Scrap 80MW power project

Former Gov. Froilan C. Tenorio yesterday called for the scrapping of the controversial Saipan power project, saying the Commonwealth Utilities Corporation should not award the contract as the island does not need additional power generation.

“CUC should stop it. It should no longer continue,” he said in an interview.

The project, which began during his administration, has ran into trouble since the government-owned utility firm chose Marubeni-Sithe last year to build the proposed plant in a highly-disputed procurement proceedings.

According to the former governor, the initial study recommending the construction of the 80-megawatt plant does not apply anymore because it was mapped out when the local economy was still at its peak.

He said the second study contracted last week by CUC board to reassess the need for this project is too late to justify such undertaking.

“Why should CUC only decide now,” asked Tenorio. “When the economy started to nose-dive, they should have stopped and looked at the situation.”

The former governor also backed recent findings that indicated Saipan’s existing power demand peaks between 60 to 65 MW and that CUC’s current capacity is sufficient to meet this requirement.

“We don’t need (the new plant),” he said.

The utility corporation floated the possibility of scaling back the project last September due to the economic crisis confronting the island, which it claimed has lessened power demand here.

The Commonwealth Development Authority, which has a stake at CUC, also urged the board to review the magnitude of the project as it will entail huge financial liability to the government without customers hooking up with island power.

Last week, utility officials agreed to hire Burns & McDonnell again to undertake an evaluation on the current and future power supply needs on Saipan, as well as an economic and feasibility study on the proposed plant.

The independent engineering firm had completed a nine-month reevaluation of all proposals submitted for the project, ranking Enron, Tomen consortium, HEI/SPP higher than Marubeni-Sithe in the “best and final offers.”

Japan’s Marubeni and its U.S. partner Sithe Energies, Inc. was selected by CUC’s in-house evaluators in June 1998, triggering protests that forced officials to hire independent experts.

The downsizing plan has fueled speculations on the project and top bidders have cautioned CUC against it, noting that the plant will get on line only after three years when the economy has recovered from the crisis.

Designed to meet power demand by end of this decade, the $120 million project was to be constructed through build-operate-transfer scheme in a 25-year deal touted to be the largest ever in the island’s history.