April 30, 2012

By Bill Jaynes
The Kaselehlie Press

April 24, 2012 Peilapalap, Pohnpei, FSM-During a private interview this afternoon from questions The Kaselehlie Press presented in advance by his request, Pohnpei's Governor John Ehsa did not mince words on the topic of Pohnpei's power crisis.

He said that he called the current special session of the Pohnpei State Legislature so that decisions could be made on several measures including the PUC bill that The Kaselehlie Press reported on in its last issue that would give him the power to dismiss PUC's entire Board of Directors.

"It wasn't even reported out and I submitted it over a month ago," he said. "And after no action I called the special session, hoping they would take it up, at least give me a decision and give me an indication on what to do next."

"The non-action puts me in a stalemate because I want to continue to work with them along the way, bring them along so that I'm not doing anything that they don't like, and this bill was a compromise between declaring an emergency and not doing anything."

We asked him if he intends to dismiss the PUC Board if the bill passes. He answered with one very direct and hard to misunderstand word, "Absolutely!"

The Pohnpei State Legislature passed a resolution during Governor Ehsa's first administration that gave him the power to work with PUC to find a solution. It was on the basis of that resolution that he established an energy task force.

He said that if he had declared a state of emergency, which he has not done he would have had the power to work around PUC.

"The real problem with PUC is really not the generators because generators are commodities that can be purchased. But audit report after reviews after reviews have indicated the lack of fiscal responsibility, management of PUC. The lack of maintenance at the power plant is a universal (comment) from all the visitors who have come to look at the situation so that they can provide their own proposals on how to resolve, all of them have said, you know 'Those generators must be replaced.' There is no more hope to maintain what we have. It's just going to be too costly. It's gone too far."

We asked the Governor why he would dismiss the board and who he would put on the board if he did so.

"Basically the board has not been supportive of this administration. A good example is the hydro, the proposal to rehabilitate the Nan Pil Hydro plant. It was unfortunate that they didn't want to cooperate with my intention to kind of do things a little bit differently; bring in private investment to operate the

Nan Pil Hydro plant. They would sell the power to PUC. PUC would put their money on it and sell, thereby reducing the consumption of fuel and hopefully reducing the cost of power to the public.

"Unfortunately, I really do not know the reasons that they didn't want this venture to go forward but they did not want to go forward. They refused to furnish the keys to the private company so they (could) begin. When I asked for the keys they refused to give (them) to me.

"Rumor on the street that I hear and in the sakau bars and elsewhere is that I was going to get rich," he said with eyebrows raised.

We told him that we had heard that rumor as well and asked him if he was saying categorically that was not happening.

"I don't see how and my regret is that perhaps they don't really know me because historically, for 23 years I lived outside of Pohnpei prior to 1995, and moving to Pohnpei I immediately worked for the National Government so, there was really no involvement at the State level for me except when I became Governor. That's the only explanation I can give as an excuse is that they really don't know who I am, and therefore there was that suspicion that I was going to get rich….

"Anyway, the lack of cooperation of the board is the reason I would like to replace them. I will replace them with people who we can work together."

He did not name names.

If his proposed bill passes in the Pohnpei State Legislature, Governor Ehsa said that he will definitely renew his efforts to rehabilitate the Nan Pil Hydoelectric plant.

"I will renew that effort to do the Nan Pil AND Madolenihmw AND Kitti because the potential for us is great. It's really so sad that we are not taking advantage of this God given resource," he said.

"The latest word from that company (the company with whom he had signed an MOU to rehabilitate and operate the Nan Pil plant) is, as long as the current management and board of PUC exists they will not do business with PUC. And again, that's why it's important that some restructuring take place to attract companies and donor assistance, loan assistance. Any kind of financial assistance will not be given to PUC at the current structure and management," he asserted.

Governor Ehsa confirmed that the State has been in negotiation with FSM Petroleum Corporation (FSMPC) as a possible power supplier. He said that though the MOU signed by the State Government, PUC, and FSMPC that he announced in a press conference a year ago has technically expired, in February the MOU was revived by leadership. The energy task force has completed a report on a recommendation on a "way forward" based on the expired MOU.

"So the task force has recommended and reserved three Caterpillar containerized 1.1 megawatt generators. They're in Los Angeles as we speak…they are set aside awaiting payment. FSM Petro has mobilized between $4 and $5 million as necessary to purchase these generators. Once the generators arrive they will be operated by a new company (separate from FSMPC or PUC) that would provide the power to PUC."

"Now, FSM Petro or the leadership can look at FSMPC partnering up with a private company to operate a new company. It would still be a public corporation but perhaps contracted out and over time locals could be trained to man it."

He said that other outside companies have been contacted and have expressed interest in operating a power plant in Pohnpei.

"FSM Petro, because it is our own company, that's our first choice. However, there are other companies. We do have at least three proposals for companies to come in under that same scenario of providing power and selling kilowatt hours to PUC for PUC to distribute.

"So while FSMPC is now being looked to for the initial financial support for the emergency need that we have, the task force report recommends long term investment in power generation capacity of up to 12 megawatts," he said.

He said that Pohnpei law allows for private generation of power but that distribution is limited to PUC.

He said that the rumor that at least one Chinese company with whom he has had contact has expressed an interest in stepping into the Pohnpei power market is true.

"One of the companies and perhaps the first company that I initiated discussion with on the possibility of stepping into Pohnpei and generating power is called Temis. It's actually a Taiwanese power company that is already in Guam generating power and managing GPA (Guam Power Authority) and so I thought that since they're already in the area that I would talk to them. They are very much interested in doing the same thing here in Pohnpei."

We asked the governor how much if anything he know about generators that were supposedly "donated" to PUC. "I have also heard those rumors. I have not been informed officially by CFC nor PUC of these generators arriving as donated," he said.

"I know that if (they're) from CFC there is also an added concern because Pohnpei State is a shareholder of CFC. And there was a letter that I sent [to CFC] on August 19 of 2010 requesting $1.5 million. That letter has never been responded to, however the rumor has it that it is based on those letters that they decided to not respond to me but to deal directly with PUC and I have yet to be briefed on what the specifics of these generators are; whether the purchase of the generators are going to affect the share values of Pohnpei State-stake at CFC." He said that he and the members of the Pohnpei State Legislature have a lot of questions regarding the major purchase by CFC.

"There is also "unclarity" about what commitments have been made by PUC because there is nothing really clear. Rumor has it that one (of the generators) PUC will buy, and if so I don't know what authority was used to commit funds because there was never a purchase order or any such thing like that. But some of these issues related to the proper purchase of these quote unquote donated generators, we are still looking into them, he said.

"I have not officially accepted them because I do not know the effect on our shares and I do not know how this decision… as a shareholder of CFC, I know that they operate as a business…but there was never a communication back in response to my letter that 'this is how it's going to happen.' As of today, no explanation from PUC or CFC to the Governor or the Legislature as to…(what the status of those generators is.)

He said that he has no knowledge of PUC having installed either of the generators.

"They (PUC) are not telling me anything. I know that I met with the task force which they are part of. PUC was here, Acting Manager, and one board member and I told them not to touch those generators until it is made absolutely clear what they are. Because people are saying they are donated. We do not believe, because how can we donate to ourselves? Because CFC is owned by Pohnpei State as well."

He said that he wasn't absolutely certain at the moment, how many shares of CFC Pohnpei State owns but he thought when pressed that the percentage was 49%.

He said that former Governor Johnny David is the chairman of the CFC board.