Friday, January 27, 2012

Energy Contracts or Energy?

When is an emergency not an emergency?

Westport Finance LLC is a curious company that won an "emergency" no-bid contract for electrical generating equipment and installation from the Empresa Nacional de Energia Electrica (ENEE) via Contract and Decreto 218-2011, published November 24, 2011 in La Gaceta.

Westport Finance is owned by Ira Ginsburg and his wife, Carla. Mr. Ginsburg's sole expertise is putting together financing for projects, not in supplying electricity or building generation facilities. He claims to be affiliated in some way with Wartsila, a Finnish builder of oil and natural gas generation equipment. We wrote about the contract back in November.

Under the terms of the contract Westport Finance LLC was supposed to have the first phase of generating equipment, some 50 Megawatts, up and running 60 days after the publication of the contract in La Gaceta.

So what, if anything, has Westport done to date?

Our gentle readers will not be surprised to hear that nothing has been done in Honduras since the contract was published. Westport has not imported or installed any power generation equipment of any kind.

One is reminded of Luis Larach's statement from Tim Johnson's reporting for McClatchy :
In a sign of money laundering, he said, "unknown companies are winning bids of huge infrastructure projects like highways and bridges, and no one knows where the money is coming from."
The problem here is likely that Westport Finance LLC stated to ENEE that they could install generators in 2 months at their own cost. The contract states:
Sixty (60) days after it comes into effect, the lessor (Westport) is obliged to install 50 Megawatts in total, of generating plants based on diesel (bunker) distributed in 4 of the five sites indicated in the following manner: one of 15 MW located in the city of La Entrada, Copan; another of 15 MW in Sesenti, Ocotepeque, another of 10 MW in the Coyoles Central substation and another of 10 MW in the city of Catacamas, Olancho, being responsible for the operation and maintenance of the same for a period of 12 months....

The contract also spells out how and where the new generating plants are to be connected to the national power grid. It in turn, requires Westport to post a bond for $1, 350, 000, which was due 15 days after the contract took effect. That would have been on December 9, 2011. In theory Westport is also subject to a $100/Megawatt/Month fine for delays, a further $5000/month from January 24, 2012 forward. Westport was also responsible for soliciting the necessary environmental approvals, as well as the departmental and municipal approvals necessary, within the first 60 days of the contract.

So Westport is in default on the second milestone. Did they find funding and pay the bond to meet the first milestone? Is the contract even still in effect?

So much for the "emergency" declared by Porfirio Lobo Sosa (PCM-064-2011) and the discriminating choice of corporate partners by ENEE.

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