Fiscal board approves Genera fuel supply contract renewal with Novum
Supplier secures independent terminal access
By THE STAR STAFF
The Financial Oversight and Management Board has approved Genera PR’s proposed fuel supply contract renewal with Novum Energy Trading Inc. after the supplier agreed to deliver fuel through an alternative terminal arrangement that reduces reliance on Genera-controlled infrastructure and addresses concerns that had previously limited competition in Puerto Rico’s fuel procurement process.
In a letter dated Oct. 16, the oversight board approved the contract with observations, clearing the way for Novum to supply some 6 million barrels annually of No. 6 fuel oil to the Puerto Rico Electric Power Authority’s Aguirre, San Juan, Palo Seco and Costa Sur power plants under a three-year agreement valued at up to $2 billion.
The contract stems from a competitive procurement launched by Genera this past April and replaces the current fuel supply agreement. According to the fiscal board, Novum submitted the most competitive proposal among three bidders and received the highest overall evaluation score.
A central factor in the award was Novum’s proposal to use San Juan Dock D and an existing manifold connecting Docks C and D, allowing fuel deliveries even when Dock C is occupied. The arrangement means the supplier can manage fuel deliveries through its own terminal-access solution rather than relying on Genera to coordinate access or logistics, an issue that drew scrutiny during the previous procurement process.
The oversight board noted that limitations involving access to San Juan Dock C had been identified during the bidding process for the current contract. At that time, some proponents argued the logistical constraints hindered competition, and Puerto Rico Energy LLC ultimately secured the contract because of its ability to handle the required delivery operations. In response, Genera required bidders in the new solicitation to develop independent terminal-access and fuel delivery solutions.
Novum supported its proposal with a Terminal Access Plan Support Agreement executed Oct. 5 with dock operator Luis A. Ayala Colón Sucrs. Inc., which committed to supporting the delivery arrangement during the life of the contract.
The agreement also provides lower pricing than the current contract. The oversight board noted that Novum’s fixed differential of $3.33 per barrel under a 60-day payment structure is $1.42 lower than the $4.75 differential in the existing contract, representing an approximately 30% reduction.
The board said Genera must ensure the terminal-access arrangement remains available throughout the contract term and that fuel deliveries are coordinated with other port users, including New Fortress Energy’s liquefied natural gas operations, without unreasonably restricting third-party access.
The proposed contract may be extended for an additional year by mutual agreement. Genera will also retain the ability to purchase up to 25% of its fuel requirements from alternative suppliers when lower-priced fuel is available.
