CUC privatization RFP ‘dead’

The Commonwealth Utilities Corp.’s Request for Proposal for power generation privatization is almost certainly dead, with government officials admitting yesterday that it “may not go through” as drafted.

“It requires major revisions. The RFP may not go through,” said Gov. Juan N. Babauta during yesterday’s press briefing on power situation.

Short of saying that the proposal is dead, the governor said that when or if the changes are done, it may no longer be acceptable to the proposers since it would be totally different from the existing RFP.

Changes to the RFP require cancellation of the existing one and possible reintroduction of a new one.

CUC executive director Lorraine A. Babauta indicated that the RFP would be cancelled, but she was quick to clarify that right now, “it’s not officially cancelled.”

Gov. Babauta said revisions are needed because the original RFP calls for the repair of the power plant engines. This work, he said, has been done by the government in view of the May 19 state of emergency declaration on CUC.

The emergency declaration stemmed from the “near collapse” state of the power plant engines, lack of a stable fuel supply, and CUC’s lack of finances to sustain power operations.

Yesterday, Gov. Babauta said that the first two situations have been addressed. However, CUC continues to suffer financially and cannot shoulder the operations without subsidy from the government, he said.

The governor said, though, that he personally favors privatization, noting that it remains the best long-term solution to ensure efficient delivery of power services in the CNMI.

“I still believe in privatization. I’ve always felt that it’s the way to go. It will result in efficient delivery of power services to the public. But it’s not solely my idea. We’re working with the rest of the community,” he said.

During last month’s gubernatorial debate, Babauta said that the power plant privatization is no longer a top agenda item of his administration.

“This administration is focusing on providing reliable power. The [power plant] privatization is not a priority of this administration,” he had said.

He maintained that privatization might be an option “in the future.” This reportedly came at the advice of Economist.com, which was tasked last August to review the financial status of the two privatization proposers: Telesource CNMI and Rolls Royce.

The proposed privatization contract, which amounts to at least $60 million, would involve the takeover of the eight-engine Power Plant I in Lower Base, its rehabilitation and upgrade to meet federal environmental standards, and installation of two new 15MW generators. The contract would allow the private company to operate the machines for 20 years.