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Muña wants lawmakers on the same page in privatization plan
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Posted on Oct 12 2008
The Commonwealth Utilities Corp. plans to talk with the Legislature about a just-passed law calling for the sale of the CNMI’s power system.
CUC executive director Antonio Muña on Friday said the utility wants to meet with lawmakers before moving forward with the privatization law, which requires CUC to issue a bid for the sale of the power system for at least $250 million.
“We need to go back to the table with the Legislature to get a clearer understanding of how they want to approach this process. We do have questions as to whether this is a realistic situation [they have put us into],” said Muña.
At the center of CUC’s concerns are the methodology by which the legislation requires the privatization to be done, and the $250 million price tag for the power system.
“Once we start this [privatization] process, we don’t want to have it stopped. So we really got to think this through from beginning to end. We want to make sure we’re on the same page,” said Muña.
The Legislature passed the privatization law over the governor’s objections. Under the bill, CUC must privatize its power system through a bidding process, as opposed to a “request for proposals.” The legislation also provides an arbitrarily set price tag of $250 million that prospective private sector buyers must pay in order to acquire CUC. Further, it gives CUC the power to settle disputes with the Commonwealth Development Authority by issuing $45 million in preferred stock.
Gov. Benigno R. Fitial had vetoed the bill, saying it could lead to higher utility rates. Any company that ends up buying CUC, he said, would try to recover the $250 million and other purchase costs by passing them on to utility consumers.
But proponents of the measure maintain that the legislation is urgently needed to avert an emergency declaration by the governor that would result in another sole source privatization contract. They also tout the prohibition of “requests for proposals” in the procurement process as one of the law’s strengths. They note that a bidding process will prevent protests that hampered previous privatization efforts.
