Guam to assist NMI in getting cheaper fuel

The Guam Power Authority is willing to help the CNMI purchase cheaper fuel and review its power privatization program, senators said yesterday.

In a trip report to Senate President Joaquin G. Adriano, senators Joseph Mendiola and Diego Songao said that Guam buys its fuel directly from a manufacturer in Singapore and stores it in its own bulk plant.

“GPWA is more than willing to work with the Commonwealth Utilities Corp. in procuring fuel regionally, thus it may additionally reduce the costs of fuel for both,” said the senators.

Further, they noted that Guam uses heavy fuel oil in approximately 95 percent of its generators, which has resulted “in a significant reduction in fuel costs as compared to burning diesel or gas fuel.”

The senators said that Guam has successfully lobbied the U.S. Environmental Protection Agency to burn the heavy fuel “in their facilities without costly compliance.”

“Based on the assumption that if CUC is to convert to heavy fuel oil…CUC will also significantly cut cost in its fuel consumptions. This can be done through lobbying effort by both the CUC and the CNMI government leadership for an exemption from EPA and the installation of CUC-owned fuel facility or leasing from the existing Mobil storage facility,” the lawmakers said.

Heavy fuel oil is said to cost about $40 per barrel while regular diesel, which the CUC currently uses, costs $60 to $75 per barrel.,

In an interview, Songao admitted that both plans—regional purchase of fuel and use of heavy oil—cannot be done in anytime soon.

“We’re not ready to do it now. It’s a good idea to have a regional procurement of fuel because we’re getting it a cheaper price but we don’t have any storage facility,” said Songao.

As for their discussions on power privatization, the senators’ report said that GPA had expressed its willingness to review Saipan’s independent power producer’s contract to avoid mistakes.

“While everyone understood the advantages of privatization, it was concurred that a thorough review must be done before any awarding takes place. GPWA has made the same hasty decision in the past and CUC or the administration should not make the same 20-year mistake,” they said.

“They [GPA] have offered to review any proposal or analysis at a very minimal cost if not for free,” they added.

Mendiola and Songao flew to Guam Monday to meet with GPA chair Simon Sanchez, general manager John M. Benavente, and assistant GM Joaquin Flores.

The CUC is expected to award a 20-year IPP contract in less than two months for the privatization of Power Plant 1 in Lower Base.