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1.4M gallons of fuel underway
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Posted on May 20 2005
The Commonwealth Utilities Corp. should have enough fuel to run its power generators through June, with the Governor’s Office and CUC management succeeding yesterday in getting Mobil Oil Marianas deliver 1.4 million gallons of fuel to the power plants.
Pursuant to the governor’s declaration of a state of disaster emergency and his office’s subsequent assumption of control of CUC, Lt. Gov. Diego Benavente and CUC executive director Lorraine Babauta entered negotiations with Mobil on Thursday through Friday.
In a news statement, the Governor’s Office reported that the negotiations had resulted in Mobil agreeing to deliver 1.4 million gallons of fuel to CUC on June 2, 2005.
The fuel, which needed to be loaded in Singapore on Friday, should be enough to solve CUC’s emergency needs.
“Additionally, long-term contract negotiations will take place next week. They will address the terms to [pay] CUC’s overdue bill to Mobil. The immediate fuel crisis is over, but until the CNMI is guaranteed a steady supply of fuel for its generators, the state of emergency at CUC remains in effect,” the Governor’s Office said.
Benavente said in an interview that the talks between the parties focused mainly on the repayment of the $8.5-million debt that CUC has incurred over the course of its two-year contract with Mobil.
He said Mobil also wanted assurance that future fuel purchases would be paid promptly. “We were able to work out some arrangement with Mobil. It was just a matter of sitting down and negotiating,” he said.
Apparently, however, the negotiations were facilitated by the fact that the government had secured a $10-million standby letter of credit from Bank of Guam.
Due to recurring power outages, Gov. Juan N. Babauta declared a state of disaster emergency and subsequently assumed control of CUC, for a period of 30 to 90 days.
In his State of the Commonwealth Address Thursday, Babauta blamed the power crisis largely on CUC’s lack of a long-term fuel contract.
CUC has failed to enter into a new fuel contract since its previous deal with Mobil expired on April 30. As a result, the utility firm was forced to purchase fuel on an emergency procurement basis, paying for the product in cash and by shipment.
