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‘CUC could have saved on fuel cost’
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Posted on Jun 21 2004
The Commonwealth Utilities Corp. could have saved millions in fuel cost had it chosen the contract offered earlier by the Pacific Petroleum Corp., according to its chief operating officer Richard Reddy.
“Now they’re complaining about fuel expenses. CUC made the wrong decision. It picked up the wrong supplier,” said Reddy.
Reddy, who represents SK Shipping, a Korean firm that had proposed to supply fuel to CUC, said that CUC could have saved $1 million a year with them compared with Mobil Marianas, which gets its fuel from Singapore.
The CUC denied SK’s proposal last year for “unresponsiveness,” and chose to again award the fuel contract, amounting to $72 million, to Mobil.
The utility firm, which allocated $31 million for its fuel expenses for FY 2004, recently said it would overshoot its budget by up to $8 million this year due to increases in the price of fuel worldwide.
Reddy said that even with the international price adjustment, CUC would still be saving if it had chosen SK Shipping. “It would not have gone up so much,” he said.
CUC said it found that SK’s proposal was “non-responsive” to CUC’s Request for Proposal and was therefore “not susceptible to evaluation.”
CUC in particular, said that SK did not provide for delivery to Tinian and Rota and the price for such service, nor did it accept CUC’s payment terms.
Reddy said that SK’s proposal was qualified for evaluation and accused the CUC of “unfair business practices.”
He had said that CUC’s awarding of a two-year fuel supply contract to Mobil was made without evaluating SK’s proposal first.
Reddy alleged that it was the CUC that failed to provide the information it had asked for so that the company could provide a “responsive” quote.
SK said that without getting statistics for Rota and Tinian from CUC, it decided to use Saipan rates for the other two islands, “a large risk in an effort to bring lower fuel costs to the CNMI.”
SK’s protest with CUC and later with the Office of the Public Auditor was denied.
