The government action comes as the country is facing a $1.8 million national deficit as tax revenues have shrunk in 2009 compared to previous years, and confirms how world market fuel prices stress the budgets of small islands.
A shipment of more than two million gallons of diesel to the Marshalls Energy Company was expected to depart S. Korea this week for the Marshall Islands.
The Marshalls Energy Company, which over the past two months has been making installment payments on the more than $4 million due two weeks ago, still owed about half of the cost for the shipment, and government officials had been scrambling to come up with the cash to complete payment.
Despite missing the payment deadline, the shipment is moving forward, according to utility officials.
“MEC has paid half of the $4 million due,” said energy company Manager Steve Wakefield.
MEC has about 750,000 gallons of diesel in its tank farm and is not facing a fuel shortage, Wakefield said. This is more than a two-month supply of fuel for the Majuro power plant.
The Cabinet’s move approved last week will resolve the payment issue, he said. Cabinet approved funding $2.2 million, which matches the amount that Ebeye Island’s power utility owes to the Majuro-based utility company for recent fuel shipments. The Marshalls Energy Company supplies fuel to power plants in Majuro, Ebeye and the outer atoll of Wotje, as well as selling fuel to fishing vessels.
A key problem forcing the Cabinet’s action is that Ebeye’s power company has not paid the Marshalls Energy Company for fuel delivered this year and now owes $2.2 million.
Wakefield pointed out that the Ebeye power operation has always been subsidized by the government, and the subsidy is used for fuel purchases.
Government officials said in order to ensure that fuel continued being delivered to Ebeye by the Marshall Islands Energy Company, assurances were made earlier in the year that government would clear the debt to the Majuro utility.
