India firm offers $60M to solve power crisis

Ras Tek Group, a major energy company operating in India, presented the Fitial administration and the Legislature yesterday with an investment offer worth over $60 million to solve the CNMI’s power crisis.

Gov. Benigno R. Fitial, some Cabinet members, lawmakers led by Senate President Pete P. Reyes and House Speaker Arnold Palacios listened to the closed-door presentation of Ras Tek Group officials and representatives in the governor’s conference room.

Ras Tek officials were not available for interview after the presentation.

Headquartered at Navi Mumbai with branches and service stations in Delhi and Chennai in India, Ras Tek Group specializes in diesel/gas engine-based power plants and the marine industry.

Rep. Victor Hocog told Saipan Tribune that Ras Tek Group presented their plans to help the Commonwealth resolve its power crisis.

“We are concerned about the affordability of the power rate for every paying customer. And this is one company that comes in and is trying to offer us a BOT [Build, Operate, Transfer] concept. But we have a law that is already in place to privatize the Commonwealth Utilities Corp.,” said Hocog, who chairs the House’s Public Utilities, Transportation, and Communication Committee.

The congressman said it all depends whether they can come to an agreement on the affordability and the reliability of the company’s power generation.

Hocog disclosed that Ras Tek is offering non-fuel costs of 9.5 cents per kilowatt-hour.

“But with the fuel costs, it will definitely rise up to probably 17.6 cents. They will [also] have to comply with EPA [Environmental Protection Agency] standards of providing power under the Clean Air Act and that would probably add a couple more cents to the rate,” he said.

Hocog said under the proposal, the CNMI government will bear no cost to install the power engines other than a commitment to a 25-year contract agreement.

“I believe that fuel will be provided again by the government, and I’m not too keen on that kind of concept,” he said.

Ras Tek, he said, proposes to build or replace the engines at Power Plant 1 and immediately provide by September 2009 the 46 megawatts needed to power the entire island of Saipan, replacing the Aggreko generators and its possible contract renewal.

Press secretary Charles Reyes Jr. said that Fitial obviously wants everybody on board as he is not just going to arbitrarily decide on his own what is in the best interest of the Commonwealth.

“He [Fitial] wants to get a consensus. That’s why he’s trying to build a consensus as to what we are going to do and what’s the best option in terms of the energy crisis right now,” Reyes said.

The Ras Tek proposal, he said, seems to be a very promising option because the company is one of the largest, if not the largest, conglomerate in India.

“India has highly skilled technical, professional people. They are very credible and they are certainly very well capitalized. And so the governor feels we’re very fortunate that they are interested in such a small island community with limited power generation capacity,” Reyes said.

Rep. Christina Sablan said she believes it might be premature at this point to accept any proposals and sign any deals.

“It is a proposal worth considering. But I do think that we should absolutely do our own diligence to ensure that we are getting the best deal for the people,” Sablan said.

“I don’t think that we should be jumping to sign any contract at this point. I think we have to really make sure we do our homework,” she added.