WAPA BOARD APPROVES DRAW DOWN ON LINES OF CREDIT

The Virgin Islands Water and Power Authority’s Governing Board was called into an Emergency Meeting today for the sole purpose of authorizing the draw down of the remaining balance of $2 million from the existing $20 million Electric System Working Capital Lines of Credit. The draw down will assist the utility in meeting fuel payments to HOVENSA. Beginning Friday, HOVENSA is requiring payments 48 hours in advance of delivery instead of the previous 30 day payment due after delivery arrangement.

On June 25, the Authority closed on two Lines of Credit with Banco Popular of Puerto Rico and First Bank of the V.I. in the amount of $10 million each. The Board then immediately authorized the draw down of $18 million to be used to refinance $12 million in existing Lines of Credit and provide approximately $6 million in cash. The $6 million was used to meet the Authority’s working cash obligations, particularly fuel payment obligations.

Today’s request was unanimously approved by the Board.

Executive Director (CEO) Hugo Hodge, Jr., stated that this approval will assist the Authority in making upcoming payments to HOVENSA for the following fuel shipments to the Authority based on the following schedule:

August 18th - delivery to St. Thomas at a cost of $3.1million to be paid on Friday, August 15th

August 20th - delivery to St. Croix at a cost of $3.2 million to be paid on Monday, August 18th

August 22nd - delivery to St. Thomas at a cost of $2.8 million to be paid on Wednesday, August 20th

WAPA continues to experience a cash short fall on fuel purchases. For August deliveries HOVENSA is charging $139 per barrel while WAPA has been authorized by the Public Services Commission (PSC) to only collect fuel costs at $121 per barrel through the Levelized Energy Adjustment Clause (LEAC) factor - the customer charge, based on energy consumption, to pay HOVENSA for the fuel that is needed to produce electricity and water.

August under-recovery from customers for fuel purchases will be above $3.6 million. WAPA is $39.8 million overdue in payments to HOVENSA of which $17.0 million is more than 30 days delinquent. HOVENSA will now access interest on WAPA’s overdue accounts at the prime lending rate at 5.1% beginning August 15.

“In addition to meeting the fuel oil bill, it will be an extremely tough week for the Authority in that payroll and debt service payments are also due,” Hodge said.

Present at the special board meeting were Board Chair – Juanita Young, Vice-Chair-Brenda Benjamin, Secretary-Noel Loftus, Planning Committee Chair-Attorney Gerald Groner, Cheryl Boynes-Jackson and DPNR Commissioner Robert Mathes. Absent were V.I. Personnel Director Kenneth Hermon, Jr., and Sports and Recreation Commissioner St. Clair Williams.