BABAUTA CALLS PRIVATE POWER MISTAKE IN CNMI

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By Agnes Donato

SAIPAN, CNMI (Saipan Tribune, Dec. 16) – The previous effort of the Commonwealth of the Northern Mariana Islands government to hire another independent power producer was a mistake, especially in light of the recent successive fuel price hikes, Governor Juan N. Babauta said.

According to Babauta, privatizing Saipan's main power plant, as contained in a Request for Proposal issued earlier by the Commonwealth Utilities Corporation, is not the solution to island's power crisis, which is mainly caused by the worldwide increase in the cost of fuel.

One alternative, he said, was for the CNMI residents to conserve electricity.

"If the people of the Commonwealth cannot agree to pay more for electricity, then we must simply use less," Babauta said. He cited his administration's energy conservation program, which reportedly resulted in hundreds of thousands of dollars in savings for the government.

The other alternative to raising rates was to find alternative technologies and or fuels for generating electricity more cheaply, he said.

However, the governor added, "One certainty is that that request for bids for an outside investor to build an additional 30 megawatts of diesel powered power generation-committing us to buying oil for another 20 years-was a mistake."

For this reason, he said, his administration did not follow through with the bids for another independent power producer [IPP]. "We already have IPPs on Tinian and Saipan. They serve a purpose, but they are costly. That is not a model for the future," he said.

The power plant privatization project would have involved the takeover of the eight-engine Power Plant I in Lower Base, its rehabilitation and upgrade to meet federal environmental standards, and installation of two new 15 mega-watt generators. The contract would allow the private company to operate the machines for 20 years.

[PIR editor’s note: In May of this year, the Commonwealth Utilities Corporation owed substantial debt to Mobil Oil Mariana Islands Inc., the Commonwealth Development Authority and other small vendors. Bank of Guam subsequently approved a request for a standby letter of credit to the CNMI government in the amount of US$10 million for the Utilities Corporation, a day after the governor declared a state of emergency for agency.]

December 16, 2005

Saipan Tribune http://www.saipantribune.com

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