CUC gets $3.5M MPLT check

* Rolling outages seen to end by mid-Sept.[/I]

The Commonwealth Utilities Corp. yesterday received a $3.5-million loan from Marianas Public Land Trust to pay for emergency power and settle debts with its contractors.

About $1.5 million of the money was immediately deposited into the account of the Scotland-based Aggreko International, which CUC had hired to provide up to 15 megawatts of temporary power to Saipan. CUC will use the balance to pay debts to contractors: $1.1 million to Pacific Marine Industrial Corp. and $800,000 to Telesource CNMI.

Under the terms of the loan, MPLT will charge CUC 7 percent interest to be paid in monthly increments of about $20,000. At the end of three years, CUC is supposed to repay the $3.5 million principal.

CUC executive director Antonio S. Muna said Aggreko is poised to ship the rental generators from the company’s Singapore headquarters this weekend. CUC anticipates delivery of the generators by Sept. 8, 2008. The engines are expected to be operational within six days after delivery, and put an end to the rotating blackouts on Saipan.

“I am relieved not only for me, but from the public’s standpoint,” Muna said after receiving the $3.5 million check from MPLT. “With the emergency power from Aggreko, we can manage our power supply and eliminate the rotating blackouts that we’ve been going through for the past two years. That will give us a chance to step back and approach fixing the engines without the desperation of meeting power demand at the same time,” he added.

Muna described the process of getting the loan and sealing the Aggreko deal as “a roller-coaster ride.”

MPLT previously approved the loan, but withdraw its decision due to legal flaws. It took actions by the Legislature, the administration, and MPLT to make the loan—and ultimately the Aggreko contract—happen.

The Legislature first passed a law earmarking $3.4 million of MPLT’s future income to CUC. Then it passed another measure exempting temporary power contracts such as that of Aggreko from review by the Public Utilities Commission. For his part, Gov. Benigno R. Fitial initially issued an executive order lifting the $500,000 ceiling on CUC’s borrowing authority. He subsequently amended that order to simply increase the CUC debt cap to $5 million, instead of removing it altogether.

By granting the loan, MPLT effectively declined the $3.4 million advance authorized by Public Law 16-7. The MPLT board of trustees, in the resolution adopted yesterday, said the advance is against the Constitution.

The board explained that the Constitution does not allow the Trust to do anything with earnings from public land use except invest them. Therefore, any transfer of money to CUC has to be in the form of an “investment,” such a loan where MPLT can earn interest.