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‘CDA should write off CUC debts’
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Posted on Feb 12 2005
Saying that the money involved was a federal direct grant assistance that required no repayment, a lawmaker proposed that the Commonwealth Development Authority just write off a longstanding $45 million principal loan of the Commonwealth Utilities Corp.
In a newly introduced House Bill 14-285, Vice Speaker Timothy Villagomez said the loan was part of the $140 million in direct assistance given to the CNMI by the federal government “without any repayment.”
He said that CDA merely acted as conduit for the distribution of these funds for infrastructure development in the CNMI.
CDA, he said, distributed the funds to various government agencies besides CUC, “without requiring these agencies to pay back the funds given to them.”
“Arguably, CUC too, should not have to pay back the funds given it by CDA because CUC is a public corporation and the funds were used for infrastructure development,” he said.
The CUC reportedly used the money for power, water, and sewer projects.
Further, Villagomez, a former CUC executive director, said it is in the best interest of the CNMI to write off in full CUC loans from CDA in order to promote the stability of the utility firm, which he said, is in “severe financial crisis.”
He said such action is necessary now since both agencies have tried but failed to resolve their dispute a number of times.
Following a court order advising the two agencies to settle their differences without the court’s intervention, the CUC and CDA executed an amended memorandum of agreement in January 2004, setting forth the terms of their agreement.
“The CUC, however, is in a state of severe financial crisis and is unable to make payments pursuant to the agreement,” said Villagomez.
He said that CUC’s main struggle surrounds its fuel cost payment every month—costs that continue to rise each month.
