*Editor’s Note: This article has been updated to add comment from WAPA officials.
The Virgin Islands Water and Power Authority’s new board chair has a bold set of priorities for the long-troubled utility; some concrete and immediate, some theoretical and philosophical. None are more important than fuel, he said in a nearly hourlong interview with the Source.
WAPA’s contract with its current fuel supplier, Vitol, ends in Aug. 31. On July 24, the board narrowly voted, 3-2, to contract with a new supplier, Puerto Rico-based Empire Gas. Chairman Maurice Muia and Virgin Islands Energy Office Director Kyle Fleming were the dissenting votes.
Muia said he and the board were rushed into voting. He’d hoped the vote could be put off for a few days while questions central to the two-year contract — including Empire Gas’s ability to deliver liquefied petroleum gas to the territory — could be explored. He didn’t get his way.
Normally, there would be relatively few outstanding questions about such an important supplier, Muia said. The proposed new contract, likely to be signed in coming days, did not come around in a normal fashion.
WAPA officials sent out a detailed request for proposals in April, asking respondents to include information on prepayment, post-payment, lines of credit, demurrage, shipping, insurance, hurricane preparedness, environmental and safety policies, statements of the company’s long-term financial health, and more. Perhaps spooked by WAPA’s history of late payments to fuel vendors, only two companies responded by the RFP deadline, Muia said. WAPA officials disputed this, saying there were four bids. None were able to meet WAPA’s criteria.
The contract with Vitol had already been extended twice, to the chagrin of some Senators who argued the terms were too steep. WAPA management and board members, including Muia, started looking for other potential suppliers. One was Empire Gas, which had responded to the RFP after the strict deadline.
“These are regional players within the industry. I mean, there’s only so many people you could go to. There’s only so many ships that you’re gonna charter this from,” Muia said. “They’re not, you know, doing this as a favor to the authority.”
The fuel price is set largely by the market. The difference between providers is in the cost of delivery, reliability, and other variables, Muia said. Shipping LPG is not easy. It requires specialized refrigerated tankers. To make matters more difficult, shipping to St. Croix’s Estate Richmond power plant is far more arduous than to St. Thomas’s Randolph Harley power plant. Most tankers can’t navigate the narrow, shallow channel, meaning fuel arrives in St. Thomas and then is shuttled to St. Croix aboard smaller vessels, at extra expense.
WAPA CEO Karl Knight told the board Empire Gas’ operation was vast, selling more than 108 million gallons of propane annually, according to a 2023 study, making it 10th among U.S. providers. Knight presented documents to the board saying Empire Gas had the ability to split deliveries between St. Thomas and St. Croix and could provide 180,000 barrels of LPG a month. Knight said the company already provided fuel to St. Croix’s Diageo distillery.
“Shipping to Diageo is one thing. But shipping directly to Richmond and Harley is a different beast,” Muia said. “I mean, these are serious challenges.”
WAPA’s RFP required would-be suppliers to have a history of shipping LPG to similar-sized operations. While Empire Gas does robust business within Puerto Rico, it was unclear what their experience was shipping off island. The Virgin Islands’ LPG needs would likely be far more than Diageo’s.
Although the Virgin Islands’ fuel demands are small by comparison to other municipalities, WAPA would be Empire Gas’s largest customer by volume. Compared to the sunsetting Vitol contract, the Empire Gas agreement would save WAPA $8.1 million, according to Knight’s presentation.
Muia said the board reviewed the Empire Gas proposal but still had questions. Despite Knight’s sunny presentation, Empire Gas likely only provided a fraction of Diageo’s needs. Muia was unsure whether the company had ever sold large volumes of LPG outside Puerto Rico.
Empire Gas, Diageo, and other Diageo fuel providers did not respond to requests for comment.
Being rushed into voting on the contract was not ideal, Muia said, and ran counter to the direction of responsible urgency he hoped the board would take. Empire Gas could be the perfect provider of WAPA’s fuel, he said, but whether or not that was true was hard to know without the same diligence given to other candidates.
The 29-page RFP outlined criteria in considering a candidate, including past quality and reputation, thoroughness of proposal preparation, competitive pricing, ability to deliver a minimum of 70,000 barrels of LPG within 72 hours, regulatory compliance, financial stability, delivery logistics, and more. It also stated: Strict Deadline Policy: There is no grace period for late submissions. Any proposal received after the deadline will be automatically rejected.
“This is still not fair to the board because it’s putting the board’s back against the wall,” Muia said. “Utilize the rubric that we would have utilized in the RFP. We have some additional questions — that the board specifically has, that we wanted to get answers. And that’s what I proposed. Nothing out of left field. Not like we need to go out to RFP and get a full RFP done within a week.”
Seeking a brief delay, however, did not mean Muia didn’t see WAPA’s issues as urgent.
Fuel was WAPA’s largest expense. Without it, as Virgin Islanders are all too familiar, the lights don’t come on and large portions of the territory’s economy and government services are hindered. Muia repeated several times that the authority needed to act with urgency, but that WAPA alone couldn’t fix its problems. It required whole-community participation.
He welcomed new ideas and people new to public service.
The board was short one member. Muia said someone with expertise in finance — especially someone who understood the particularities of financing a public utility — would be an ideal addition. There could be someone in the Virgin Islands with this skillset who had not considered helping the authority.
As for new ideas, Muia wondered why the territory frequently dredges to accommodate ever-larger cruise ships but, seemingly, hadn’t considered adding width and depth to the Richmond power plant channel.
“I’m like, why haven’t we explored this? Or has it been explored and it dropped off? I don’t know. But I will say, it costs us more for fuel because of that,” he said. “But the thing is, I don’t get these conversations. I’ve never heard a conversation about this.”
Currently, the berths at St. Croix’s Richmond Power Plant cannot accommodate vessels with dimensions greater than 95 meters in length, a beam of 15.98 meters, and a draft of 5.5 meters. A typical small LPG tanker is closer to 100 meters or longer, with at least a 17-meter beam, requiring more than seven meters draft, according to maritime industry experts.
“We silo WAPA, and we think, you know, you fix WAPA, then you may have some of these other benefits. And really and truly, it’s a larger conversation of how the Virgin Islands solves many of its structural issues,” Muia said.
