Power privatization fast-tracked

A new independent power producer is expected to take over the Lower Base power plant by as early as next month, well ahead of the October 2005 target set earlier for the privatization project.

Commonwealth Utilities Corp. chair Francisco Q. Guerrero noted that Harris Group, CUC’s consultant for the power plant privatization, had aimed to have a contract signed with an IPP by Oct. 1, 2005.

However, Guerrero said, a contract might be awarded earlier than this, with only two companies now left to choose from. The two remaining proposers are Telesource CNMI and Rolls Royce Power Ventures.

“I’m hearing that [the new IPP] could start as soon as next month. After all, there are only two companies to negotiate with. The consultant has already reviewed and evaluated the proposals. All that needs to be done is to make a final decision, based on the consultant’s recommendation,” said Guerrero.

He said that the CUC board of directors, whose powers had been suspended by the governor’s declaration of a state of disaster emergency, would be making the decision when the declaration is lifted.

According to Guerrero, the Governor’s Office is planning to turn CUC back to the board’s control by July 18.

“We have been communicating with the Governor’s Office. They said the governor should be able to turn CUC over back to the board by July 18. But of course, if the governor feels CUC is not ready, he may extend [the declaration],” Guerrero said.

CUC is looking to enter into a 20-year contract with an independent power producer to operate power plants 1 and 2 in Lower Base.

Guerrero said the privatization program would include upgrading the power plants and bringing them to compliance with environmental regulations.

Harris Group had estimated that $60 million would be needed to upgrade CUC’s main power plants. The consultant also said the privatization of power in the CNMI would cost $364 million over 20 years.

Guerrero added that the IPP would be adding two additional 15-megawatt slow generators to replace Power Plant 2, which currently has only 7-megawatt capacity.

Further, the winning contractor would also be asked to consider burning heavy fuel rather than more expensive diesel, which is currently used at the CUC power plants.