RAYTHEON PUSHES FOR GUAM WATER CONTRACT

By Mark-Alexander Peiper

HAGATNA, Guam (Pacific Daily News, Nov. 6) - Raytheon Technical Services Co. says it can repair the island's ailing infrastructure without having to immediately raise water rates.

Raytheon officials recently presented their plan to privatize the Guam Waterworks Authority to the Consolidated Commission on Utilities.

The contractor has been pushing for months to take over the long-troubled water agency, and recently told CCU members that it could bring the agency into compliance with federal drinking water and wastewater standards within five years.

CCU Chairman Simon Sanchez said despite how good the Raytheon offer looks, the commission still wishes to see what other potential bidders can offer to ensure the island's ratepayers get the best deal.

Barrigada resident EveMarie Malaca is one of many residents who has for years suffered from water pressure problems. She said she would like to see the utility privatized immediately because that will be the only way to ensure solutions are found.

Maybe that would end her having to wake up before dawn each morning to fill up nine five-gallon drums and several buckets of water because water flows through her pipes only between midnight and 6 a.m., she said.

Malaca, 49, said she sold her washing machine because she can't get enough water from her pipes for it to work.

"I pay my bills and I still don't have water. It's hard, it's frustrating, I've complained to (GWA) and the problem is still here -- I'm just tired of it," said Malaca. "Sometimes I just don't get enough sleep because it takes so long to fill up the water, but it's something I have to do and I'm tired of it."

According to the highlights of the financing plan, Raytheon would form a public purpose corporation with the utility. Raytheon would be able to borrow up to $350 million on the bond market at a favorable rate, unlike the government-run utility, which is in poor financial condition.

John Canney, managing director of Municipal Advisors Group of Boston, who has been hired by Raytheon to put the deal together, said Raytheon will hold off on rate increases for the first two years of the 20-year deal by reducing operation costs and spending efficiently.

Canney said rates would then gradually increase to 12 percent over the current rates by 2011. GWA, in a current plan to pay for improvements, has proposed a 12-percent rate increase by next April followed by incremental increases of 5 percent for each of the following two years.

Public Law 24-295 allows the commission to privatize the water agency without going through the normal procurement process. The 1998 law calls for a public-private partnership between Waterworks and the U.S. Navy Base Operation Services contractor, which in this case is Raytheon.

Gov. Felix Camacho in August asked the commission to privatize the agency under this law. The Guam Contractors Association in September wrote a letter to the governor advising him that skipping the procurement process may not guarantee the best deal for the island.

John Dela Rosa, the governor's spokesman, said the governor wants the commission to make a decision soon and not spend months debating it.

Sanchez said the commission is in the process of drafting two requests for proposals that could be issued by the end of the month.

One RFP is to privatize the agency and the other is to hire a consultant to help the commission craft an RFP that is attractive to private companies and at the same time beneficial to the island's ratepayers. The second request would be made in case the commission's privatization RFP is lacking.

Sanchez said although the commission's current plans may not mean privatization for the water agency possibly until the start of September 2005, the agency will work to make short-term improvements to help residents who suffer from poor water service.

Barrigada resident Joseph San Agustin said he believes the commission should not rush into any privatization deals.

Like Malac, he is able to get water only between midnight and 4 a.m. San Agustin has become so tired of the problems that he's spent $6,000 on three water tanks and all the parts that come with owning a tank.

He said the property value of his two-story home located near the San Roke Church has plummeted so badly from the lack of water that it is now almost unsellable. Still, the 46-year-old doesn't want the commission to make any rash decisions.

"The commission (is) stuck between a rock and a hard place because they want to help the people with no water now, but at the same time they don't want to do anything that will cost us down the line," he said. "Let's start the process of doing something now but let's make sure we get a good deal because 20, 30 years from now we don't want our grandkids to look back and say 'what were you thinking.'"

November 6, 2003

Pacific Daily News: www.guampdn.com

 

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