Project Profile: Puerto Rico Toll Roads Monetization Project (PR-52, PR-20, PR-53, and PR-66)

The Puerto Rico Toll Roads Monetization Project; Highway Package (PR-52, PR-20, PR-53, and PR-66) P3

Puerto Rico

Puerto Rico Public-Private Partnership Authority together with the Puerto Rico Highways and Transportation Authority (PRHTA)

Asset Recycling/Monetizing Existing Toll Roads

Toll Roads

The Puerto Rico Gov. Pedro Pierluisi announced today October 16, 2023, the Spanish firm Abertis Infrastructures has won the USD 5bn, 40-year contract to improve, finance, operate, and maintain toll roads PR-20, PR-52, PR-53, and PR-66 under a public-private partnership concession agreement. The project aims to:

1. improve budget certainty and address the Puerto Rico Highways and Transportation Authority (PRHTA)’s fiscal situation through leveraging up-front funding sources and minimizing public fund contributions;
2. modernize the existing infrastructure and improve the quality of the Toll Roads;
3. improve mobility, accessibility, and safety for users of the Toll Roads;
4. improve performance and accountability by allocating responsibilities to the party best able to manage them and integrating performance-based contracts;
5. increase revenue opportunities through reduced leakage, optimizing fare collection, and better aligning toll rates to costs;
6. accelerate improvements in the Toll Roads and limit risks in the delivery of improvements; and
7. reduce exposure to current fiscal situation in Puerto Rico.

After a rigorous and competitive study, bidding and analysis process, the Government of Puerto Rico has selected the company Abertis and signed the four-highway concession agreement on October 16, 2023 with Abertis subsidiary Puerto Rico Toll Roads to carry out the financing, repair, design, construction, maintenance and operation of the four-highways: PR-52 highway, Autopista Luis A. Ferré; PR-53, José Celso Barbosa Highway; PR-66, Roberto Sánchez Vilella Highway; and PR-20, Rafael MartÃnez Nadal Expressway, under a public-private partnership concession agreement with the Puerto Rico Highways and Transportation Authority (PRTHA) under Act 29-2009. Abertis, the company’s concessions in the U.S. territory will be known Metropistas. Abertis is a multinational company dedicated to the management of road transportation infrastructure around the world. Currently, the company operates and manages the PR-22 and PR-5 toll roads and the Teodoro Moscoso toll bridge. This will add 144 miles of highway to the 74 miles already under private management.

The 40-year concession contemplates an upfront direct payment of $2.85 billion to the bankrupt PRHTA at financial close, which will allow the public corporation to pay off its debt, and a private capital investment of over $ 2.37 billion to modernize and improve the infrastructure, quality, and safety of the island’s toll roads. The concession will bring over 1,000 direct and indirect jobs.

The selection of Abertis, the officials said, is the result of a rigorous procurement process that began in 2022 with the objective of providing Puerto Rico with a reliable highway system, in a state of good repair and safe for drivers, capable of supporting the economic growth and development of the island. This can be accomplished through a P3 concession mechanism that will allow the improvement of the budgetary and fiscal certainty of the PRHTA, in accordance with the public corporation’s certified fiscal plan.

For years, the PRHTA has faced administrative, operational, and fiscal challenges such as debt and funding restrictions and shrinking budgets that have hindered effective planning and maintenance for toll roads -- including debt, funding restrictions, and shrinking budgets -- that have made it difficult to carry out effective planning for toll roads, maintain them in a state of good repair and provide a reliable road network. The situation has resulted in old and deteriorating infrastructure that is not up to par with the operational standards of the road and highway industry.

The new concession will allow PRHTA, which filed for bankruptcy in 2017, to emerge from the transaction without any debt and focus on the rest of the island’s public highways. The upfront accelerated payment is allowed by the PRHTA debt agreement approved by the bankruptcy court in December 2022 and will not carry penalties and focus on offering better and more secure public roads to the people of Puerto Rico.

