Guest Column: NTEC needs support of tribal officials, Diné people to prosper

By Clark Moseley
CEO Navajo Transitional Energy Company

The Navajo Council has two important legislations before them this week, both of which would strengthen a young Navajo enterprise, Navajo Transitional Energy Company (NTEC), which owns the Navajo Mine near Farmington.

Jobs on the Navajo Nation are scarce and our unemployment rate has hovered near 50 percent for several years. The jobs from coal are critical to the Navajo Nation economy and the wellbeing of our people and must be protected.

For that reason, and facing possible closure of the Navajo Mine by 2016, the Nation created a tribally owned company, the NTEC, which purchased the Navajo Mine from BHP-Billiton in 2013. The purchase ensured sustained revenues to the Navajo Nation and employment for nearly 800 workers at the mine and Four Corners Power Plant.

The mine has a large impact on the Navajo Nation and local community. An Arizona State University study was completed for Navajo Mine and concluded the Navajo Nation’s gross national product would be positively impacted by $8.8 billion through the life of the power plant. In addition, workers are expected to generate about $4.1 billion in the mine’s lifetime.

However, for that future to become a reality, NTEC must endure the struggles of a start-up company. When the purchase of Navajo Mine was negotiated, all revenues generated at the Navajo Mine are dedicated towards federal and tribal taxes, tribal royalties and fees, while the remainder goes to BHP-Billiton to pay the remainder of the promissory note used to finance the purchase of the Navajo Mine. NTEC isn’t scheduled to share in revenues until the note is paid in full, which will be in 2017.

Legislation 0115-15 is asking the Navajo Nation to supply $3.1 million for operations and expenses to run NTEC. The $3.1 million is less than 10 percent of what the mine contributed to the Navajo Nation in 2014 in taxes and royalties, which was about $37 million.

Our second initiative regards amending previous adopted legislation that allowed for our company to carry $463 million worth of bonds to meet contractual and regulatory agreements as being the owner of a coal mine.

Of the $463 million, the bonds are separated into two different types of bonds; $300 million for a performance bond and $163 million as a reclamation bond. These are not revenue generating bonds, they are insurance bonds for NTEC’s performance to meet contractual demands of supplying coal to Four Corners Power Plant and a reclamation bond that ensures funding is available when the mine’s land has to be reclaimed to federal standards.

Understanding these two bonds were needed to continue business, Navajo Council approved a limited waiver of sovereign immunity to secure the bonds in 2013.

However, the legislation named only two sureties, which NTEC could work with in terms of securing those bonds. Currently there is only one company supplying those bonds.

Since NTEC can only deal with one company for $463 million worth of bonds, we are limited to our choices in the bond market place. Since there are no other insurance companies to compete for NTEC’s business, a monopoly exists for $463 million worth of bonds.

Legislation 0116-15 would strengthen NTEC’s position to secure bonds with other companies, thus creating competition among sureties allowing NTEC to save money. Since the company was formed and belongs to the Navajo Nation, the money saved is money saved for the Navajo people.

The legislation amends original language in the 2013 bill. Rather than naming insurance companies, the amendments would create a list of criteria a company must have before they can negotiate any bonds with NTEC. These are the same criteria the Navajo Nation already uses in existing practices.

If this legislation were approved, our company could save about $25 million through 2031, or $1.5 million annually because we would receive more competitive interest rates from other good-standing companies.

NTEC is a young enterprise and needs the support of the government and its people to prosper. Right now, we have the lives of 800 workers and their families depending upon NTEC’s success.

Four chapters surrounding the mine understand the importance of the mine, and all have passed resolutions or will vote on supporting the two legislations.

We at NTEC never underestimate the importance of the work we do and the lives they affect. Just as we are asking Navajo Nation to invest money into our company, we see our investment of job security providing good lives for many workers and contractors. Together, we are making the Navajo Nation stronger.

---