
Priorities and a small
team
Cordero says one of his priorities is to coordinate and integrate
the work plans of both AFI and Prasa to ensure regular infrastructure
improvements are accomplished within a certain time frame and
that these are kept functioning well. He emphasizes the importance
of maintaining good communication with customers to stay in touch
with their needs. "I believe a good information network is
key in keeping people informed of the work being done. I did
this in Prepa through written communication and I feel I can help
Prasa reach its clients," he notes.
The director also explains that delegation of decisions to
lower levels is key in preventing unnecessary bureaucratization
that would otherwise slow things down. This is a key element
of the entity's efficiency. Cordero's team in this venture is
small: Deputy Director Perfecto Ocasio, Financial Administrator
Jose Perez, Ana M. Gregorio, in charge of communications; attorneys
William Rios and Hilda Quiñones in charge of legal affairs,
and two secretaries.
How can an 11-person agency manage a $2 billion budget to develop
600 infrastructure projects? The answer is to be found in AFI's
structural model--itself an innovation in Puerto Rico. The agency
relies on scores of private design consultants, contractors, and
inspection consultants under the centralized management of a private
consortium hired by AFI.
The consortium is composed of CSA Group Inc. and CH2M Hill,
two planning companies specializing in construction, engineering,
and architecture. In coordination with their client--AFI--the
consortium evaluates projects, directs the bidding processes,
and chooses the companies they understand will work best at the
most reasonable cost.
For example, for the IAP program alone, the consortium, under
AFI's direction, coordinates and manages the work of 21 design
consultant firms, 32 contractors and 6 inspection consultants
firms.
Cordero, however, believes more can be delegated to the lower
levels to improve the quality of services even more and believes
Prasa/PRWC should aim to make the necessary reforms in that direction.
He mentions the example of Prepa, whose personnel, he says, was
prepared for the changes that took place in the first half of
the 1990's. The implemented method of decentralization and its
information systems have made that agency one of the most highly
regarded by public opinion today.
Timing is highly important to Cordero. "If you tell someone
you are going to fully restore their water service in, say, two
months, they are going to time you, so you better get going,"
he says "And that is exactly what we do. AFI's structure
accomplishes a lot in little time and cost efficiently."
AFI's future
Cordero believes it may take AFI up to 5 more years of continued
dedication to the water system infrastructure before Prasa and
the PRWC can regain full control of those operations. After that,
he envisions AFI turning its attention to housing, an area in
which it is already working, and education.
This Caribbean Business article appears
courtesy of Casiano
Communications.
For further information please contact www.casiano.com
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