Defaulted Puerto Rico in Blackout Due to Corrupt Government Utility

Puerto Rico blackout (Carlos Giusti / Associated Press)
Carlos Giusti / Associated Press

All 3.5 million Puerto Ricans residents were without power for a second day Thursday following a fire at the grossly inefficient and allegedly corrupt government-owned electrical utility.

The island-wide power outage resulted in numerous secondary fires as a result of malfunctioning generators at hospitals, schools and even the elite Vanderbilt Hotel. Although Puerto Rico’s Governor Padilla and the state-owned Puerto Rico Electric Power Authority CEO Javier Quintana promised service would be restored within 24 hours, residents believe the blackout is just the latest infrastructure disaster due to corruption.

Breitbart News has reported extensively on Puerto Rico’s $70 billion municipal default and its troubled public pension plan, which  only has $1.8 billion in assets to pay $45 billion in pension liabilities. To avoid one million Puerto Rican U.S. citizens fleeing to Florida, the Obama administration and a bipartisan Congressional majority passed the “Puerto Rico Oversight, Management and Economic Stability Act,” which took federal control over all Puerto Rico finances under a joint Democrat and Republican appointed committee.

With Puerto Ricans having U.S. citizenship, over 27 percent of the island’s residents are on federal welfare, 12.2 percent are collecting unemployment, and only 43 percent are employed. Another 1 in 10 Puerto Ricans are either government public employees, retirees, or beneficiaries. Even more challenging, there are 120,169 public pension plan retirees and beneficiaries, compared to just 118,780 public employees still working.

According to Zulma Rosario Vega, executive director of the Puerto Rico Office of Ethics, “government corruption has been a key factor in leading the Puerto Rico’s gross national product to contract eight of the last nine years.”

Although Puerto Ricans are accustomed to the island’s penchant for corruption, they have been transfixed this summer by a pay-to-play scandal alleging the current governor’s campaign manager solicited huge illegal cash donations. The revelations actually forced the president of the Puerto Rico House of Representatives to resign.

The fire started at a sub-station in Central Aguirre, but the real culprit for shutting down all power on the island is the lack of redundant systems that were supposedly paid and built with billions of dollars in municipal bond proceeds.

From 1993 to 2001, the Administration of Governor Pedro Rosselló used tax-free bonds mostly sold to mainland U.S. individual investors to finance “mega public works projects,” wrote Emilio Pantojas García, Professor of Sociology at University of Puerto Rico. Only a few of these are actually functional.

By late in the second day, 1.5 million Puerto Ricans were still without power. The island desperately needs to build new redundant power supplies to prevent future blackouts. But impoverished Puerto Ricans that already pay twice as much for electricity as U.S. mainland residents would hard pressed by even higher electrical rates.


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