The Financial Oversight and Management Board for Puerto Rico (FOMB) announced on November 28, 2025 its conditional approval of the proposed liquified natural gas (LNG) agreement between the Puerto Rico Electric Power Authority (PREPA), the Public-Private Partnerships Authority (P3A), and NFEnergía LLC (NFE).
The Board’s determination reflects significant improvements to the contract negotiated over the past several months—adjustments that the FOMB estimates could yield more than $4 billion in fuel-cost savings over the life of the agreement.
While approving the agreement subject to several conditions, the Board also directed the Government to evaluate the Puerto Nuevo terminal access framework, a long-standing contractual arrangement between NFE and the Ports Authority that governs LNG-handling infrastructure.
The FOMB’s authorization is conditioned on PREPA and P3A requiring NFE to execute a bilateral tolling agreement with a qualified third-party LNG supplier.
This mechanism is intended to ensure continuity of supply in the event that NFE cannot deliver fuel or invokes force majeure.
Additionally, the Oversight Board instructed the Government to:
These steps reflect the Board’s dual objectives: improving contractual protections for PREPA while preserving system reliability during Puerto Rico’s transition away from oil-fired generation.
The Puerto Nuevo terminal is Puerto Rico’s only active LNG entry point for the San Juan and Palo Seco generating units.
Under an agreement with the Ports Authority, NFE holds exclusive rights to critical berthing, storage, and handling areas at the facility.
Understanding the origin of those rights is essential for assessing the legal and operational implications of any potential modification:
The exclusivity provisions in NFE’s lease were part of the consideration exchanged for that investment—an arrangement typical of infrastructure redevelopment concessions in distressed or underperforming assets.
From a legal perspective, altering exclusive rights granted as bargained-for consideration raises questions that must be examined within the framework of:
The Oversight Board’s directive reflects this complexity: it did not instruct the Government to alter the lease, but to evaluate its implications and identify whether adjustments—if pursued—would require renegotiation, compensation, or a broader infrastructure-access policy.
For additional context, INDIARIO’s coverage underscores the FOMB’s view that any long-term energy strategy must consider both improved contract safeguards and the structural implications of single-terminal dependency.
The FOMB noted meaningful enhancements to the LNG contract relative to earlier drafts submitted since June 2025, including:
These revisions substantially mitigate PREPA’s risk profile and improve operational flexibility in future fuel procurement cycles.
The FOMB cautioned that rejecting the LNG contract could have resulted in Puerto Rico being left without adequate LNG supply, significantly reducing available generation at a time when the Island’s grid continues to rely heavily on San Juan and Palo Seco for stability.
Nevertheless, the unresolved question of terminal access remains a strategic issue for Puerto Rico’s long-term energy planning.
A single operational LNG import facility heightens exposure to supply disruptions and constrains competitive procurement.
Any policy decision regarding exclusive access must therefore be informed by contractual realities, infrastructure investment history, and the practical requirements of maintaining safe and reliable energy service.
Stakeholders should monitor:
For more information regarding LNG supply arrangements, infrastructure-access issues, regulatory proceedings, or contract strategy, please contact our Energy Practice at www.mzls.com.
