‘OPA support will finally resolve CUC debt’

Lt. Gov. Timothy P. Villagomez said yesterday that the Office of the Public Auditor’s support for the bill allowing the Commonwealth Development Authority to write off the $45.5 million owed by the Commonwealth Utilities Corp. is a good signal to finally resolve CUC’s financial problem.

“I think OPA coming in support of this thing is a true indication of getting some results once and for all so we can move on with CUC,” said Villagomez in an interview with the Saipan Tribune at the Department of Public Safety where he attended the National Peace Officer Memorial Day ceremony.

The Lt. Governor said he strongly believes that it is about time to resolve the CUC debt issue.

“It’s been in the books for over 20-some years that has done nothing but create problems for both agencies,” he said, referring to CUC and the Commonwealth Development Authority.

Villagomez said the issue should be addressed now to resolve the integrity of CUC and CDA.

Public Auditor Michael S. Sablan, in a letter sent Wednesday to Gov. Benigno R. Fitial, expressed support for the writeoff bill and even suggested also forgiving the $16 million that CDA loaned to CUC for water and sewer improvements.

“In general, OPA does not support loan forgiveness legislation. OPA believes that condoning loan forgiveness encourages risky and ill-advised loans and discourages responsible behavior,” said the public auditor in his comment on the proposed House Bill 15-64.

“While OPA is loathe to support any loan forgiveness, we do recognize that this situation is unique and furthermore, that passage of HB 15-64 will have significant beneficial ramifications for all people residing in the CNMI,” he noted.

CUC, Sablan pointed out, cannot resolve its financial problems without acquiring capital equipment, and it cannot acquire such capital equipment without seriously improving its credit-worthiness.

OPA said that the forgiveness of the $147 million debt would dramatically alter the net deficiency of CUC, changing a negative balance of over $30 million to a positive balance of $116 million.

More important, Sablan said, the unrestricted surplus would change from a deficit $81 million to a surplus of over $4 million.

H.B. 15-64 would authorize CDA to waive the principal sum and interest due from loans extended to CUC.