US firm New Fortress Energy has decided to withhold an LNG cargo shipment to Puerto Rico amid a payment dispute causing the island to idle ten of its generators, Bloomberg reported on July 13.

New York-headquartered New Fortress Energy claims it is owed millions of dollars from past LNG shipments to Puerto Rico.

Meanwhile, Puerto Rico’s energy czar Josue Colon has pushed back against the assertion stating that his office carries no debts with the company, whose move is causing major strain on the energy grid amid the summer heat.

 “We have let them know that this is not acceptable to the government of Puerto Rico,” Colon told Bloomberg.

The island in the Caribbean has a total of 14 temporary generators which it relies on during peak demand over the summer. The missed LNG cargo delivery has caused the island to instead run four of its temporary generators on more expensive diesel.

New Fortress Energy claims that the island owes it over $9mn, as well as $3mn in interest for gas deliveries made in 2020.

In a letter seen by Bloomberg, the New York company says that under the terms of its contract it has the legal right to withhold deliveries if debts are not paid.

Puerto Rico is heavily reliant on New Fortress Energy, with one of its subsidiaries, Genera also managing and operating the majority of its aging power plants.

In June, the Puerto Rico Electric Power Authority annulled an up front payment of $110mn in exchange for canceling nearly $900mn in potential bonuses.

The deal fell by the wayside when Puerto Rico refused to accept some of the conditions, such as providing third-party guarantees should the firm declare bankruptcy. The Puerto Rico Energy Bureau also ruled that $40mn which had been set aside as part of the contract should be returned to Puerto Rican consumers.

Puerto Rico’s LNG supply deal with New Fortress Energy was set to expire in June, but the parties had agreed to extend it on a temporary basis.

However, the Puerto Rican government’s plans to offer a 15-year LNG supply deal for approximately $20bn were scrapped by a federal watchdog, which found that the agreement could give New Fortress Energy a practical monopoly on the island’s gas supply.

The dispute comes with New Fortress Energy struggling financially, with the firm losing around 75% of its market value over the past year, sparking concerns among investors and bondholders.