MAJURO – The power utility in the Marshall Islands warned Wednesday that unless the government clears its debt, electricity for Majuro and Ebeye Island could be cut off next week.
As of Wednesday, Marshall Islands government entities owed the Marshalls Energy Company $4 million.
If some or all of this debt is not cleared immediately, the power utility won’t have money to pay for fuel and the lights could go out in Majuro or Ebeye, or both, said Marshalls Energy Company General Manager David Paul.
The irony of the impending crisis is that there are 2 million gallons of diesel fuel in power company tanks. But, Paul said, it is fuel provided to the utility on “consignment,” meaning it has to pay its fuel supplier as it uses it. And as of this week, the cash-strapped government utility does not have funds to pay for fuel needed for the two urban centers of Majuro and Ebeye.
The payment problem centers on the government-owned hotel, the Marshall Islands Resort, which owes $1.8 million; Ebeye’s power utility and the Majuro water utility that owe $500,000 each; the College of the Marshall Islands that has debt of $172,000; and the two biggest and largely United States-funded ministries – Health and Education – which owe $600,000 and $262,000, respectively. Paul said the Ministry of Finance is up-to-date on payments for all other ministries and departments that are not U.S.-funded.
A fuel delivery is scheduled for shipping to Ebeye this Saturday. But Paul said he’s putting this delivery on hold pending resolution of the fuel payment problem because if he sends the fuel to Ebeye, Majuro’s lights will go off next week.
“We have access to fuel for the next four to five days,” Paul said Wednesday. “If we send the fuel to Ebeye (this weekend), we’ll have to turn Majuro off."
“How can we run a power business when customers don’t pay?” he asked.
Financial viability
Paul said the Marshalls Energy Company has done everything it can to return the company to financial viability.
“We swapped debt from Bank of Guam to the Asian Development Bank to get lower loan interest rates; we’ve just received a $2.3 million U.S. grant for engine repairs and had $2 million in U.S. loan payments deferred for two years; we’ve fixed engines to increase fuel efficiency; we’ve installed prepaid meters to improve our financial status; and we’ve aggressively stepped up collections,” Paul said. In addition, the utility set up a new fuel supply system so there is no danger of running out of fuel: It negotiated a consignment agreement so that fuel is always available in the company’s fuel storage tanks. But the company still has to pay for it, Paul said.
“If significant customers don’t pay on time or at all, we cannot perform miracles,” Paul said.
