Saipan Tribune

Thursday, May 23, 2013

Monday, January 07, 2013

Reyes: Fitial should personally say that PPA is void

Gov. Benigno R. Fitial should personally come out-and not just through his press secretary-that he now agrees with the attorney general's opinion that the $190.8-million power purchase agreement is void and unenforceable, according to Senate floor leader Pete Reyes (IR-Saipan).

In an interview on Thursday, Reyes said if press secretary Angel Demapan's announcement that Fitial has agreed with Attorney General Joey P. San Nicolas' opinion regarding the power purchase agreement deal is correct, “then that is good for the Commonwealth.”

Reyes said the Delaware-based Saipan Development LLC should be informed that the power purchase agreement is not enforceable because it appears from the company's media release that the deal is closed.

“I guess it's not just me, I guess the population.the public would want to know if it's really void. If it's void then someone has to inform Saipan Development LLC that it's no longer enforceable, that there's no contract,” the senator pointed out.

The lawmaker, however, raised two questions: the contract's potential harm to the CNMI and absence of a request for proposal. He quoted Saipan Development LLC counsel William Fitzgerald, who reportedly asked: “Where's the harm in entering into the power purchase agreement?”

Reyes said that people are talking about the consequence of the contract and that what people are talking about is now actually reduced to writing by the Commonwealth Utilities Corp., that there's great deal of harm if the information from CUC is true.

“I am not going to question that it's true because they are the experts, the CUC,” Reyes said.

The senator was referring to CUC's request urging the Superior Court to deny Saipan Development LLC's motion to vacate the injunction order on the power purchase agreement.

CUC, through counsel Deborah Fisher, argued that if it proceeded based on the power purchase agreement and related escrow and guarantee agreements, this will entail up front costs of approximately $18 million, which will require an immediate increase in CUC's rates.

Reyes asked: “How can something be right when it requires a request for proposal [but] there is no RFP?”

“Somebody is focusing on what the contract is going to do and how it is going to affect the residents and the consumers in the CNMI. But what about the fact that it's subject to RFP and it was never gone through the RFP? Why isn't there a public hearing on this?” he asked.

In a separate interview, Senate president Paul A. Manglona (Ind-Rota) said, “The buck stops at the governor's desk.”

Manglona said any decision that the governor makes cannot be credited or blamed on the attorney general, especially for a project of this magnitude, committing the CNMI, according to some estimates, by up to $500 million.

“It's not whether the governor can legally sign off on the contract or whether he is personally liable. I think the issue here is, as a public servant, the people entrusted you all these authority and responsibility to act on their behalf. So you have fiduciary responsibility,” Manglona stressed.

The governor, he said, has the responsibility to carry out and protect the people's interest.

“And when you sign off on a contract that in the first place the Legislature clearly intended that a project of this magnitude, especially under the CUC, that there is a public bidding,” he said.

Clearly, Manglona said, the Legislature did not remove that provision in the law that requires a public bidding for any project under CUC.

Manglona said one exemption for not having a public bidding is that it absolutely requires a sole-source contract and that the attorney general shall certify the need for it.

Manglona said Fitial knows very well that there is no justification for this sole-source contract.

“I don't know if you can term it certified. But the certification requires that there be factors considered before you sign off a certification such as the economic analysis, economic study for this project. None has been done,” he stressed.

Manglona said the power purchase agreement contract was “signed overnight, just like that.”

“So you know that the governor made a very critical error to say the least because he knew that to move this project forward there are many issues that needed to be addressed,” he added.