Mobil asks for changes to fuel supply RFP

Mobil Oil Mariana Islands Inc., a potential bidder for the Commonwealth Utilities Corp.’s approximately $80-million fuel supply contract, has asked CUC to make amendments to the bid package.

Mobil commercial manager Frances Diaz offered the proposed amendments following a meeting on Jan. 24 with top CUC officials, including chair Frank Guerrero, vice chair Herman P. Sablan, executive director Lorraine Babauta, and comptroller Sohale Samari.

In an interview, Guerrero said CUC is not considering suggestions made by Mobil, which is CUC’s current fuel supplier.

“We can’t discuss the [request for proposal] with them, and they can’t dictate us what to do about it. The fact that they are a potential bidder creates a conflict of interest,” Guerrero said.

For his part, Sablan said he found nothing wrong about Mobil making suggestions.

“Anybody can submit requests. CUC does not necessarily have to take them. Right now, however, we cannot amend the RFP because it’s already out. We don’t want anybody to start protesting; that might delay the awarding of the contract.”

Diaz noted in a Jan. 27 letter to Babauta that several pricing formula concepts were discussed during last week’s meeting to come up with a favorable price to CUC.

She urged CUC to reconsider its current price formula, which uses the Mean of Platts Singapore plus a fixed add-on. MOPS is a benchmark for oil pricing.

“An alternative is to have a MOPS-based formula that passes actual costs per shipment for freight and product premiums to CUC so that the fixed add-on will cover only indirect product costs,” Diaz said. “This formula should result in the most favorable pricing formula to CUC and provide for some transparency in direct fuel supply costs.”

As a variation of this option, she said, CUC could also fix the freight and product premium for 12 months.

“We appreciate CUC’s consideration of these options and suggest that CUC amend the RFP to allow for the above alternate methods of pricing,” Diaz said.

CUC is currently seeking proposals from firms qualified to supply fuel for the power plants on Saipan, Tinian and Rota for a period of two years.

The bid period started Jan. 6 and will end Feb. 24.

The utility firm’s fuel expenses in fiscal year 2004 totaled almost $40 million, CUC data showed.