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Politics : Rat's Nest - Chronicles of Collapse -- Ignore unavailable to you. Want to Upgrade?

To: Wharf Rat who wrote (8174)	7/17/2008 2:03:04 AM
From: Wharf Rat	Read Replies (1) \| Respond to of 24225

Marshalls' Energy Crisis -------------------------------------------------------------------------------- Marshalls' Are Going Dark As Funds For Fuel Run Low By Giff Johnson and Suzanne Chutaro, MAJURO With no financial reserves and a national fuel bill skyrocketing beyond the financial ability of the country’s only utility provider, the Marshall Islands is in a countdown to power rationing in its two urban centers, Majuro and Ebeye. President Litokwa Tomeing declared a state of emergency on July 3 with the hope that this will give some additional traction to requests for help from donor nations, as well as cost-cutting measures at home. While the Marshall Islands (RMI) government last week announced a ban on local tax- and Compact-funded travel until further notice, ordered street lights turned off at night, and took away Cabinet Ministers’ privilege of free gas for their vehicles, the government has yet to address the biggest drain on RMI government coffers — the nearly $34 million annual government employees payroll bill, which has doubled since 1999. The ability of the Marshall Islands to overcome its current energy crisis depends on whether the U.S. government will play ball with the Marshall Islands, Foreign Minister Tony deBrum told a government-business forum last week. But the initial response of U.S. Interior Department officials to feelers from the RMI government about possible use of Compact of Free Association infrastructure or other U.S. funds to solve the current crisis has not been positive, increasing the worry about the likelihood of power rationing or worse. While some donors — including the Asian Development Bank — have indicated interest to help, these offers will come as a trade off for fiscal reforms that the government has yet to indicate it is prepared to make. They also are likely to take time to negotiate, increasing the challenge of finding a short-term solution to keeping the lights on in Majuro and Ebeye. The Marshall Islands is facing two key deadlines this week and next: It must pay $6.5 million by July 24 to the South Korea-based fuel company SK Networks for fuel delivered in early June. But it also must place an order for new fuel by July 16, or it risks the possibility of running out of diesel before the next tanker arrives. Government Chief Secretary Casten Nemra said last week that the utility company and the government had cobbled together about half of the $6.5 needed, and Marshalls Energy Company General Manager William F. Roberts said that MEC has been making ongoing partial payments to SK Networks as it get funds to do so. The utility companies on Majuro and Ebeye are running about a $1.5 million deficit per month, a figure that is likely to increase with fuel prices about to hit $150 a barrel. Foreign Minister deBrum told business leaders last week that the government is working on a short-term solution to address the current cash shortfalls to pay for fuel to power the utility companies but that, "all plans for a short-term solution for the energy problem depends on the U.S." DeBrum alluded to the possibility of an Asian Development Bank scheme for a loan “buy-down.” The RMI currently owes the ADB over $60 million in low-interest loans received most in the 1990s, and for the past two years has frequently been delinquent on the roughly $250,000 per month payments. DeBrum said if the “U.S. agrees to pay down the loan, money for new grants will be available (from the ADB).” The ADB’s desk officer for the Marshall Islands, Kiyoshi Nakamitsu, said he is keen to look at ways for the bank to assist, but said the “RMI has not met conditions for ADB to actively engage” in helping the country. He discussed the loan “buy-down” proposal with officials in Majuro earlier this month, saying that precedent has already been set for this by Australia paying off loans that Samoa owed to the ADB last year. He said the ADB may be able to assist with “facilitating the loan buy-down” by a donor country. This could require the RMI to meet conditions to reduce its payroll levels and implement changes to tax laws, he said. “Without a good reaction from the U.S. the plan (to meet the cash short-falls of utilities companies) will fail,” deBrum said bluntly at the government-business forum last week. But strictly controlled Compact of Free Association funds offer little flexibility to help in the fuel crisis. Roberts explained the current fuel situation in detail, and reassured the business community that there is enough fuel to keep the power on until about the end of August. “We have secured close to half of the $6.5 needed (to pay for the current fuel on island)," said Nemra last week. Meanwhile, "the National Disaster Committee is working on a contingency plan to ensure vital services such as the hospital and sewer operations still have power to continue operation." Fishing companies are also reportedly talking with MEC about paying for fuel bunkering use of MEC's tank farm, which could also inject needed cash into the utility. In the first cost-cutting move following the July 3 state of emergency declaration, the Cabinet announced that: • No travel will be allowed during the state of emergency on General Fund, Compact accounts or government agency sources unless it is specially authorized. This does not apply to travel funded by non-RMI sources. • Any Continental OnePass miles gained from government-funded travel are to be put into an RMI travel account to be used for medical referrals or other government travel needs. • The credit cards with a $2,500 limit recently approved for all Cabinet Ministers were revoked. • The government will not pay for fuel for Cabinet Ministers’ vehicles. They are responsible to fuel their own cars. Since shortly after the emergency declaration, streetlights in Majuro have been turned off, plunging the streets of the capital into darkness that is punctuated only by headlights of the seemingly fewer vehicles that are cruising the streets as prices at the pump hit US$6.77 per gallon for gas and diesel went over $7 a gallon last week. The government radio station V7AB on Friday began broadcasting a public service announcement advising listeners how to conserve fuel and save money: stop using washing machines and wash clothes by hand, cook on the ground using wood and coconuts instead of propane or electric stoves, turn off air conditioners, and don’t drive around unless you have somewhere specific to go. What the V7AB announcement failed to note is that for a large percentage of the 28,000 residents of Majuro, these changes are already a fact of life and have been ongoing since last year when electricity and gas prices began to skyrocket beyond affordability. pacificmagazine.net