CUC spent $.5-M for 80-MW bidding

Amid the unpredictable outcome at today’s board meeting of the Commonwealth Utilities Corporation on the controversial Saipan power plant, the government has already spent more than half-a-million dollars for a project that has yet to benefit the public.

Based on available public documents, the much delayed project has incurred the government-owned utility corporation at least $500,000 since planning the procurement of the 80-megawatt plant nearly three years ago.

This includes the study conducted by R.W. Beck recommending such size of the plant, which cost taxpayers’ money between $200,000 to $300,000.

During the procurement process conducted by an in-house selection committee in the early stages of the bidding, CUC officials traveled to Portland, Oregon to interview the two top potential contractors, Enron and Marubeni-Sithe, and paid fees to technical consultants who assisted them in their evaluation.

The utility corporation also was forced to hire an outside law firm at the height of the protests mounted by losing bidders against its choice of Japan’s Marubeni Corp. and its U.S. partners after its own legal counsel inhibited himself from the proceedings.

In January last year, CUC gave in to pressure and hired independent experts who have so far received close to $150,000 in public funds to undertake re-evaluation of all proposals submitted by various firms since 1997 as well as an assessment of Saipan’s current power load.

Incidental expenses, such as travel, communications and others, amounting to hundreds of thousands of dollars may have also been incurred in connection with the project, according to sources who claimed that the delay in awarding the contract to build the plant has already resulted to millions of dollars in potential revenue losses.

Cost-saving measure

All these expenditures were incurred by CUC after the board decided in May 1997 to scrap a recommendation to hire independent consultants in order to save the government corporation $300,000 which was the amount it would have cost if they hired these experts.

Due to the absence of the independent evaluation, CUC came under a storm of protests questioning the procurement regulations used by the in-house committee, which eventually led to a recommendation from the Office of Public Auditor for a fresh review of all the 13 proposals.

Burns & McDonnell, the private engineering firm hired last year by CUC in response to the OPA’s ruling, is set to release at today’s meeting the report on Saipan’s power requirements which will be the basis of a board’s decision on the fate of the project.

The board has not ruled out the possibility of re-bidding the entire project if the study suggests that the island will need a lower capacity power plant than the initial recommendation laid out years ago – a move that would mean additional burden to the taxpayers’ pockets,

In a news conference last month with CUC Executive Director Timothy P. Villagomez, he credited the protests lodged in the past several months against the corporation for giving them more time to reconsider the original plan.

Utility officials have pointed to the present economic downturn and the reduction in large investments coming into the CNMI in the past two years for their decision to scale back the 80-MW plant.

Commonwealth Development Authority Chairman John S. Tenorio has also encouraged CUC board to review its plan, citing its shaky financial conditions and the unstable revenue generation from its services. CDA has a stake at the utility firm due to the $100 million debt owed by the latter.

The utility firm is under pressure to resolve legal disputes that have stalled the project since September 1998. Designed to meet power demand by 2000, it was to be constructed through build-operate-transfer scheme under a 25-year deal touted to be the largest ever in CNMI’s history.

Enron, the Tomen Consortium, HEI/SPP have edged out Marubeni-Sithe under the Burns & McDonnell’s evaluation, giving them greater chance to win the $120 million contract — that is, if the board decides to move ahead with the project.