Guam Power Authority Reviewing Fuel Supply Bids

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Earlier bidding cycle hampered by protest action

By Louella Losinio

HAGÅTÑA, Guam (Marianas Variety Guam, June 18, 2013) – The Guam Power Authority (GPA) received three bids yesterday for the supply of fuel oil for its generators and is now reviewing the bids.

GPA expects the review to be completed at the end of the week, after which a notice of award will be issued to announce the winning bidder.

GPA Communications Manager Art Perez made the confirmation yesterday afternoon after all price bids had been turned in to the power agency.

GPA initiated the rebidding for the procurement of residual fuel oil at 2 p.m. yesterday. Three companies submitted bids to provide fuel for GPA’s baseload generating plants. They are: Vitol Pte. Asia Ltd., Hyundai Corporation, and current fuel oil supplier Petrobas Singapore Pte. Ltd.

Hyundai Corp. and Jiershin GT OHNG & Co. LLP submitted as one bidding proponent, according to Perez.

Once a final contract for the supply of residual fuel oil has been negotiated and finalized, GPA will then submit the contract to the Consolidated Commission on Utilities and then the Public Utilities Commission for final review and approval.

The PUC has a contract review threshold of $1.5 million for GPA. The review protocol states contracts and obligations exceeding this amount are subject to the commission’s review and approval.

Protests

Protests hampered the first bidding cycle for GPA’s fuel supply services.

GPA first released an invitation for bid for fuel supply services in September 2012 as it anticipated the expiration of its contract with Petrobras.

Petrobras’ contract with GPA, worth more than $300 million, expired last Feb. 28 and has been extended while the procurement process for the new fuel supply services is ongoing.

Although Petrobras has supplied residual fuel oil to GPA for three years, the company had notified GPA of a profit decrease under the existing contract due to the increasing costs of blending components needed to meet the power utility’s specifications.

During the previous bidding cycle, Jiershin, Vitol and Petrobras were considered for the fuel supply contract.

In January, one month before the expiration of the agreement with Petrobas, GPA endorsed Vitol for its new fuel supply contract.

Factoring in compliance requirements and contract cost, GPA determined that Vitol – which offered a bid of around $379 million – was the most responsive bidder among the two other companies.

Jiershin filed a protest questioning the selection of Vitol, which prevented the final awarding of a fuel supply contract several months ago. The company just withdrew its protest last March.

The protest resulted in GPA enforcing a stay of procurement, which was only lifted last April. GPA said it will now issue a solicitation for a new fuel contract.

After the stay of procurement was lifted, GPA General Manager Joaquin Flores said it will take several months for the new procurement process to be completed, thus Petrobas will continue supplying fuel for GPA while the process is ongoing.

Just last month, Vitol filed an appeal with the Office of Public Accountability seeking the nullification of GPA's extended contract with Petrobras for six months of oil supply.

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