WAPA leader sees progress on debt retirement

The chief executive officer of the financially stressed U.S. Virgin Islands Water and Power Authority said its “critical” project to retire debt and take ownership of infrastructure remains on track.

CEO Andrew Smith told the WAPA board of directors Thursday he is optimistic WAPA and local agencies are making progress on fulfilling the requirements for a U.S. Department of Housing and Urban Development grant, which it needs to pay off money it owes to Vitol and the USVI local government and gain ownership of propane infrastructure.

Several years ago, Vitol built propane storage facilities for WAPA, for which the authority has not yet paid. In the spring it reached a deal to settle the debt for $145 million even though Vitol said the authority owed it $285 million. Upon WAPA’s request, the local government granted it a $100 million letter of credit and WAPA immediately used $45 million to make a down payment to Vitol.

Upon completion of the deal, WAPA will gain ownership of the propane storage facility. Doing this is “absolutely critical to the energy security of the Virgin Islands,” Smith told the board. The facility will allow the authority to use more lower-cost propane rather than higher-cost diesel to generate electricity.

In December, Fitch Ratings cited WAPA’s dispute with Vitol over the capital lease obligation and Vitol’s decision in November to stop supplying WAPA with propane for downgrading the authority’s senior bonds to CC.

WAPA has about $207 million in bonds, $341 million in long-term debt, and $1.098 billion in total liabilities outstanding.

Smith told the board he remains optimistic HUD will be happy with the Virgin Islands Finance Authority’s “capacity assessment” and Virgin Islands Housing Finance Authority’s “environmental assessment” findings.