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Emergency fuel purchase OK’d
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Posted on May 05 2005
The Commonwealth Utilities Corp. authorized its management yesterday to purchase fuel on an emergency basis pending the signing of a new fuel supply contract.
The CUC board of directors adopted this resolution, as it put off making a decision on the plan to scrap its request for proposals for a new fuel contract.
According to the resolution, the special authorization given to management will be effective for an indefinite period of time.
“The [CUC] currently does not have a contract with any supplier for the provision of fuel necessary for the operation of its power generation equipment. CUC must, until a contract is executed, purchase fuel through individual purchases with payment required at the time of delivery,” reads a portion of the resolution.
CUC’s contract with Mobil Oil Marianas expired on April 30, 2005.
Several months before the contract expiration, the utility firm sought proposals from companies interested in supplying fuel to CUC for the next two years. Mobil was the only company that submitted a proposal.
Finding Mobil’s price quotation too expensive, CUC is now discussing the possibility of scrapping the bid and putting out a new one.
The board, however, deferred action on the plan yesterday, giving management one more week to negotiate with Mobil.
CUC chair Francisco Q. Guerrero said Mobil has shown willingness to renegotiate rates with the utility.
Guerrero disclosed earlier CUC would be paying $70 million annually for fuel if it decided to take up Mobil on its offer. This is over 80 percent of CUC’s budget for fiscal year 2006, which totals $83.29 million.
In its FY 2006 budget, CUC allocated $51.56 million of the total budget for fuel. The fuel budget represents an increase of $16.51 million or 46.8 percent, as compared with FY 2005, and an increase of $20.70 million or 66.6 percent as compared with FY 2004 budget.
