Not too fast, auditor says on backing for Mabunei

Posted on Feb 09 1999

A proposed legislation supporting the bid of Marubeni-Sithe on the 80-megawatt power plant on Saipan is premature and unnecessary in light of ongoing independent re-evaluation of all proposals submitted for the $120 million project, according to the Office of Public Auditor.

Commenting on the measure under review by the legislature, Public Auditor Leo L. LaMotte said the proposal is contrary to a decision by the Commonwealth Utilities Corporation to call off its agreement with the Japanese conglomerate and its U.S. partner.

The OPA chief also questioned a 25-year full faith and credit backing by the CNMI government sought for the stalled project in view of the plan to privatize CUC in the next few years.

“Does the government want to guarantee a potentially private obligation that it will no longer have control over,” LaMotte asked in a letter to Rep. David M. Apatang, chair of the House committee on Public Utilities, Transportation and Communication.

The power project has drawn protests since June last year when the government-owned utility firm agreed to enter into contract negotiations with Marubeni-Sithe despite questions on CUC’s procurement process.

Last September, utility officials were forced to cancel the deal on OPA’s recommendation and had agreed to hire an independent evaluator to conduct a new round of review on various proposals handed in by 13 firms vying for the largest ever contract in the CNMI.

Although CUC has recently hired the services of a Kansas-based engineering firms Burns & McDonnell for $49,000, the legislature is attempting to resolve the issue through the proposed bill which will favor Marubeni-Sithe over other companies.

“Perhaps, this (reevaluation) and additional expense makes the proposed legislation premature and unnecessary,” LaMotte said.

But Senate Vice President Thomas P. Villagomez, who initiated the bill, stressed the legislative intervention only aims to speed up the project’s procurement which began nearly two years ago.

“I am satisfied with the way things are moving now,” he explained in an interview yesterday. “If it needs further push, I’m willing to give whatever support needed there,” added Villagomez, who chairs the PUTC committee at the Senate.

Enron, a closest competitor of Marubeni-Sithe whose protest is pending with OPA, warned the legislature against the move, saying the ongoing reevaluation is the proper venue towards resolving the impasse.

“Delays are the unfortunate result of attempting to shortcut a process that is by its nature detailed and time consuming,” Enron Vice President David B. Howe said in a letter to Villagomez.

“Abbreviating this process any further will shortchange the public, the ultimate utility consumer, by denying Saipan the most efficient, cost-effective and reliable source of power,” he added.

Designed to meet anticipated power demand on Saipan, the power plant has come under a storm of protests largely due to CUC’s choice of Marubeni-Sithe, while OPA has held off ruling on the complaints of Enron and the consortium of Alsons, Tomen, Singapore Power and Tan Holdings Corp. pending result of the new review.

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