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SCC favors partial power privatization
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Posted on Nov 21 2005
The Saipan Chamber of Commerce favors the privatization of power operations and management only, as opposed to the existing plan of awarding a 20-year contract to an independent power producer.
In a recent letter to government leaders, SCC recommended that the privatization contract should be limited to operations and management cost only.
“This would not commit the CNMI to a 20-year contract, and in addition would not commit the CNMI to purchase additional power production that may, in fact, not be needed,” said SCC president Alex Sablan in a July 21 letter to Gov. Juan N. Babauta, House Speaker Benigno R. Fitial and Senate President Joaquin Adriano.
Sablan said the O&M contract should be modeled after that of Guam Power Authority’s “power management” privatization for its Cabras 3 & 4 Power Plant that costs $1.6 million to $2 million a year, instead of the estimated $18 million under the current IPP contract.
In the letter, Sablan said that the proposed 20-year contract “is too long for the IPP contract.”
He said that, as cited by Harris Group, it is expected that oil will no longer be an economical fuel by the year 2015 or nine years from now.
“We don’t want to commit the next generation to this unwarranted obligation,” said Sablan.
The Babauta administration recently said it may no longer pursue the existing Request for Proposal for the privatization of power plant 1.
In a press briefing last week, Gov. Juan N. Babauta said the RFP requires major revisions since the government has already began the rehabilitation of the power engines.
An RFP has to be cancelled first if new changes would be introduced.
CUC executive director Lorraine A. Babauta said that as of now the RFP “is not officially cancelled.”
The original RFP calls for the takeover and repair of the power plant engines, among others.
Authorities said that since May this year, some $3 million has been spent for the repair of engines for the power plant.
