CPA eyes establishment of emergency fund

The Commonwealth Ports Authority is seeking to establish an Operation Emergency Fund with an initial deposit of about $312,000 to finance contingency needs at both the airport and seaport divisions.

Board Chair Roman S. Palacios told an interview that CPA management is initially requesting for $249,880 in supplemental funds for the airport, and an additional $62,000 for emergency needs at the harbor.

Mr. Palacios said the idea behind the proposed creation of an Operation Emergency Fund is to make the money available whenever the immediate need arises, without necessarily calling the Board of Directors for a meeting which may be time-consuming.

The fund is to remain within CPA coffers for the rest of a financial year should there be no event that may be considered emergency for which the money is originally earmarked for. The fund will be treated as a separate account to the operations budget.

“If there are no events that would oblige us to use the funds, the money will remain in the account for future use should there be an emergency need,” Mr. Palacios told an interview.

During a previous board meeting, the CPA management was asked to discuss and identify the true purpose of the proposed emergency fund, as well as to qualify expenses that may be considered part of the emergency list, like the immediate threat to health and safety of passengers.

Concerns have also been raised on whether the money that will be earmarked for emergency purposes would be considered a revolving fund which has to be replenished once used in order to make sure that future emergency needs would still be financed.

Earlier this year, CPA set up a similar supplemental reserve fund to obtain investment rating for its seaport bond and to mitigate the possible impact of the impending Saipan garment manufacturing sector pullout to its apparently worn out coffers.

The Ports Authority is working at making an initial $2.7 million deposit to the Seaport Reserve Fund within the year. CPA plans to deposit $700,000 to the Fund every year to reach the target $8 million in five years.

The Reserve Fund is being put in place to alleviate the anticipated drop in seaport revenues once the apparel manufacturing sector pulls out of Saipan in a period of five years.

The impending pullout of the garment manufacturing industry, an anticipated result of the international multi-fibre agreements which would phase out garment quota to the United States by 2005, may cause the collapse of CPA’s seaport revenues beginning 2002.

Seaport revenues are projected to fall from $5.7 million in FY 2002 to $3.2 million in FY 2007 practically because 58 percent of the container movement activities in Northern Marianas harbor is buoyed by the garment industry.