CPA wants outstanding debts retired, too

Meddling by the Legislature and the government with the financial affairs of autonomous agencies like the Commonwealth Ports Authority, will compromise its ability to promote developmental programs.

Citing its adverse effect in terms of loan agreements and bond floatation to fund Capital Improvement Projects, CPA Executive Director Carlos H. Salas said political interference will categorize an independent agency as an unstable organization.

Mr. Salas urged the Legislature to look at the bigger picture to resolve whether to retire the indebtedness of Commonwealth Utilities Corporation to Commonwealth Development Authority.

“If a little situation arises and the Legislature comes in and disturb the statutes, it will hamper the ability of the agency to promote programs,” said the executive director.

If House Bill 12-320 intends to write off the both the principal and the interest of loan obtained by CUC, Mr. Salas urged the Legislature to consider the initial capital and accrued interest as a grant for a CIP project.

However, if the bond will be considered as a grant, he said the Legislature should be ready to provide CPA the same treatment on its outstanding loan from CDA.

“If there is no way to repay it, consider it as a grant but CPA should be treated the same,” Mr. Salas stressed.

The House Committee on Public Utilities, Transportation and Communication on Monday called an inquiry on financial status of the utility corporation amid reports of violations of its fiduciary responsibilities.

Committee Chair Rosiky Camacho said the 30-day period given to CUC should be enough to give the corporation time to prepare needed documents to support its contentions.

The Legislature hopes to get a clearer picture of the financial status of the utility corporation particularly on alleged ostentatious lifestyle of its board members.

The Commonwealth Development Authority earlier said it will not and cannot support the house bill and urged CUC to honor its obligations.

CDA Legal Counsel Vicente Salas argued that under the Special Representatives Agreement, the government-controlled lending agency has the right to investigate CUC’s financial management.

He added that CDA has the right to remove officials who cannot properly operate the utilities corporation and relegate the responsibility to CDA’s appointees.

This, he added, will ensure smoother relationship and guaranteed repayment of CUC’s obligations which has amounted to $51,568,750.

CDA Executive Director MaryLou S. Ada explained on the other hand, HB 12-320 will violate constitutional calls that no law should be enacted to impair the obligations of contracts.

CUC and CDA entered into a loan agreement, stipulating CUC’s obligation to repay the loans plus interest. Such obligation was agreed to by CUC and bargained for by CDA but HB 12-320 will impair these contractual rights and obligations, said Ms. Ada.

The executive director added that the government lending arm has fiduciary responsibilities that cannot be ignored especially the need to safeguard the assets and preserve its financial vitality.

Under HB 12-320, the indebtedness of the CUC from the CDA will be transferred to the Department of Finance to relieve the utility company of all obligation to pay accrued interest.

The bills also seeks to provide CUC with credit against such indebtedness for all capital expenditures made from its revenues subsequent to the date of such borrowing from the CDA. (EGA)