TINIAN POWER PLANT EYED AS LOAN COLLATERAL

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CNMI, Saipan, (Marianas Variety, May 5) - Telesource CNMI Inc..,
which built the 20-megawatt power plant on Tinian, wants to use the project as
collateral to borrow money from the Commercial Bank of Kuwait despite opposition
from several Commonwealth Utilities Corp. officials.

The $32 million power plant will be turned over to CUC in 2020.

CUC said the build-operate-transfer contract it signed with
Telesource must be amended before the firm can use the plant as collateral.

A special board meeting was held Friday to discuss the issue.

The board approved Telesource’s request to amend the contract
but it must also be reviewed and approved by the CNMI attorney general.

CUC Chairman Francisco Q. Guerrero strongly opposed the request.

He is questioning Telesource’s financial condition and its
decision to use the Tinian power plant as collateral.

"If a company is using whatever project it has to tie in a loan,
obviously, there’s something wrong," he said.

Guerrero said Tinian would have a major power problem should
Telesource fail to meet its financial obligation to the Commercial Bank of
Kuwait.

"Should Telesource default on their loan payments in the
remaining 11 years and then the Kuwait bank comes over and padlocks the power
plant, what’s going to happen to the community of Tinian?" he said. "I’m totally
against amending the contract because Telesource’s power plant on Tinian is
already half-owned by CUC. Of the $21 million we owed them, we have already paid
$9 million — CUC owns the property were the plant is located," he said..

May 5, 2003

Marianas Variety:
www.mvariety.com

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