PREPA Privatization A Risk To Stability, But Could Yield Economic Dividends For Puerto Rico

  • The handover of Puerto Rico’s electric utility company, PREPA, to privately-owned LUMA Energy increases the risk of political instability, given resistance to the privatization among significant segments of the population. 
  • There are also risks to the popularity of Governor Pedro Pierluisi, who has backed the agreement and is in a relatively fragile political position. 
  • In the long term, LUMA’s success operating Puerto Rico’s power grid will influence the cost and reliability of electricity, which could attract higher investments to the territory.

(Source: Fitch Solutions)