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CUC offered new payment scheme
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Posted on Nov 27 2006
The Commonwealth Ports Authority is giving the Commonwealth Utilities Corp. up to 10 years to settle its longstanding debt totaling $9.4 million.
CPA executive director Clyde Norita said that, based on the proposed payment agreement, CPA would allow CUC to pay the wharfage fee of $3.4 million in 10 years at 12 percent interest rate.
For the sewer line project at the airport, he said that CUC needs to pay CPA $6 million in five years at 6.5 percent interest rate.
“That’s the proposed agreement. CUC will have to review that,” said Norita in an interview yesterday.
The $3.4 million wharfage fee is part of the total billing of $6.6 million to Mobil Marianas for retroactive wharfage fees covering a seven-year period from October 1997 to June 2004.
Mobil paid CPA only $2.7 million last October, arguing that the balance of the debt had to be paid by CUC. Mobil has been the exclusive supplier of oil to CUC.
Mobil had signed a settlement agreement with CPA last year and demanded payment from CUC but to no avail.
The oil company had then referred the case to CPA, saying the right to pursue the debt is now assigned to CPA, as provided for in the settlement agreement.
On Feb. 1, 2006, CPA legal counsel Douglas F. Cushnie sent CUC a demand letter, warning that if no payment is received after 15 days, a suit would be filed to collect this amount.
The utility firm earlier said that it could not afford to pay the wharfage fee in view of its current financial condition.
CUC had also expressed intent to question Mobil’s assertion that retroactive charges were collectible from CUC under its previous and current contracts with the oil firm.
Mobil’s unbilled wharfage fees to CPA were discovered only in 2004. This amount includes charges from the Port of Saipan and the West Tinian Harbor, where Mobil maintains fuel facilities.
CPA charges a wharfage fee of $5.50 per revenue ton of goods passing through its ports.
Meantime, the $2.7 million paid by Mobil included $718,775.03 in retroactive charges that Mobil asserts is due Shell Marianas as a result of fuel products it brought into the Commonwealth for Shell.
Mobil is said to be the same supplier for Shell Marianas on Saipan.
