CPA seeks changes to lease agreement with Tinian Shipping

The Commonwealth Ports Authority is seeking an immediate amendment to the lease agreement with Tinian Shipping so that it can carry out its own collection of passenger fees and remove the burden from Tinian Shipping.

CPA executive director Carlos H. Salas said such amendment will allow the ports authority to charge the passengers $5.85, the new approved rates against the $3.75 under the lease agreement.

The new seaport rates took effect on July 1, 1999 as part of CPA’s revenue-generating measure to pay its $33 million debt and meet operating expenses.

CPA legal counsel Jose S. Dela Cruz has advised the ports authority on the need to amend the lease agreement to prevent any problems which may arise since the Terminal Tariff regulations have been passed allowing the increase in port charges and fees.

But CPA may not have to worry about immediate collection of passenger fees at all as ferry service between Tinian and Saipan has been temporarily suspended after the Federal Court ordered the seizure of the two vessels for failure of Tinian Shipping & Transportation Inc. to pay its loan to Debis Financial Services Inc.

Michael S. Kwan, chairman of the Hong Kong Entertainment (Overseas) Investments Ltd., which owns Tinian Shipping, has sent a letter to Salas seeking the support of the ports authority amid the recent court ruling.

Tinian Shipping has said it will appeal the decision handed down by the court, and “will fight it until the end.” The company asked the local government and the people of Tinian for support to allow TSTI to continue to operate while awaiting court dates for appeal.

TSTI had acquired a loan amounting to $7,616,000 from Debis Financial to finance the acquisition of two vessels — Saipan Express and Tinian Express. Based on the loan agreement, a repayment schedule of $753,270 every six months has been set for a period of seven years.

But the financial crisis in Asia and the decline of visitor arrivals to the CNMI, has led TSTI to incur huge losses since the beginning of the ferry operation in 1996.

As part of its marketing campaign to encourage tourists to come to Tinian, TSTI even lowered its ferry rate, in a desperate move to bring in more customers to Tinian Dynasty Hotel & Casino.

However, this caused TSTI to operate at a loss for the past two and a half years which brought more difficulty in meeting its financial obligations in the early part of 1999. (Lindablue F. Romero)