CUC-Aggreko deal still on

The Commonwealth Utilities Corp. has assured Aggreko International Power Projects that their deal for temporary power is still on, even though the funding source for the contract remains uncertain.

CUC executive director Antonio S. Muña in a letter to Stephen Dunlop, Aggreko’s Singapore-based sales director, said that CUC “is still interested in leasing temporary power units” from the company.

Muña said CUC expects to make the initial contract payment of $1.5 million by the end of this month.

“Please continue to hold necessary inventory to ensure that you can deliver required units pursuant to the contract delivery timeline of 36 days,” Muña said. He noted that the delivery timeline may have to be extended if payment is made after July 31, 2008.

Yet it remains unclear where CUC will get the money to pay Aggreko. CUC’s plan to borrow money from the Marianas Public Land Trust has been put on hold due to legal issues. The leadership at the House of Representatives has expressed willingness to appropriate funds to CUC, but no bill has yet been introduced in either house of the Legislature.

Gov. Benigno R. Fitial yesterday urged the Legislature to pass legislation earmarking interest and dividend income of MPLT investments for 2009 and 2010 to CUC. If such an earmark is passed into law, CUC will get approximately $3.4 million to pay Aggreko and settle debts to other contractors.

MPLT, which is tasked with investing money collected from the use of public lands, remits approximately $1.7 million of income a year to the central government for appropriation by the Legislature.

“As you know, with the record rise in fuel costs, CUC is struggling to maintain sufficient operational funds and the CNMI government is in no position to subsidize CUC operations, given the sharp decline in government revenues,” the governor said.

“I know you fully appreciate our local community’s enormous frustration with frequent power outages and I trust you will consider this proposal to finally resolve our power crisis for the Commonwealth’s benefit,” Fitial added.

CUC has hired the U.K.-based Aggreko International to provide 15 MW of temporary power to Saipan, which is suffering constant blackouts due to the poor condition of its power plant. Under the contract, CUC must make an initial payment of $1.5 million before Aggreko ships the rental generators. The contract costs a total of $6 million.