SAIPAN POWER PROJECT CDA: Delay selection of contractor

Commonwealth Development Authority Board Chairman Juan S. Tenorio has asked the Commonwealth Utilities Corp. to postpone indefinitely the selection of a company that will build the 80-megawatt power plant until after CUC has made an assessment of the power demand on Saipan.

In a letter to Timothy P. Villagomez, executive director of the utilities firm, Tenorio warned CUC against embarking on a financial commitment which it may not be able to justify.

He noted the present power demand on the island do not warrant the construction of a power plant of that magnitude.

“To proceed with the continuation of the project would be unwise if CUC cannot, at present, justify on paper the demand for additional power generation on Saipan. The project is an expensive endeavor, which deserves a second assessment as to whether or not it is still needed,” said Tenorio.

Construction of the $120 million power plant will be carried out through a build-operate-transfer scheme. It was designed years ago to meet the demand for reliable power on the island by the end of this decade.

Due to the slowdown on the island’s tourism economy, more than 1,000 businesses were forced to close shop which has greatly reduced power consumption on Saipan.

Currently, CUC has a peak capacity of 65 megawatt, but large consumers, like hotels and garment factories, are usually told to switch to their own generators when existing plants malfunction or when consumption jumps especially during the summer months.

In fact, Tenorio said the present power generation capability of CUC far exceeds the demand of power consumers who are presently on line.

“CDA fully appreciates that CUC has undergone tremendous effort and expense in pursuing its project. However, the actual cost of the project far-out distances the current expense and effort,” he added.

CUC is expected to announce today its decision on the Saipan power project as Board Chair Rosario M. Elameto hinted at changing the original plan since it has failed to see the load growth as projected when it was first proposed.

The utilities corporation will make public today the report of Burns & McDonnell, an independent firm hired to evaluate all the proposals of the 13 power firms to build the power plant.

One year since CUC announced its intention to award the contract to Marubeni Corp. and its U.S. partner Sithe Energies Inc., the Saipan power plant project has been mired in legal squabble.