SGMA cries foul on proposed surcharge fee

The local garment industry yesterday joined other sectors and community members in raising their opposition to the fuel surcharge fee being proposed by the Commonwealth Utilities Corp.

The Saipan Garment Manufacturers Association said the industry does not argue with the concept of the planned fuel surcharge, but it disagrees with the way CUC is trying to impose it.

“SGMA disagrees with the amount of the fuel surcharge, finds fault with the assessment in determining the surcharge, vehemently opposes the manner in which the hike is being adopted, argues against the absence of any third-party oversight [minus this committee’s intervention] and disagrees with a less than timely, urgent, and forceful imposition upon commercial and residential power consumers in the Commonwealth,” SGMA executive director Richard Pierce said in a Nov. 14 letter to the House and Senate committees on public utilities, transportation and communication.

The committees, chaired by Vice Speaker Timothy Villagomez and Sen. Diego Songao, are scheduled to conduct a joint legislative hearing on CUC’s proposed fuel surcharge today.

In the letter, Pierce urged the committees and the entire Legislature “to take immediate steps toward delaying the proposed fuel surcharge to properly study and evaluate the rates, manner and method the CUC intends to impose on its cost increase upon every business and resident in the CNMI.”

Pierce said that additional production costs would further hurt the already ailing garment industry, especially with the nearing end of the garment quota system.

“The island’s factories are at a point, with the end of a worldwide quota system a mere 45 days away, competition is higher than ever experienced in the past, the cost of raw materials rising and freight and other operational costs always increasing, where any additional increase in the cost of doing business only exacerbates and further aggravates an already almost untenable situation,” Pierce said.

Further, he noted that unlike other businesses on Saipan, garment factories cannot pass on additional operational costs to their customers. In fact, he said, the buyers dictate the selling prices, not the factories.

“Therefore, only out of our pockets will come the funds for any increase in power and utility rates. Quite frankly, we really can’t dig any deeper,” he said.

Pierce also hinted that garment factories, as well as hotels and other large businesses, may resort to using their own power generators more often if CUC’s power become too costly.

“CUC needs these commercial users on its grid. If rates exceed what these costumers can afford to produce themselves, what will CUC do when they begin to drop off public power supply more frequently than they already do? What will happen to charges for smaller consumers as CUC collects less overall?” he asked.

He further stated, “SGMA appreciates that CUC has had its own costs in operations increasing due to factors outside its control. However, we do not feel that this proposed fuel surcharge is being accurately and effectively imposed on the factories. We are an integral part of the CNMI’s inter-dependent business and public community, and, therefore, what affects the factories, affects everyone else.”

SGMA is comprised of 25 licensed apparel manufacturers on Saipan. The industry accounts for nearly 16,000 jobs in the factories and yields a third of budget revenue for the Commonwealth government, Pierce said.