By Giff Johnson
For Variety

MAJURO — Bank of Guam on Wednesday approved a $12 million loan to the financially struggling power company in the Marshall Islands, which utility officials say will resolve a cash crisis that has plagued it for nearly two years.
The bank’s loan approval is expected to at least temporarily shelve a bid by energy giant SK Networks, or SKN, of S. Korea to buy into the debt-ridden company.
A three-member team from SKN is expected to arrive in Majuro later this week for continuing negotiations on a $12 million offer to the Marshalls Energy Company for a controlling interest in its large fuel tank farm, the only such government-owned facility in this region of the north Pacific.
SKN is reportedly keen to gain a foothold in the western Pacific to expand its fuel supply to nearby island countries. But power company officials indicated that the injection of funds from the Bank of Guam will solve the company’s immediate problems without having to consider foreign ownership or control, allowing it to get back on its feet financially.
“We’ll be able to retire our high-interest loans and debt, pay off our current fuel stocks, and order the next fuel shipment in a few days,” Marshalls Energy Company general manager William F. Roberts said in an interview Wednesday.
“It means we can get a consistent fuel supply and get business back with (fuel sales to) fishing vessels.”
Since the utility company’s 13-year fuel supply contract with Mobil Oil Micronesia, a subsidiary of ExxonMobil, collapsed following acrimonious negotiations in 2005, the Marshalls Energy Company has been on the brink of financial collapse. The government has repeatedly been forced to reprogram funds designated for other purposes to cover fuel bills.
Earlier this month, the capital Majuro nearly faced several days with no power when the utility missed a payment deadline, delaying the arrival of a fuel tanker from SK Networks, its main fuel supplier. Roberts negotiated with Mobil to buy small quantities of diesel — the first time in two years the utility had traded with Mobil — to tide the power plant over until the SK tanker arrived in mid-April.
Roberts said that the new long-term loan will help solve the ongoing cash crisis by allowing the utility to pay off a high-interest debt to Mobil for a 2005 fuel purchase, retire a previous higher-interest loan with Bank of Guam, and stabilize bulk fuel purchases without having to continue tapping into government coffers for funds.
Up to 2005, the Marshalls Energy Company subsidized relatively low electric rates by large volume sales of diesel to foreign fishing vessels. But that system collapsed when the supply deal with Mobil ended two years ago, forcing the company to dramatically increase power charges and to scramble for cash to pay off its fuel debts.