Senate bill backs Marubeni for power project

A proposal is underway in the House of Representatives that will extend full support behind a conglomerate chosen by the Commonwealth Utilities Corporation to build the new 80-megawatt power plant on Saipan despite protests disputing the deal.

In a bill offered by Senate Vice President Thomas P. Villagomez, the legislature will grant full faith and credit backing to Marubeni Corp. of Japan and its U.S. partner Sithe Energies, Inc. which won the $120 million project in the controversial awarding announced by CUC in June last year.

The guarantee by the CNMI government is required to make sure that it will “assume contingent liability for the payments under the agreement and to ensure the best price possible for the people,” according to a draft of the proposal.

Designed to address rising power demand on Saipan by next year, the project is to be constructed through the build-operate-transfer scheme in which the contractor will generate power for purchase by CUC and after 25 years, the government-owned utility will assume ownership.

Under the deal worked out with Marubeni-Sithe, CUC will pay each month a capacity charge of some $1.45 million, operations and maintenance charge of about $593,110 as well as energy charge of .00125 cent per kilowatt hour during the initial run of the plant.

The proposed measure said annual revenues from the power project are expected to reach about $89.8 million every year, providing an “ongoing asset value to the Commonwealth greater than the agreement liabilities.”

Although the bill has yet to be filed at the House, Marubeni-Sithe earlier had expressed approval over the move to allow intervention of lawmakers in a bid to resolve mounting protests that have stalled the project for the last six months.

Its close competitors, industrial giant Enron and the consortium of Alsons, Tomen, Singapore Power and Tan Holdings Corp., have opposed the deal largely due to questions on Marubeni-Sithe’s offer and the competence of an in-house selection committee formed by CUC.

Their protests are pending with the public auditor while waiting the result of an independent re-evaluation of all the bids submitted by 13 companies for the project. The review is set to be conducted in the next few weeks by a private engineering firm hired by CUC in an effort to resolve the legal snag.

Meanwhile, a unsigned statement sent to Saipan Tribune, apparently against the legislative proposal, has alleged the “sweetheart deal” with Marubeni-Sithe would cost the CNMI more than $700 million in total payments.

A lawyer for Marubeni-Sithe, David R. Nevitt, declining to comment, said he was not aware of the statement. He maintained, however, that the full faith and credit guarantee is part of the financial component of the power project.