Many cargoes being shipped to Rota and Tinian are twice assessed wharfage fees, a factor that discourages businesses on the two islands. They say the “double charges” being enforced by the Commonwealth Ports Authority worsen the economic difficulty on the two islands, which are totally dependent on shipped cargo from Saipan for their supplies.
CPA board member Barrie Toves, who represents Rota on the board, disclosed this to his colleagues last week, urging the board to revisit the wharfage policy and either waive or reduce the fees for the two islands.
Based on the existing policy, Toves said, a company like Joeten, which gets its commodities from the West Coast, is assessed a wharfage fee once its container lands on Saipan. But in bringing this similar commodity to Rota where Joeten has an Ace Hardware branch, the same container is assessed a separate wharfage fee as it enters the Rota seaport.
“In essence, CPA is charging the same container twice. We have to look at this issue because that’s double charging the consumers,” said Toves.
As much as many businesses want to boost the economic activity on the two islands, he said the high shipping cost has been a major issue.
CPA executive director MaryAnn Lizama said their current wharfage is $11.40 per revenue ton. That has been the rate since 2009.
“The last time we had our rate study, the recommendation to increase the then rate of $6.75 per revenue ton to the present $11.40 per revenue ton was implemented in 2009. There was a recommendation that the wharfage fees should be increased based on the Consumer Price Index, which is at 3.9 percent per year but we didn’t opt for that recommendation,” said Lizama.
Saipan Tribune learned that for petroleum, oil, and lubricants, CPA assesses a wharfage fee of $8.55 per revenue ton.
Toves believes the ports authority has something to learn from the Customs Division in how it assesses fees.
“Take this as an example: When commodities from outside CNMI come in, Customs assesses taxes at ports of entry. So when a container comes in, taxes are already assessed but that same container, when it brings the same commodities to its suppliers on Rota and Tinian, Customs doesn’t assess any more fees. So I see disparity [between CPA and Customs practice],” said Toves.
He said both the Tinian and Rota legislative delegations are very concerned about this matter.
Toves is convinced that the “double charges” imposed on these commodities are passed on to the residents of the two islands. Prices of commodities on Rota are far higher than Saipan and Tinian, due to the high cost of bringing them to the island.
According to seaports facilities chair Benigno Sablan, waiving the wharfage fee for interisland shipping is “practically not possible,” citing the impact it would have on the seaport bond indenture ratio.
In the 10-month period of fiscal year 2013, CPA seaports have been in compliance with the bond ratio with 1.36 percent—surpassing the required bond ratio for seaport of 1.25 percentage, according to finance committee chair Frances Mafnas.
Sablan disclosed that the wharfage fee collection on Rota in fiscal year 2012 totaled $83,000. On Tinian, the collection each fiscal year is over $50,000. CPA will incur a tremendous loss if it waives these fees for the two islands, he said.
“We really cannot do that because of our bond ratio. If we do it, we will be hearing from our bond trustee. …If we lose a certain percentage in bond ratio it would be more of a problem for us,” said Sablan.
Board members Mafnas and Thomas Kiyu Villagomez both recommended that the wharfage policy be revisited and recommended the establishment of a “one-time fee” for any cargo coming in to the CNMI.
Sablan tasked CPA comptroller Skye Aldan on Friday to come up with a projected cost analysis if the current wharfage fee is reduced by 50 percent and what impact it will have on the bond ratio.
When asked about the matter yesterday, CPA executive director Lizama said: “We are currently still looking at the impact if and when the board makes changes to the current fee schedule.”