The V.I. Water and Power Authority will contract with Vitol Inc. for diesel fuel for its generators for the next three years, WAPA’s governing board determined during a special meeting Tuesday morning. Vitol Inc. is parent company to Vitol Virgin Islands Corp., which is converting WAPA’s generators to run on propane and installing propane storage tanks.
WAPA Executive Director Hugo Hodge Jr. told the board the current fuel oil contract with Trafigura expires Aug. 31, and that when they put the contract out for bid, Vitol came up with the best overall offer. While price is not the only factor in the decision, Vitol also had the best price, Hodge said.
The board voted to approve a contract for no. 2 fuel oil from Sept. 1 through June 30, 2015, with options for annual extensions.
Costs are set by a formula tied to two fuel oil indices: The cost is 50 percent of the Platt’s price and 50 percent of the Argus U.S. Gulf Coast price, plus $11.94 per barrel. The price is bit higher than in the last contract, Hodge said, because the volume has to vary a lot and purchases will taper off after the propane conversion.
"The fuel oil quantities in the beginning are the same, but after the propane conversion is complete, the volume drops substantially over time," he said. "That variability was a hurdle," Hodge added. "It had to be something with no minimum take or pay. … But Vitol is offering at a set price without guaranteed purchase volumes."
Once the conversion is done, the generators will be able to run on either fuel oil or propane but they will continue to burn fuel oil while the tanks and infrastructure for the propane are installed, Hodge said.
The board also authorized Hodge to enter into a three-year, $398,000 contract with Softmart to provide the "latest versions of Microsoft software used throughout" WAPA. The contract costs $128,000 for the first year and $135,000 for each of the second two years.
Hodge said Tuesday’s special meeting was called because the new contract is "time sensitive" and WAPA would lose a discount for the first year if it is not ratified in time.
Voting for both measures were Energy Office Executive Director Karl Knight, Gerald Groner, Donald Francois, Cheryl Boynes-Jackson and Noel Loftus. Absent were Juanita Young, Elizabeth Armstrong, Planning and Natural Resources Commissioner Alicia Barnes and Licensing and Consumer Affairs Commissioner Wayne Biggs.
