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United States

Puerto Rico cancels controversial US$300m power-restoration contract, awarded to tiny US firm

Whitefish Energy, which had just two employees before winning the post-hurricane contract in Puerto Rico, is based in the Montana hometown of US Interior Secretary Ryan Zinke

PUBLISHED : Monday, 30 October, 2017, 9:50am
UPDATED : Monday, 30 October, 2017, 8:51pm

Puerto Rico is scrapping a deal with a tiny American firm that fell under intense scrutiny after it won the lucrative contract to restore electricity to the storm-ravaged island, the head of its power authority said on Sunday.

Ricardo Ramos – executive director of the Puerto Rico Electric Power Authority – announced the decision to journalists just hours after the US territory’s governor urged the cancellation of the deal with Montana-based Whitefish Energy Holdings, as controversy mounted over how it was struck.

Whitefish Energy had won a US$300-million contract to help turn the lights back on in Puerto Rico, where some 80 per cent of customers still lack power more than a month after Hurricane Maria ripped through the island, which is home to some 3.4 million people.

The company, which had just two employees before working on the island, was founded two years ago and is based in Whitefish, Montana, hometown of US Interior Secretary Ryan Zinke – arousing suspicions that Donald Trump’s administration could have wielded unfair influence. The main financial backer of Whitefish Energy donated tens of thousands of dollars to the Trump campaign and other Republicans.

Ramos insisted the deal’s cancellation “was not an easy decision” and there was “nothing illegal” in the contracting process. He said the controversy was “an enormous distraction” and “negatively impacting the work we’re doing”.

The company’s work in Puerto Rico will not be affected, he said, saying the cancellation will not take effect until 30 days after the utility’s board approves it. He estimated the cancellation would delay work by 10 to 12 weeks.

Whitefish Energy said it was “very disappointed” with the decision, with spokesman Chris Chiames saying it will only delay efforts to restore power.

Chiames said the company had sent 350 workers to the island and expected to have a total of 500 there this week.

According to Chiames, Whitefish workers had already finished some critical work that would soon lead to half a million people in San Juan getting power.

Facing scrutiny, island authorities hurried to defend the decision, saying Whitefish Energy had not asked for an advance as other companies had. But given the scale of the destruction, it came as a surprise that a small company received such a crucial contract.

Zinke on Friday said he “had absolutely nothing to do with Whitefish Energy receiving a contract in Puerto Rico” and would welcome an investigation.

Governor Ricardo Rossello took to Twitter to call for more detailed scrutiny of contracting processes and said he had referred the Whitefish Energy case to the office of the comptroller for investigation.

“I have given instructions so that things move forward … so that brigades and teams arrive” to get power back, he said.

Additional reporting by Associated Press