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Pacific Islands Development Program, East-West Center

With Support From Center for Pacific Islands Studies, University of Hawai‘i


CNMI Officials Denounce Saipan Development LLC Claims
Contentious power agreement, shipyard facility criticized

By Haidee V. Eugenio

SAIPAN, CNMI (Saipan Tribune, Dec. 6, 2012) – Rep. Frank Dela Cruz (IR-Saipan) said yesterday that Saipan Development LLC adviser Kenneth Mahmood's claims about the multimillion shipyard facility and sole-source $190.8-million power purchase agreement planned for the Northern Mariana Islands are a "hogwash," while Rep. Janet Maratita (IR-Saipan) said this is the "best possible deal for SDLLC, not for the CNMI."

"Mr. Mahmood and Mr. [Jason] Osborne should maybe first get the U.S. Congress to approve the CNMI as a ship repair facility and then once that becomes law then maybe, just maybe, we can start talking about a power plant," Dela Cruz told Saipan Tribune.

Osborne, consultant for Allegiance Capital, said his main task is to push for legislation to allow U.S. military vessels to be repaired in the CNMI.

Dela Cruz said Mahmood and Osborne themselves claim that a 50-megawatt power plant will cost $70 million but because of financing, it's going to cost $190 million.

"So basically they are saying $120 million is for financing alone," he said. "In the first place, we don't need a 50MW diesel power plant. What is it that these gentlemen and the governor don't understand? What the CNMI needs now is renewable, alternative energy to supplement our existing baseload diesel plant."

He said the CNMI should also be looking at cheaper producing baseload plant.

"Again, not another diesel plant," added Dela Cruz, chairman of the Public Utilities and Infrastructure Committee of the Saipan and Northern Islands Legislative Delegation.

Mahmood said SDLLC looked at natural gas. But he said it is not feasible for a 50-MW power plant. He said natural gas is good for at least a 100-MW power plant.

Dela Cruz said the CNMI should ask Mahmood about his experience with diesel power plant and liquefied natural gas.

"Maybe we should ask him how many power plants have they built and where? As far as I'm concerned, they are nothing but brokers or middlemen trying to make a quick buck from the CNMI and its people," he said.

Mahmood has said that the multimillion shipyard facility and new 50-megawatt power plant in Lower Base is the best deal possible for the CNMI, and hopes that the people of the islands can get behind these projects to spur economic growth.

Maratita, who filed an injunction on the power purchase agreement, said the PPA is bad for the CNMI and its people.

"It is the best possible deal for SDLLC, not the CNMI and its people," she said.

Mahmood also said that impeaching Gov. Benigno R. Fitial, who has less than two years left on his term, and local politics are not helping lure more investors into the CNMI.

Delaware-based Saipan Development LLC bagged a sole-source, $190.8-million diesel power purchase deal that the governor and former attorney general Edward T. Buckingham signed off on.

SDLLC is co-founded by David Mahmood of Allegiance Capital Corp. and Don Kurz of Keystone Shipping. David and Kenneth Mahmood are brothers.

SDLLC plans to set up a shipyard facility in Lower Base that will encompass the current location of the Commonwealth Utilities Corp. Part of the shipyard project is the development of a 50-megawatt power plant.

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