The U.S. Virgin Islands Senate postponed voting on a bill that would address the Water and Power Authority's debt to its fuel supplier after raising concerns about the islands' own financial obligations for it and a lack of advance notice of it. .
The Senate on Wednesday postponed considering a bill for a letter of credit for WAPA to transfer money to its fuel supplier, Vitol, until April 13. WAPA officials said in its deal with Vitol to resolve
At the session, the 12 present senators voted unanimously to delay consideration of the bill approving the Virgin Islands government taking out $150 million letter of credit. The senators said the bill needed to be amended before they would vote for it.
Sen. Alma Francis Heyliger and others said they were concerned that the LOC bill, which would allow for the LOC to continue to 2026, would undermine the senate's ability to control the budget.
Sen. Dwayne Degraff complained that he had only learned of the letter of credit proposal from the governor Tuesday night. WAPA Office of Budget and Management Director Jenifer O'Neil responded that her team should have kept the senators informed earlier but that it had been in contact with some of them.
Officials with Gov. Albert Bryan Jr.'s administration and with WAPA advocated for the bill to the senators on Wednesday.
Of the $150 million letter of credit, the government would immediately draw $45 million to give Vitol. WAPA CEO Andrew Smith said the authority is hopeful the federal government would reimburse the Virgin Islands government for this draw and would provide the additional $100 million needed to complete WAPA's deal with Vitol.
The remainder of the LOC would help advance federally funded reconstruction projects, O'Neil told the senators. The LOC would allow the government to start Federal Emergency Management Agency-approved hurricane reconstruction projects that need funding until FEMA approves disbursement, she said.
The senators did not like the LOC bill's wording and voted unanimously to amend it and postpone taking it up again until April 13.
Virgin Islands Public Finance Authority General Counsel Kye Walker said Moody's Investors Service said WAPA's debt to Vitol was a financial albatross for the Virgin Islands government. Virgin Islands Public Finance Authority Commissioner Bosede Bruce said the government had about four days of cash on hand and this was not enough to pay Vitol without the letter of credit.
Smith has said resolving the Vitol issue is essential to its financial future. The authority owes about $285 million to Vitol, Smith said independent parties have said. To completely resolve the liability through a $145 million payout, as the deal specifies, is very attractive, he said.
After the vote, Gov. Albert Bryan Jr. said, "The outcome of Wednesday's special session was not what we hoped and may have negative implications for WAPA's ability to deliver efficient and effective services to the ratepayers and the government's ability to move forward key recovery projects in a timely manner.
"However, I look forward to working with the 35th Legislature and those members not supportive of this current approach toward alternative solutions to addressing these matters prior to the next scheduled legislative session on April 13," Bryan said.
O'Neil said local banks have expressed interest in extending the letter of credit to the Virgin Islands government.
O'Neil said the deal with Vitol would give WAPA ownership over propane storage facilities and this would allow the authority to use more propane as opposed to expensive diesel. She also said the authority's continued dispute over its debt to Vitol has negatively affected the Virgin Islands government's own credit.
Lewis said potential new fuel suppliers constantly raise the authority's financial dispute with Vitol as a problem.
WAPA Chief Financial Officer Jacob Lewis said if there was no deal with Vitol, WAPA would owe $278 million for the infrastructure including interest and fees. So, the deal to settle for $145 million saves WAPA $133 million, he said.
Lewis said gaining ownership of the assets would save WAPA about $20 million a month in fuel costs. The deal would also end its contract with Vitol to provide propane and this would allow the authority to competitively bid for propane from other supplies and this would lower its fuel costs further.
O'Neil said if the federal government did not approve reimbursing the government for the $45 million it would have to look to finding the money from its own resources.
WAPA has about $207 million in bonds, $341 million in long-term debt, and $1.098 billion in total liabilities outstanding. The bonds are rated CC by Fitch Ratings.
In late March the
