Puerto Rico's House of Representatives Tuesday passed amendments to legislation authorizing $2.95 billion in oil tax-supported bonds, opening the way to the bonds' sale in the next few weeks.
For several months Puerto Rico Gov. Alejandro García Padilla has been working to increase oil taxes to support the bond issue.
The Puerto Rico Infrastructure Finance Authority is expected to sell the bonds in the next few weeks, with most of the proceeds going to pay off the debt of the Puerto Rico Highways and Transportation Authority to the Government Development Bank for Puerto Rico.
The House-approved amendments add a consumption-based adjustment to the tax on imported oil. If the island's consumption of oil falls below a certain level in the coming years, there would be an automatic increase in the per-barrel tax rate. If island consumption is above a certain level, there would be an automatic decrease in the per-barrel tax rate.
The adjustments are designed to insure that there would always be enough money to pay the bonds' debt service.
As a start, Puerto Rico plans to increase the per barrel of imported oil to $15.50 from $9.25 on Sunday.
The approved measure extends the government's general obligation pledge to the bonds and allows disputes to be heard in New York courts.
The Puerto Rico Senate has already passed the amendments. A source in García Padilla's office said he plans to approve them.
The largest the bond sale would be is $2.95 billion; it could be smaller.
