Guerrero makes a pitch for PNG oil firm

A Saipan representative made a pitch on Wednesday for a Papua New Guinea-based oil company, which, he said, could provide the Commonwealth Utilities Corp. better—and cheaper—fuel.

According to Rep. Joseph Guerrero, CUC should find ways to reduce costs and improve efficiency, and seek other possible alternatives in terms of fuel products or suppliers.

Guerrero, who denied any ties with the oil company, urged CUC to consider a proposal from Inter Oil Corp., which has expressed interest in supplying CUC an alternative type of fuel called LSWR, or low sulfur waxy residual fuel oil.

“This proposal is currently with CUC and, as I understand it, CUC has not bothered to act or even responded to the proposer,” Guerrero said at the public hearing on the proposed fuel surcharge.

He said the LSWR fuel meets U.S. Environmental Protection Agency requirements and has a higher BTU value than diesel. BTU, or British thermal unit, is a measure of heat energy.

He added that Inter Oil is offering the LSWR fuel at 16 cents less than what CUC is paying for diesel, which CUC imports from Singapore for its power plants. As of October, CUC spends $1.4006 per gallon of diesel.

Because Inter Oil’s refinery in Papua New Guinea is closer to the CNMI than Singapore, CUC stands to save an additional 14 cents per gallon in shipping costs, Guerrero said.

“At CUC’s current usage rate, CUC could stand to save over $800,000 a month using LSWR as compared to diesel,” he added.

Further, the lawmaker reported that Inter Oil is willing to provide CUC with up to four brand-new 18-megawatt generators, which have an efficiency rate of 16 gallons per kilowatt-hour.

Guerrero noted that the inefficiency of CUC’s old power plant generators is one of the major reasons the utility firm has high operational costs. CUC’s existing generators consume over 40 gallons of diesel to produce one kilowatt hour of energy, he said.

With brand new generators, which can operate at less than 20 gallons per kwh, CUC can produce the same amount of energy for less than half the amount of fuel it currently uses.

“Repayment for the generators will be made through the savings that CUC realizes from the cheaper fuel and the more efficient generators. What this means…is that we have the potential to get brand-new generators with double the efficiency rate to be paid for by the savings we realize and not one cent coming out of CUC’s pocket or having to raise utility rates,” Guerrero said.

Inter Oil’s proposal, he added, offers cost savings of over $1.2 million per month, inclusive of fuel costs and monthly payments for the new generators.

“If CUC accepts this proposal, it can put away the $1.2 million per month so that when those generators reach their non-productive years, we will have the funds to purchase new generators without having to secure a loan or perhaps CUC can find a generous spot in their hearts and pass on these savings to their consumers by reducing the rates a couple of cents per kilowatt,” he said.