Consortium opposes revival of 80-MW power project

An attempt by lawmakers to restore the mothballed 80-megawatt Saipan power project is courting yet stiff opposition as at least two leading bidders have urged Gov. Pedro P. Tenorio to veto their measure due to questions on a provision that could eliminate competition.

The consortium of Tomen, Singapore Power, Alsons and Tan Holdings Corp. wrote a letter to the governor to lobby against passage of Senate Bill 12-19 which is pending before his office for approval.

The move followed similar action by Saipan Power Partners/Hawaiian Electric Inc. which appealed last week to Mr. Tenorio to junk the legislation it viewed as favoring front-runner Enron over the others despite it having a “more costly” bid.

According to Joseph C. Nocos from the Tomen Consortium, Section 7 of the bill implies that its offer, as well as those from other bidders, will no longer be eligible as this provision requires installation of only low-speed, diesel-power generators in the proposed plant.

Enron, which received the highest scores in an independent evaluation conducted by private engineering firm Burns & McDonnell, is the only one proposing such specifications, while the consortium and SPP/HEI offer medium-speed engines.

Mr. Nocos said the use of low-speed engines, depending on project size and application, may in fact be more costly than medium-speed engines, noting that the consortium’s bid is cheaper by $23 million over a 25-year contract compared with Enron’s offer using low-speed generators.

“If the bill is signed into law, it will essentially award the project to only low-speed engine proposed and giving little consideration to the price or the overall project cost to CUC and the CNMI,” he said in the letter to Mr. Tenorio dated March 2.

Without bias

While supporting efforts to revive the 80-MW power plant abandoned in January by the Commonwealth Utilities Corporation, the consortium stressed it should be done without bias to other bidders after their offers have been revealed and made public.

“We believe CUC and the CNMI government could achieve the overall objective of providing sufficient power generation capacity even on phased installation, by addressing the proposals submitted under [a request for proposal],” said Mr. Nocos.

If it becomes law, SB 12-19, sponsored by Senate Floor Leader Pete P. Reyes, will force the government-owned utility corporation to adhere to the original plan of the RFP issued three years ago. It will also nullify its decision to cancel the project in favor a new round of bidding for a 60-MW power plant for Saipan.

Lawmakers had passed the measure after the CUC board ignored their pleas to work out a compromise on the project that has drawn controversies for the past two years and attracted attention even from U.S. legislators.

Top bidders Enron, the Tomen Consortium, and SPP/HEI are vying to win the $120 million contract — touted to be the biggest deal ever in the Commonwealth’s history — but a new bidding planned by CUC would bring the project back to square one.

Mr. Reyes’ bill is an attempt to curtail such action and to declare a public policy on Saipan’s need for a power plant with such magnitude, while allowing flexibility for the utility corporation to phase in a smaller-size generator.

CUC has voted to install a 60-MW plant, citing assessment made by Burns & McDonnell on the island’s power demand which has declined in recent years amid the economic difficulties confronting the CNMI.