Bill compromises CPA’s autonomy – Salas

Commonwealth Ports Authority Executive Director Carlos H. Salas has expressed concern over a proposed measure seeking a waiver on passenger fees on the ferry between Tinian and Saipan because it interferes with the autonomy of the agency.

Sen. Herman M. Manglona has filed SB 11-151 in an attempt to stop the ports authority from collecting the $5.85 passenger fees and assist the financially-beleaguered Tinian Shipping.

The proposal was put forward after the CPA board rejected the appeal of Hong Kong Entertainment (Overseas) Ltd. board chairman Michael Kwan to lower passenger fees to assist Tinian Shipping, its debt-laden subsidiary.

According to Salas, the bill sends a wrong signal to lenders and will cast doubt on CPA’s capability to charge and collect fees to meet its financial obligations in the future. He added he has discussed the issue with some legislators who are receptive to the concerns of CPA regarding the proposal’s implications.

Manglona explained the imposition of passenger fees will deter economic growth of the island municipality Tinian and adversely affect the most effective means of transportation between Saipan and Tinian.

So as not to burden Tinian Shipping with the collection of passenger fees, the ports authority will assign its own staff at the harbor to do the job, said Salas.

CPA is still working out a payment scheme with Tinian Shipping for the payment of accrued passenger fee. The ports authority has to generate as much revenue to pay the $33 million debt of the Seaport Division.

Based on the number of passengers going to Tinian, the ports authority is projecting collections to reach some $120,000 per month under the new passenger fee of $5.85.

Tinian Shipping ferried an average of 22,000 passengers a month from January to May 1999. Ninety-four percent of the total 106,966 passengers during the five-month period were non-paying. Majority of the six percent paying passengers came from Tinian.

Hong Kong Entertainment spent over $12 million to acquire the two high speed ferries — M/V Tinian Express and M/V Saipan — to service tourists coming from Saipan to Tinian.

Unfortunately, poor tourist arrivals and the reduction in international flights coupled with Asia’s economic crisis have pushed the company into a financial distress since its operation started in May 1998. Every month, Tinian Shipping incurs a net loss of over $300,000.

The regional crisis has greatly affected the expected revenue from the ferry, hotel and casino that the company has already missed mortgage payments for the ferries.

Debis Financial Services Inc., which financed the acquisition of the two vessels, has filed a lawsuit in the federal court for alleged non-payment of a $7.6 million loan.

Hong Kong Entertainment has managed to forge an out of court settlement to prevent the seizure of its ferries.