This article has been updated to reflect additional details regarding
the kw per hour rate.
Questions have been raised over a potential 30-year contract between the Republic of Palau and a foreign energy company following the Senate’s late-term passage of a Resolution endorsing the contract on November 30, search 2012. The contract, over its term, is said to be worth hundreds of millions of dollars. The Attorney General’s Office claims they have not yet reviewed the contract.
The Contract was initially signed by outgoing President Toribiong and thereafter, transmitted to the legislature. Attempts to contact President Toribiong were unsuccessful as he is not currently in Palau and his press secretary said he was unfamiliar with the details of the project.
The Senate Resolution approves Earth Energy Company’s (“EEC”) interest in building and managing up to 10 megawatts of solar power for Palau over a 30 year period. The Resolution was introduced jointly by the President’s brother, Senator Joel Toribiong and Senator Paul Ueki, who lost his re-election bid. The Senate did not hold any public hearings on this project and issued no Committee Report with its Resolution.
The Senate Resolution stated that the Secretariat of the Pacific Community (“SPC”) supports the contract; however, a preliminary assessment indicates there potential practical difficulties with the project. The preliminary assessment of the contract was prepared by an energy specialist and it notes, at the outset, that Palau’s Request For Proposal for this project contained “some unusual requests in the Scope of Work.” There are also concerns that conflicting documents offer regarding the rate. While one states the rate would be 39 cents per kilowatt, another requires a daily payment of $5,460 which under the reasonable power generation capacity would produce power closer to 56 cents per kilowatt. The assessment suggested that EEC’s estimates be verified by independent consulting engineers appointed by Palau’s utility company and indicated that the Palau Energy Office and National Energy Committee were not consulted prior to the selection of EEC.
Suspicion is also swirling about the validity of the company that calls itself “Earth Energy International Co., Ltd.” and it was suggested that the Ministry of Finance turn over any information on this company to the Palau Energy Office and the National Energy Committee. The Senate Resolution claims EEC is located in Belize, Central America, others say it is a Hong Kong and Taiwanese company. OTV has been unable to find any information regarding the existence of Earth Energy Company.
OTV contacted Palau’s Public Utility Corporation (“PPUC”) and a representative familiar with the project explained that PPUC’s current grid cannot handle such solar generation and this project would require a major overhaul, at significant cost. Further, it was their understanding that a power-generating corporation could only be established in Palau with PPUC’s consent. PPUC has not consented to the project.
If the contract is approved, but not acted upon, the Republic of Palau may be liable for millions of dollars for its default.