Oversight eyed on Saipan power plant • Legislation forbids CUC to scale back 80-MW project

Lawmakers intend to get involved deeply into the controversial new power plant for Saipan with calls for oversight investigation and a legislative policy declaring the need for such a project amid attempt by Commonwealth Utilities Corporation to scale back the initial plan.

House Speaker Diego T. Benavente yesterday raised the possibility of investigating into the project, saying the move to scrap the 80-megawatt will only damage the credibility of the CNMI government.

Likewise, the Senate passed unanimously during yesterday’s session a measure forbidding CUC to downsize the project as well as supporting a phased implementation of the original plan drawn up four years ago.

This move will ensure that the government-owned utility corporation will comply with the recommended size of the new power plant despite an ongoing assessment of the island’s actual power demand based on the decision of the CUC Board last month.”Quite evidently, we need [the 80-megawatt power plant]. I don’t think we need to debate this now,” said Senate Floor Leader Pete P. Reyes, who sponsored SB 11-158 which is now up for House voting.

He also threw support behind the proposed House probe, noting that he broached the idea last September in the wake of speculations that CUC had revised the initial plan.

New study

Utility officials, backed by the Commonwealth Development Authority, have said they need a new study to determine the actual need of Saipan residents and businesses as they cited the economic downturn confronting the CNMI.

The decision came as independent evaluators hired by CUC countered a highly-flawed review conducted by some utility officials that selected Marubeni-Sithe as contractor of the $120 million project.

Burns & McDonnell, a private engineering firm based in Kansas City, ranked three other companies — Enron, the Tomen consortium, and SPP/HEI — higher that the Japanese conglomerate and its U.S. partner after nine months of re-evaluation of all 13 proposals submitted since July 1997.

According to Mr. Reyes, the probe is imminent to shed light on the decisions by CUC which had insisted just months ago prior to the release of the independent evaluation that Saipan would need the project with such magnitude.

“I can’t understand what is the force behind continuing the effort to award Marubeni-Sithe,” Mr. Reyes explained. “There are still moves to do that. I would like to get to the bottom of this. I’d like to know what is behind this.”

Mr. Benavente echoed his concerns as he underscored the need to proceed with the project and comply with the requirements of the initial request for proposals issued more than two years ago.

He pointed out that CUC officials had been pushing the project for a long time to a point that it pressured the Legislature to endorse their choice of Marubeni-Sithe under a proposed measure that was later scrapped on the heels of mounting protests.

“I don’t think the question now is whether or not we can afford it. Something as important as utility like power or water, eventually we will be paying for this,” Mr. Benavente told reporters in a separate interview.

Oversight hearing
He added that he has suggested to the House leadership that if it requires a probe, then this Legislature “needs to call an oversight hearing to make that determination if CUC were to decide to scrap this project.”
Any downsizing plan will also hurt the integrity of the government in projects such as this that need expertise of outside firms, said Mr. Benavente.
He cited as an example the recent termination of the procurement on the proposed desalination plant for Saipan after several companies spent hundreds of thousands of dollars drawing up their bids.
“If we scrap [the power project], we’ve got a lot to lose as far as credibility is concerned,” said the Speaker, casting doubt whether companies will come forward in the future to bid for local projects.
Mr. Benavente, however, vowed to meet with CUC officials to persuade them against changing the project at this time when tourism is predicted to grow again, requiring efficient power supply.
“This is the kind of things that we hear as elected officials. The government needs to communicate to CUC when it starts to make a decision in regards to the power plant,” he said. “The Legislature needs to be involved to make sure that we do the right thing here.”
Burns & McDonnell, which is doing the study, has been given a deadline by mid-December to come up with the assessment that will be the basis of the board’s decision by January 2000 on the much-delayed power plant.
Designed to meet surging power demand on Saipan by the end of this decade, the project is to be constructed through build-operate-transfer scheme under a 25-year agreement touted to be the largest deal ever in CNMI’s history.