The renewable solar energy project with an Independent Power Producer (IPP) work continues while Palau Public Utilities Corporation (PPUC) and the IPP seek solutions to satisfy the financing institution requirements.

Senate did not pass the resolution approving the Government Support Agreement, one of the five conditions required in the contract between PPUC and the IPP. 

PPUC CEO Kyota assured that the work on the solar energy project is progressing while PPUC and the IPP continue looking for amenable solutions to the issue.

The financing institution, AIFFP (Australia Financing Facility for the Pacific) which is providing a loan to the IPP to build the 20MW solar generation facility in Palau, requires certain guarantees including the Government Support Agreement.

“This is a standard requirement by any financing institution issuing out loans to ask for guarantees,” said Anthony Rudimch, a civil engineer at PPUC.

The Government Support Agreement meant that OEK (congress) pass a resolution approving a waiver of limited sovereign immunity.  In other words, in case of payment default by PPUC, IPP could recover its losses by taking certain assets. 

The “limited sovereign immunity” meant that the list of assets that IPP could technically get is very limited, explained PPUC CEO Frank Kyota in an interview.  They can’t touch, for example, the compact trust funds, SS or Pension Funds including PPUC’s power generation infrastructure.  They can touch PPUC income but Kyota reiterates that they are confident that this will never happen.

“PPUC had always paid its debts to its vendors without fail,” asserted Kyota of PPUC’s financial capabilities.

One of the concerns expressed by some of the Senators during the oversight hearing with PPUC on the IPP project was the property that the Independent Power Producer, Solar Pacific, selected to construct the solar farm. 

The IPP chose a property belonging to Surangel Whipps Sr., the father of President Surangel Whipps.  Based on the documents presented by the IPP, the decision was based on property meeting certain requirements, a clear land title, closeness to the power transmission line, and the physical attributes of the land best fit for the solar farm.  Other properties offered did not meet one or all of the requirements.  For example, the land at Nekken, Aimeliik, which was previously offered by the government, was close to the transmission lines but has third-party claimants. 

PPUC said that the site was also reviewed by other vendors in the earlier segment of the bidding process.

Mr. Kyota is optimistic that they will find a solution to satisfy the lender’s requirement. 

“We are following a mandate given to us by the national government to reach a certain level of renewable energy production by 2035. This mandate started during Toribiong’s administration to Remengesau and now Whipps.  It is our mandate to produce energy, not develop energy policy,” stated CEO Kyota of the task before them.

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