Jump to content

Attention: In order to reply to messages, create topics, have access to other features of the community you must sign up for an account.
Sign in to follow this  
Trainspotter

MTA getting gouged on bus fuel by Sprague Energy Corp.

Recommended Posts

MTA getting gouged on bus fuel by Sprague Energy Corp.

BY PETE DONOHUE

DAILY NEWS STAFF WRITER

September 22nd 2008

 

barge_photo.jpg

Sprague Energy Corp. fuel barge

 

The MTA's bus fuel costs are skyrocketing by $26 million - more than triple what the cash-strapped authority paid last year - after it got caught in a no-win contract negotiation, the Daily News has learned.

 

Not a single company had submitted bids to supply fuel to city bus depots by the Aug. 21 deadline, leaving only three weeks until the existing contract expired, according to a Metropolitan Transportation Authority staff summary obtained by The News.

 

Faced with the possibility of running out of fuel, the MTA asked Sprague Energy Corp., its existing supplier, to agree to a contract extension.

 

Sprague, of New Hampshire, saw an opportunity.

 

The company demanded that the MTA more than triple its pay rate - and commit to buying a full year's supply of the hard-to-get fuel, according to the summary of a contract signed by Sprague and the MTA subsidiary, NYC Transit.

 

"Sprague, while agreeing to continue to supply the product, insisted upon revisions to the terms of the contract that are quite onerous," the summary states.

 

MTA buses run on a rare fuel that must be specially refined: ultralow-sulfur kerosene No. 1. There are no pipelines to carry it, so it has to be shipped by barge and then distributed by tanker trucks.

 

The increased costs are mainly for the delivery and storage of the fuel, and largely unrelated to the price of oil.

 

The trouble began when transit execs mistakenly expected that multiple firms would vie for the job of supplying the MTA with its bus fuel - work Sprague has done since 2000.

 

"The decision of suppliers not to bid on this lucrative contract left us in a situation where, to secure an uninterrupted supply of fuel for our continued operations, we had to exercise this very costly option," NYC Transit spokesman Paul Fleuranges said yesterday.

 

In the end, Sprague increased its per-gallon fee, known as the "fixed differential," to about 73 cents, up from about 21 cents.

 

The one-year $206.6 million deal gives Sprague $36.5 million in differential payments - up from $10.6 million last year.

 

This price spike comes as the MTA is already bracing for a massive projected budget gap next year that administrators say will force them to raise fares and tolls.

 

Over the next year, the MTA will test another fuel - ultralow-sulfur diesel No. 2 - that is used by many other transit agencies and is easier and cheaper to transport.

 

The goal, Fleuranges said, is "to ensure that this never happens again."

Share this post


Link to post
Share on other sites

Join the conversation

You can post now and register later. If you have an account, sign in now to post with your account.

Guest
Reply to this topic...

×   Pasted as rich text.   Restore formatting

  Only 75 emoji are allowed.

×   Your link has been automatically embedded.   Display as a link instead

×   Your previous content has been restored.   Clear editor

×   You cannot paste images directly. Upload or insert images from URL.

Sign in to follow this  


×
×
  • Create New...

Important Information

By using this site, you agree to our Terms of Use.