$5.1 billion

• $ 2.85 billion upfront payment and the
• $ 2.37 billion Capex Investment, which will cover capital needs for the first twelve years of the concession

50% financed with capital from Abertis with the rest coming from 11 local and international banks. Local banks Banco Popular, FirstBank, Oriental Bank and Banesco will provide USD 600m, while Mizuho, ING, SMBC, Société Générale, Crédit Agricole, MUFG, and Intesa Sanpaolo will provide the remaining funds

P3 Concession Agreement for 40-year term, Finance-Operate-Maintain; Asset Recycling, Bundling Projects; Asset Concession (40-year Revenue or Demand Risk)

Abertis Infrastructures, S.A., Equity Provider

• McConnell Valdés and Gibson, Dunn & Crutcher; SPV Legal Advisor
• Barclays and Agentis Capital; SPV Financial Advisor
• O'Melveny & Myers and Pietrantoni, Mendez & Alvarez (PMA); Project Sponsor Legal Advisor
• Agentis and Barclays are the concessionaire’s co-financial advisors
• Metropistas’ legal advisors were Gibson Dunn and the local law firm, McConnell Valdés. The government’s legal advisors were O’Melveny & Myers and PMA.

50% financed with capital from Abertis with the rest coming from 11 local and international banks. Local banks Banco Popular, FirstBank, Oriental Bank and Banesco will provide USD 600m, while Mizuho, ING, SMBC, Société Générale, Crédit Agricole, MUFG, and Intesa Sanpaolo will provide the remaining funds

40-year Revenue or Demand Risk; Commercial Closed on October 16, 2023 (Abertis subsidiary Puerto Rico Toll Roads signed the four-highway P3 agreement on 16 October with the Puerto Rico Highway and Transportation Authority (PRHTA)).

Commercial Closed. The concession contemplates an upfront payment of $2.85 billion to the PRHTA, which will allow it to cover the payment of its debt, and a private capital investment of over $2.37 billion to modernize and improve the infrastructure, quality, and safety of the island’s toll roads.

• Utilizes Project Bundling and Value Capture Asset Recycling to advance Puerto Rico Toll Roads Monetization Project (PR-52, PR-20, PR-53, and PR-66)
• Provides greater value for every taxpayer dollar - lower infrastructure costs and further improvements during the life of the project through P3 concession structure.
• Generates a concession payment which could be used to address the outstanding debt burden and provide initial capital investment that significantly enhances the quality of the Toll Roads and achieves state of good repair
• Boost the efficiency of the island’s last remaining public toll roads, which account for more than 60% of traffic.
• Utilizes Asset Recycling by Value Capture strategy --- the 40-year concession contemplates a direct payment of USD 2.8bn to the bankrupt PRHTA at financial close, which will allow that public corporation to pay off its debt, and a private capital investment of over USD 2.3bn to modernize and improve the infrastructure of the four toll roads. The concession will bring over 1,000 direct and indirect jobs.
• Monetize of Puerto Rico highways to pay off $1.6 billion of debt.
• Transfer risks to private sector to protect taxpayers and ratepayers from absorbing costs associated with operational failure or insufficient demand

• The Puerto Rico Public-Private Partnerships Authority (P3A)
• Puerto Rico Government Announces Toll Concessions RFQ
• Request for Qualifications for the Puerto Rico Toll Roads Monetization Project
• Desirability and Convenience Study for the Toll Roads Monetization Project
• Development and Road Safety
• Resolutions of the P3 Authority Board
• Concession Agreement
• Toll Roads Monetization Schedules
• Puerto Rico’s Public Debts: Accumulation and Restructuring
• Puerto Rico's PR-22 and PR-5 highway project
• Senate Hearing 114-307, Financial and Economic Challenges in Puerto Rico
• Press Release- The Puerto Rico Public-Private Partnerships Authority releases shortlist for PRHTA’s Toll Roads Monetization Project

• Laura Viña-Arias, P.E., Director of Project Development, Puerto Rico Public-Private Partnerships
• Edwin E. Gonzalez-Montalvo, PhD, PE. Executive Director of the Puerto Rico Highways and Transportation Authority (PRHTA)
• Contact Us: https://www.p3.pr.gov/contact-us/
• Email: info@p3.pr.gov
• Telephone: 1.787.722.2525

PPPA’s Information Officers who were designated pursuant to Act No. 141 of August 1, 2019, known as the “Act for Transparency and Expedited Procedure for Access to Public Information,” are:
1. Carmen Pérez Brown - carmen.perez-info@p3.pr.gov
2. Keyla Homs Aleman - keyla.homs-info@p3.pr.gov
3. Luis Martoral Rivera - luis.martoral-info@p3.pr.gov