CUC emergency extended

Citing that the Commonwealth Utilities Corp. remains insolvent, Gov. Benigno R. Fitial has extended for another 60 days the emergency declaration over the utility firm.

Fitial said during yesterday’s news briefing on Capitol Hill that he signed the memo extending the order this week.

At the same time, Fitial said in a letter to the Legislature yesterday that he hopes to solve CUC’s financial woes “in the next 60-90 days.”

Fitial noted that the seven-month continuous state of emergency under the previous administration failed “to restore CUC to self-sufficiency.”

“Upon declaring the state of emergency [on Jan. 27], I had no clue as to the needed time to restore CUC to self-sufficiency. …It is at best an estimate that we may be able to solve CUC’s financial woes in the next 60 to 90 days,” said Fitial.

He said that when former Gov. Juan N. Babauta lifted the seven-month CUC emergency declaration last December, the firm “was obviously still in a ‘state of emergency.’”

He cited that, in Babauta’s December 2005 report on the CUC crisis, the former governor admitted that “critical financial and management issues remain, which necessitate the involvement and support of the administration.”

In the report, Babauta was said to have acknowledged that “CUC remains in a negative cash flow situation.”

Fitial said that, of the $13.4 million that Babauta reprogrammed for CUC during the seven-month period, only $1 million was left as of Jan. 13, 2006.

Meantime, he said that fuel payment due to Mobil on Jan. 31, 2006, for a three-week supply amounted to $1.9 million.

Fitial’s administration has also estimated that, to ensure uninterrupted fuel supply through Sept. 30, 2006, CUC needs $24.4 million.

To do this, the government has to implement an across-the-board budget cut, he said.

Recovery program

Fitial outlined a four-step CUC recovery program: restore CUC’s financial solvency, increase power production, allow CUC to effect cost rate recovery, and continue to explore privatization.

He said that CUC has a net deficiency of $12.9 million as of fiscal year 2004.

The administration also looks at increasing power generation by an additional 30MW.

In his letter to the Legislature, Fitial acknowledged that his office will pursue privatization “to ensure that the public is assured reliable power at the least amount of cost.”

The administration said it has hired a consultancy firm to assess this option.