Gov. Benigno R. Fitial developed a “profit sharing program” to entice businesses to invest in renewable energy development in the CNMI but the first company that signed such a deal with the government on Oct. 10, 2011 said Tuesday that it backed out from the agreement after its California-based investor for a $40 million solar project thought it “risky.”
Press secretary Angel Demapan, when asked for comment on the issue, said that the profit sharing program “is an option that is available if it is determined to be beneficial to the Commonwealth.”
But he said he is “not aware of others who may have availed of this program.”
Under a profit-sharing program, the CNMI agrees to provide the lessee with public land access without charge until the decentralized, renewable energy program becomes profitable.
Herman Sablan, vice president for Eco Island Development, the local partner of American Capital Energy Co. or ACE, said Tuesday that Eco Island backed out from the profit sharing deal last year.
Sablan said ACE, which was planning to invest some $40 million to build and operate solar photovoltaic power plants on Saipan, said a profit sharing deal at the time was “risky” because there's no assurance a contract could be had.
He said ACE instead decided to respond to a Commonwealth Utilities Corp. request for proposal on solar power plants. ACE was selected the best bidder.
“But like I said earlier, it's been a year and ACE is still waiting for a contract from the government. They have spent considerable amount already on this project and I am hoping they won't back out from this project because it will help bring down cost of power to customers,” Sablan said.
Sablan said this piece of information-that Eco Island /ACE backed out from the profit sharing deal last year-was unintentionally not shared on Monday.
Some lawmakers were poised to ask the Office of the Public Auditor to investigate this profit sharing program that Fitial and the Department of Public Lands signed with Eco Island Development president Shen Yen.
DPL acting secretary Ray Salas was still reviewing the profit sharing agreement signed last year with Eco Development. Salas was only recently named acting DPL secretary.
The profit sharing for the government is the amount to be paid to DPL based on the terms and conditions or rental payment schedules laid out in a “lease agreement.”
Profit-sharing will be included in the power purchase rate of 0.189 cents per kilowatt hour as signed in the PPA with a 5-percent increase every five years until the contract expiration.
About a month later or on Nov. 7, 2011, this MOA was amended to change the profit sharing from 5-percent increase every five years to 2.5 percent every year.
Postponed leadership meeting
In other news, Fitial postponed once again Wednesday morning's leadership meeting with the Legislature to give way to a Senate Committee on Executive Appointments and Government Investigations' public hearing on the governor's chief justice nominee, Alexandro Castro.
Fitial postponed the leadership meeting once before, to give way to an ongoing budget conference committee