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New CUC-Mobil contract now in ‘final’ review
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Posted on May 31 2005
The government is now awaiting Mobil’s final review of its new long-term fuel contract.
As of yesterday, the government and Mobil Oil Marianas remained on the negotiating table to hammer out the “final” agreement, the government said.
According to press secretary Pete A. Callaghan, a new fuel contract with Mobil is expected “within the week.”
“The administration and Mobil have been on the bargaining table all weekend. Various proposals have been presented and a final agreement is now being reviewed,” said Callaghan.
Lt. Gov. Diego T. Benavente said earlier that a new contract must be secured before the shipment of 1.4 million gallons of fuel, which is expected on Saipan tomorrow, June 2. The ship carrying the fuel for CUC is on Guam now, said Callaghan.
The government had expected that it would strike a new long-term contract with Mobil no later than last Monday.
Mobil, which has been CUC’s lone fuel supplier over the years, finished its last contract with CUC on April 30.
Last month, it refused to provide CUC any more fuel due to the utility agency’s outstanding debt. CUC reportedly owes Mobil some $8.5 million, including a $3.5 million delinquent account for May.
Mobil’s initial refusal resulted in a massive power outage on May 17.
On May 19, Gov. Juan N. Babauta declared a state of disaster emergency, resulting in the government getting a letter of commitment from Bank of Guam for a $10 million line of credit.
On May 20, Mobil agreed to ship 1.4 million of gallons to CUC, which covers CUC’s fuel needs for the month of June.
Callaghan said yesterday that without the emergency declaration, Saipan would experience blackouts during the month.
“The CNMI would have been facing potential blackouts because Mobil is going to hold the fuel. The state of emergency was needed,” he said.
The negotiation for a new contract comes amid the Legislature’s warning of potential constitutional liabilities over the $10 million letter of credit with Bank of Guam.
