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CUC facing $2.5M shortfall
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Posted on Sep 09 2004
The Commonwealth Utilities Corp. needs to raise $2.5 million in a week to be able to meet its obligations, including a $2.86 million payment to Mobil Marianas and the next payroll.
CUC comptroller Sohale Samari reported that, as of yesterday morning, the corporation had $1.3 million in available cash. However, CUC has to meet obligations totaling $3.8 million that are due by the end of next week.
This includes a $2.86 million payment to Mobil for production fuel, about $600,000 for the personnel’s salary and overtime pay for work done following Supertyphoon Chaba, and $340,000 for other miscellaneous expenses.
Samari, however, informed the CUC board of directors of different possible sources of revenue that can help the corporation meet its commitments.
On top of this is the $650,000 payment due from the CNMI government on Sept. 15. Samari also expressed confidence that CUC will be able to raise at least $1 million out of the remaining $1.8 million shortfall from collections from customers. He noted that CUC’s collection averages $275,000 daily.
The corporation could encash its certificates of deposit to cover the balance.
“Another scenario is if the government does not make a payment by Sept. 15,” Samari said. CUC will then have to rely on the $1 million projected collection from customers and on the cash from the CDs.
He said that CUC’s certificates of deposit currently amount to $7.8 million. However, $2.8 million of this has already been allotted for some expenses, leaving CUC only $5 million available for its operational expenses.
The $650,000 payment from government comes pursuant to its agreement with CUC, following a court order stopping CUC from disconnecting utility services to the government. As of July 31, the government owed CUC $17.9 million.
At yesterday’s board meeting, CUC legal counsel Kay Delafield said the corporation can bring the government to court for breach of agreement if it fails to make a payment next week.
Samari also reported that 10 major accounts have been identified for collection. He said letters will be sent to these delinquent customers to force them to settle their accounts immediately.
