SAIPAN UTILITY CONTRACTS OUT POWER GENERATION

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Emergency power to be provided by private company

By Junhan B. Todeno & Gemma Casas

SAIPAN, CNMI (Mariana Variety, June 23, 2008) - To meet its emergency power requirements, the Commonwealth Utilities Corp. entered into a US$4 million contract with a company that will provide temporary power generation on Saipan.

The contract between CUC and the U.K.-based Aggreko International Projects Ltd. was signed on June 19 by CUC Executive Director Antonio S. Muna and Stephen Dunlop, the company’s sales director for Asia.

The Aggreko will provide up to 10 megawatts of continuous power for 52 weeks on Saipan.

[PIR editor’s note: According to a Saipan Tribune article on the deal, the contract with Aggreko is valued at over US$6 million and involves the lease of 15 1-megawatt generators.]

CUC said this temporary power rental solution will address the island’s power crisis.

Taotao Tano president Greg Cruz questioned the contract, saying CUC should have acquired the services of Aggreko before it entered into a separate rehabilitation and repair contract with the DCM Group for its power plant.

Cruz noted that Aggreko was awarded a contract this month even though the government turned down its bid in 2006.

He said CUC also has a US$885,000 contract with Commonwealth Industrial Supply Co. Inc. for the repair and rehabilitation of Power Plant 2.

Cruz asked Muna why CUC is still waiting for the parts of Power Plant 2 when CISCO was awarded the contract on March 14, 2006.

According to CUC, "The main issue we had [with Aggreko] was the energy charge that would be payable under the contract."

CUC said it tentatively agreed to pay five cents per kWh of energy delivered. The contractor will supply the equipment, labor and lube oil, while CUC will supply the diesel fuel.

CUC has to pay US$336,000 as advance payment and US$672,000 as deposit for the eight weeks of rental period.

Under the contract, Aggreko is responsible for erecting, installing, commissioning and decommissioning of the plant, including cabling, ladder racking and provision of all necessary materials required up to the point of connection with CUC’s system.

The temporary power generation is in Singapore which Aggreko will transport to Saipan.

Besides Muna, Governor Benigno R. Fitial also signed the contract.

According to Government Procurement and Supply Manager Manuel B. Sablan, the contract was secured through competitive sealed proposals.

Founded in 1962, Aggreko is the leading supplier of power rentals such as diesel generators and industrial generators in 29 countries.

Its clients include the U.S. Army base camps in Iraq and Kandahar province in Afghanistan.

Under Aggreko’s contract with CUC, electricity will be sold to the agency at 5 cents per kilowatt hour -- the same amount that CUC pays PMIC in running Power Plant 4.

When fuel costs are added consumers will end up paying about the same power rates charged this month -- 38.7 to 50 cents per kWh.

CUC’s three power plants -- 1, 2 and 4 -- produce only 31.5 megawatts.

Saipan needs at least 41 megawatts.

Saipan Republican Representatives Rosemond B. Santos and Ray N. Yumul want to know how CUC can pay the monthly US$360,000 rental fee.

"The question here is where will CUC source the funding? There is surely going to be impact on rates among consumers," Yumul said.

Speaker Arnold I. Palacios, R-Saipan, said CUC has "internal resources."

"I hope that’s the case. We need this additional power generation to enable CUC to properly overhaul its old engines. CUC said they have the funding," said Palacios.

He said the administration informed the Legislature about the Aggreko deal out of courtesy and not because it is seeking funds for it.

"We learned about this contract only this morning and we have some questions," he added.

In a brief presentation yesterday, CUC told House lawmakers about the contract with Aggreko.

Lawmakers learned that the deal calls for the delivery of the rented generator to Saipan within 26 days after a deposit is made to Aggreko’s account at the Royal Bank of Scotland.

"During this time CUC and the contractor will ensure that the site is ready to receive the cargo and have the plants running within the next 10 days. This means that the plant will generate power to supply the Saipan power grid within about 36 days," CUC said.

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