MARSHALL ISLANDS POWER PLANT ISSUE GOING TO ARBITRATION

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MAJURO, Marshall Islands (August 10, 2001 – Marshall Islands Journal)---Continuing performance problems with Majuro’s new power plant are going to arbitration.

Marshalls Energy Company general manager Billy Roberts said earlier this week that the continuing under-performance of the new engines has been referred to the American Arbitration Society in Hawai‘i for resolution, according to the terms of MEC’s contract with Deutz Australia, Pty., Ltd.

The engines are not performing to the specifications of the warranty, he indicated.

A design fault in the engines is resulting in a higher than expected level of lube oil usage than was agreed to in the contract performance requirements, he said. This is expected to cost MEC an additional $2 million over the 20-year life of the plant, he said.

Last year, in a negotiated settlement, Deutz paid MEC $950,000 in penalties for the late completion of the facility.

The Marshall Islands Journal, Box 14, Majuro, Marshall Islands 96960 E-mail: journal@ntamar.com  Subscriptions (weekly): 1 year US $87.00; international $213.00 (air mail).

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