$200M renewable-energy bid raises ‘red flag’

May 7, 2013 by  
Filed under Green Energy News

LAWMAKERS interviewed by the Variety expressed doubts about the viability of a $200-million renewable-energy proposal that would involve Kenneth Mahmood.

Mahmood is the president of Allegiance Capital Corp., the “financier” of the controversial $190-million power-purchase agreement that led to the impeachment and resignation of then-Gov. Benigno R. Fitial.

Green Global Solutions president and chief executive officer Chris Thunken and managing partner Lars Jorgensen told lawmakers during a meeting in the Senate chamber yesterday that they have no ties with Saipan Development LLC, the shadowy firm that was behind the no-bid power plant deal.

But Jorgensen said Mahmood’s Allegiance Capital will finance their renewable energy project and is interested in developing Lower Base, the proposed site of the now-shelved power-plant project.

“Allegiance’s primary interest is to develop Lower Base, but they are committed to us,” Jorgensen said.

Mahmood toured the Commonwealth Utilities Corp.’s power plant in Lower Base yesterday and joined Green Global Solutions’ initial presentation in the Senate chamber on Monday.

He told lawmakers that Allegiance was involved in financing only, so it did not matter what type of energy was being proposed — all Allegiance would do was finance the project.

Jorgensen said their proposal to provide Saipan with 30 megawatts of wind and 10 megawatts of photo-voltaic energy would not require the relocation of the power plant in Lower Base which Mahmood wants to turn into an “industrial park.”

Green Global Solutions, Jorgensen said, will offer renewable energy for 27 cents per kilowatt hour for 25 years. The project, he added, will create more than 1,000 well-paying jobs.

CUC currently charges 32 cents per kilowatt hour.

When Speaker Joseph P. Deleon Guerrero, IR-Saipan asked how Green Global Solution’s plan is tied to Mahmood’s interest in developing Lower Base, Jorgensen said there are no ties, but added that Allegiance’s plan for Lower Base will not happen without Green Global Solution’s renewable energy project.

He said they have been working on the renewable energy plan for six months already, and have been talking with European financing institutions about backing them. Since they wanted to talk to financers interested in investing in the CNMI, they established a link with Allegiance.

“We are satisfied that Allegiance is the right partner,” Jorgensen told lawmakers,

Deleon Guerrero asked: “Will Allegiance finance your project even if it doesn’t get Lower Base?”

Jorgensen said yes.

For his part, Thunken said the Allegiance is just into financing and is not interested in running power plants. “They are just money people and they make their decisions based on [what] makes sense for this territory,” he said.

“It took us a good while and we found Allegiance which had previous plans to do something here…. They also will back our proposal with due diligence and find others to [also] provide backing.”

Good for NMI

Thunken said their proposal will address the CNMI’s power-generation concerns. He asked lawmakers to look at their proposal carefully, adding that they will also invite hotels and other businesses to hook up to the CUC grid once the renewable energy is integrated into the system.

Phase 1 of Green Global Solutions’ project involves negotiating a power-purchase agreement with the CNMI government. That is why they are here to talk to the people who will make the decision, Thunken said.

Phase 2 involves the construction of wind turbines, a photo-voltaic facility, the installation of battery chargers and grid stability as well as the establishment of an industrial park. A wind farm will be constructed on Tinian.

Phase 3 is the actual operation and expansion of the project.

Thunken told reporters that they need the CNMI government’s help.

“We have worked and done research and we have come back with what we see as a very nice integrated solution for the benefit of the people here in the CNMI,” he said. adding that every time they come here they see another business establishment shutting down which is “sad.”

“I am married to a Pacific islander; my wife is from Samoa. It’s a similar situation over there. We talked about dollars and cents here but, really, what I’m interested in is the socio-economic solution,” he said.

Through their project, he added, “certain things have to happen but it could lead to the creation of a good industrial park and the creation of a thousand jobs. But the power solution above everything has to be addressed.”

He said they have a private utility operator standing by and ready to step in if CUC is privatized.

He said they have met with CUC officials before, but they will meet again with acting executive director Alan Fletcher.

“As part of the solution, we would like this privatization of CUC to happen,” Thunken said.

Red flag

Deleon Guerrero told Jorgensen and Thunken that it was not the first time that CNMI leaders have listened to investors offering renewable energy. Lawmakers, he added, already know that a wind turbine, even under ideal conditions, can only provide 30 percent of what a power plant needs to produce on Saipan.

He also reminded he presenters that the CNMI government is not going to enter into any deal without a full disclosure of the proposed project’s entire plan.

The Legislature, he added, will not approve any agreement without weighing it and considering other proposals.

He recalled that when then-Governor Fitial signed the controversial power-plant agreement, other leaders in the commonwealth were not informed about it. The deal, the speaker said, turned out to be a bad one and not beneficial to the people of the commonwealth at all.

Senate President Ralph DLG. Torres, R-Saipan, said Green Global Solutions presented a “very good alternative-energy proposal,” but added that the involvement of Mahmood in their project has “raised a red flag.”

“The concern that we have is Kenneth Mahmood’s involvement,” he said, adding that the issue with SDLLC has not been resolved yet.

Rep. Ralph Yumul, IR-Saipan, said Green Global Solutions was “very honest with its actual proposal,” but the involvement of Mahmood is “what makes it a little bit shady.”

“It’s gone sour now but at least they were straightforward about what their intentions are,” he said, referring to Green Global Solutions.

“Right now the red flags are all up. So I am not interested. Their revelation really hurt them,” he added..

Senate Floor Leader Ray N. Yumul, IR-Saipan, said he respects companies that offer renewable-energy proposals, but before they come to the Legislature, the proponents should first talk to CUC, the agency they will have to deal with directly.

He said it is CUC that needs to complete a study on the integration of a renewable energy into the current system.

“So I recommend that they talk to CUC first,” Yumul said, adding that once the utilities agency makes an informed decision, the Legislature can decide whether or not to authorize the public debt to finance the project.

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