By Giff Johnson
For Variety

MAJURO — South Korean energy giant SK Networks is making a bid to buy a controlling interest in the struggling Marshalls Energy Company, with a high-powered delegation from the Asian company arriving here this week for negotiations.
S K Networks, which replaced ExxonMobil as the Majuro-based electric company’s fuel supplier a year ago, has submitted a $12 million bid to government in an effort to gain a controlling interest. Key to the deal is the Marshalls Energy Company’s six million gallon fuel storage depot — the largest government-owned tank farm in this area of the central Pacific that would, if the SK proposal is accepted by the Marshall Islands government, open the door SK Networks to use Majuro as a transshipment point for fuel sales in the region. Currently, the Marshall Islands is SK Networks only supply contract in the island region.
But SK Networks is competing with Saipan-based Luen Thai Corporation, a major fishing, airline, hotel and shipping conglomerate, and ExxonMobil, both of which are involved in rival bids to operate the government-owned utility in this former United States territory.
Up until late 2004, the Marshalls Energy Company ran at a profit, with no government subsidy. The company used revenue generated from the sales of fuel to the foreign fishing fleet based in Majuro to earn a profit and subsidize the cost of producing electricity, keeping power costs among the lowest in the Pacific region.
But when the company and ExxonMobil could not agree on a fuel supply contract extension in 2005, MEC’s finely tuned system of selling fuel to the fishing fleet to support the power operation collapsed, plunging the company into debt. Disputes with ExxonMobil prompted the Marshall Islands government to ask the U.S. Interior Department to investigate ExxonMobil’s negotiating tactics. But Interior officials have reportedly declined to do so.
The Marshalls Energy Company now owes ExxonMobil and banks more than $6 million, and is struggling to pay off the debt and maintain fuel supplies to keep the lights on the in the capital.
Major negotiations on the SK Networks bid to buy into MEC are expected to start in Majuro mid-next week, with the arrival of a high-power task force team from S. Korea.
About 10 SK Networks officials will arrive in Majuro mid-next week, led by general manager William Choe, for the talks with MEC.
The sticking point, according to people close to the negotiations, is SK Networks demand for 51 percent control of the government-run utility. But the government-owned power company, desperate for a cash infusion to pay its debts, is seriously considering the proposal from SK Networks, according to officials involved in the talks.
A report of a detailed corporate review of the electric company, funded by the U.S. Department of the Interior, is also expected to be handed to government early next week.
Marshalls Energy Company chairman and Minister of Public Works Mattlan Zackhras said that he expects the recommendations of this report to assist the company in reviewing the various investment proposals before it.