CPA protests planned waiver of wharfage fees

A bill seeking to waive wharfage fees on cargoes shipped from Saipan to Rota and Saipan could result in personnel layoff and significantly hamper port operations and therefore should be rejected, the Commonwealth Ports Authority said yesterday.

CPA executive director Carlos Salas noted in a letter to Senate President Joaquin G. Adriano that the ports authority relies substantially on income from wharfage charges to operate the ports.

Data show that wharfage fees comprised 53 percent of the Rota seaport’s total revenues in fiscal year 2004. Even with the almost $60,000 collected from wharfage charges, the Rota seaport suffered a $40,185 deficit last year.

During the first five months of FY 2005, wharfage fees totaled $31,500 or 58 percent of the Rota seaport revenues. Without the wharfage fees, CPA would not have had enough funds to meet its $31,188 payroll expenses during the same period.

Likewise, wharfage charges made up 50 percent or $91,804 of the Tinian seaport’s total revenue collection in FY 2004, and 49 percent or $33,070 of the port’s income during the first 5 months of the current fiscal year.

Salas maintained that taking away the revenue source from CPA would have adverse consequences upon seaport operations.

Among the possible results, he said, are workforce reduction, elimination of maintenance and repairs at the seaports, and a stop in power supplies.

Salas said that if police or fire services at the ports are curtailed or eliminated, federal homeland security requirements would be jeopardized “both with respect to funding and possibly permitting the port to even operate.”

He added that with the curtailment of maintenance and repairs, CPA would have further difficulty in procuring insurance coverage at a reasonable rate. He added this would make it harder for CPA to receive assistance from the Federal Emergency Management Agency and other federal agencies after typhoons.

Further, waiving wharfage fees could put at risk the revenue bonds covering improvements at the seaports, Salas said.

He explained that under the bond indenture, CPA is obligated to inform the bondholders of any changes in CPA revenues that result from an act of the CNMI government.

“If they make the decision to call the bonds due to a breach of the indenture, approximately $28 million may become due and payable,” Salas said.

He also expressed doubt that the Legislature has authority to amend CPA tariffs filed with the Federal Maritime Commission. “While time has not permitted a thorough research of this issue, it is highly arguable whether this can be done,” he said.

Lastly, Salas questioned a statement in the bill claiming that wharfage fees are partly to blame for the high cost of commodities on Rota and Tinian.

“There has been no study to [CPA’s] knowledge as to the effect of wharfage fees on the price of commodities in either Rota or Tinian,” Salas said. “Thus there is no rational or statistical basis for the House finding.”

Authored by Rep. Norman Palacios, House Bill 14-309 was recently passed by the House of Representatives and now awaits Senate decision.