Lack of funds deters CUC SO2 projects

The Commonwealth Utilities Corp.’s continued lack of funds deters the agency from moving forward with upgrading its pipelines, installing new tanks, and others projects mandated by court orders.

On top of this, CUC said that the unavailability of specialized contractors, materials, and equipment in the region “continue to be a cause for concern.”

For the last four years, CUC has received grant funding from the Department of the Interior’s Office of Insular Affairs to help it resolve these projects, totaling some $10.7 million. Majority of these funds were use to complete numerous projects under stipulated order 2.

“CUC’s financial situation is dire. With outstanding payments from large consumers and with debt servicing difficult, choices for the corporation remain limited,” CUC said.

According to CUC’s SO2 submission to the court, about $2.23 million is needed in fiscal years 2014 to 2015 for its priority projects but the only available funds left is $117,000.

CUC’s SO2 projects include replacing a fuel tank in Lower Base, power plant waste handling, facility drainages at Saipan’s power plants 1 and 2 and Rota’s power plant, improvement on fuel trucking, Power Plant 4, and SO2’s project coordination and administrative costs.

Delays

Two major projects in the works are the Tank 102 replacement project and pipeline replacement.

According to CUC, about seven months were lost due to protests and inability to complete the procurement and contract award for the Tank 102 replacement project.

Additional requirements for a geotechnical probing (foundation design verification) and redesign have also resulted in further delays.

“Despite CUC’s consultant’s continuous guidance in support of the contractor’s activities, the tank erection contractor has been unable to produce proper fitting and welding activities in completion of the tank,” CUC said.

This led to the termination of the contractor for default and an alternate contractor procurement is underway.

For the pipeline construction, an alternate routing of about 1,000 feet due to the potential contamination was only recently finalized.

According to CUC, a design and project management firm was awarded the contract after being approved by the U.S Environmental Protection Agency.

“This process involved additional effort by CUC who had to go through a detailed procurement, contractual negotiation with the construction contractor,” CUC said.

About $3.5 million is needed to complete the pipeline project.

“External financing and loans require decisions and guarantees required from outside CUC. Increasing diesel fuel costs and support to the water division from the power division also adds to the overall constraints,” CUC said.

Highlights of CUC projects

Despite these challenges, CUC executive director Alan Fletcher said that CUC has gone through many positive changes and improvements that benefit its customers.

He said the increased number of water service hours to the community maximizes the flow of water, reduces water theft, and facilitates the repair of leaks.

Fletcher also said that the Well Isolation Project, W8 Sewer Lift Station Reroute, and Sadog Tasi Wastewater Rehabilitation Project enabled CUC to meet stringent wastewater discharge permit requirements that protect the ecosystem.

“We have also made great progress in power generation, and transmission and distribution systems over the last few years,” he said.

Fletcher also noted CUC’s retrofitting of engines 5, 6, 7, and 8 at Power Plant 1 with new turbochargers and a rebuild on other engines.

“While both [oil pipeline and Tank 102] projects are vital, the added pressure on operational funding continues a practice of short-term crisis management to the detriment of consumers and in CUC’s ability to meet stipulated order requirements,” Fletcher said.