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  • By Pacific island Times News Staff

GPA contract awarded to company involved in Cabras plant blast

Ridgell urges rejection of power plant deal

After a cursory review of the proposal for a 198-megawatt power plant, Sen. Clynt Ridgell has found that the contract for the new power plant has been awarded to the company that was in charge of the Cabras 4 power plant when it exploded.

“This is extremely concerning. Why would we award a contract worth billions of dollars to build and operate a power plant to a company that was operating the Cabras power plant when it exploded? It’s because of this I am calling upon the CCU to deny the approval of this highly questionable contract.”

The contract in question was awarded to Korea Electric Power Company or KEPCO.

KEPCO and the Korea East-West Power Company or KEWP have entered into a consortium agreement for this project. The bid documents state that KEWP is responsible for 40 percent of the bid. KEWP is the same company that was operating the Cabras 4 power plant when it exploded. GPA filed an insurance claim after the explosion and was awarded $125 million for the explosion from its insurer.

GPA has said this $125 million will go toward helping pay for the construction of the new power plant.

“GPA was compensated $125 million for the power plant that blew up under KEWP’s watch; now, that $125 million is going to be used for the construction of a new power plant that KEWP will help to build, operate, and maintain. Something is not right here.”

“GPA has awarded a contract to a company that was not only in charge of the Cabras power plant when it exploded but is now being sued for that very explosion. Why would we reward a company that was in charge of the power plant when it exploded? Why would we award a new contract for a new power plant to a company that is being sued for the explosion of the Cabras power plant? This whole deal smells foul.”

According to court documents the insurance company is suing KEWP for breach of contract and gross negligence. KEWP had the contract to manage operate and maintain Cabras 4.

The suit alleges that KEWP is at fault for the explosion of the Cabras 4 power plant and it states that “an investigation determined the engine explosion, fire, and resulting damage occurred as the result of work performed by KEWP.”

In addition to this the suit alleges that the five GPA employees at the power plant noticed something was wrong with the generator and attempted to notify KEWP of the problem but the “KEWP operations manager could not be reached” despite the fact that this KEWP manager “was required by the contract to be on-call at the time. ”

During GPA’s oversight hearing in May, Ridgell asked CCU Chairman Joey Duenas about this investigation and whether or not the cause of the explosion was determined. Duenas refused to answer responding only by saying that the issue was “moot.”

“After finding out that the company that was awarded a contract for a new power plant is the same company that is being sued for the Cabras explosion, I do not believe the issue is moot.”

Officials of the Guam Power Authority, Korean Electric Power Corp., and LG CNS Consortium take a group photo after the sigining of a renewable energy contract Aug. 24, 2018. Photo courtesy of GPA.

On Aug. 24, 2018, GPA entered into a renewable energy contract with KEPCO and LG CNS Consortium as part of its phase II renewable acquisition of a 60MW project.

“GPA ratepayers are the beneficiaries of this utility scale renewable project to include the benefits of solar energy available at rates that are affordable, stable and not subject to world oil price fluctuations,” GPA general manager John M. Benavente said following the contract signing.

GPA said in the first five years of operations, the renewable energy production is estimated to bring $43 million in savings that will be passed on to ratepayers through their monthly energy statement as part of the GPA’s levelized energy adjustment clause rate.

GPA earlier signed a separate 60MW power purchase agreement with Hanwha Energy Corp. to construct a facility in the Dandan area of Inarajan.

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