KUTh Energy asks government of Northern Marianas to honor successful bid

KUTh Energy asks government of Northern Marianas to honor successful bid View to Saipan, Northern Marianas (source: flickr/ p_jolo, creative commons)
Alexander Richter 22 Oct 2012

Australian KUTh Energy is asking the government of the Northern Marianas to honor its compliant and successful bid for an RFP for geothermal exploration on Saipan financed in parts by a U.S. Department of Interior grant.

Local news from the Northern Marianas reports that the Managing Director of Australian KUTh Energy has “asked the Fitial administration to honor an intent to award letter it issued to the company earlier this year.

Earlier this year the company won a tender for drilling a geothermal exploration well in the Commonwealth of the Northern Mariana Islands, a U.S. territory (similar to that of Puerto Rico) in the western Pacific region, North of Papua New Guinea and West of the Philippines.

Now it seems like the local government has cancelled that project for which it received funding of $1.2 million from the U.S. Department of the Interior. It now seems to favor new diesel-based power generation, which is – looking back at recent historic oil price data, as well as other island states’ efforts to become more independent from imported oil or diesel for power generation – surprising … to put it diplomatically.

The local government has recently raised its concerns about the renewable energy based RFPs it had issued and in particular the geothermal concession it intended to award to KUTh Energy.

It is strange to issue a Request for Proposals and then announce the intent to award it, and now take a complete u-turn as highlighted by KUTh’s Managing Director, David McDonald.

In a release, he stated that it is important for the government but also local media to keep the facts straight, referencing the government’s stake that the RFP had not been aimed to provide a full development license.

McDonald referred to a clause on page 1 of the administration’s RFP, which stated: “The government will provide an exclusive concession to develop geothermal power and sell the electricity to the grid. However that concession will depend on adherence to a mutually agreed-to plan with a timeline and clear milestones. Failure to keep to the timeline and reach the milestones may result in the loss of the concession.”

Now the government doesn’t see the RFP for building a geothermal plant “will serve the best interests of the commonwealth, at least for now”… and that “only drilling and exploring the island for geothermal potential” was issued and “not to generate power right away”.

It seems like that the local government didn’t do its homework prior to inviting RFPs or – and this is more likely – that political interests seemed to have gotten into the way favoring now a diesel-based power generation project, that clearly cannot be in the long term interest of the commonwealth’s people.

Source: Marianas Variety