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‘$5M debt limit for CUC not enough’
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Posted on Aug 02 2008
Although the increase in its debt limit to $5 million is a welcome development for the Commonwealth Utilities Corp., it is not enough to effectively run a $100 million operation, according to CUC executive director Antonio Muña.
“For a lot of people $5 million is a lot of money but when you’re trying to run a $100-million operation, $5 million is only 5 percent of the working capital,” said Muña in an interview with Saipan Tribune.
He pointed out that CUC is dealing with increasing fuel costs and trying to pay accumulated past dues.
“Five million dollars is not going to do it,” the CUC official stressed. “What’s I’m concerned with is that it’s not anywhere close to what we’re going to need at the end of the day.”
Gov. Benigno R. Fitial issued an executive order on July 25 that removes the requirement for any CUC debt over $500,000 to be approved by the Legislature. The order would allow the utility agency to borrow an unlimited amount of money without going through the legislative process.
Fitial issued another executive order last Wednesday that amended the first executive order. The new version would allow CUC to borrow up to $5 million without first obtaining legislative consent.
Asked for comment about the $5 million debt cap, Muña said for sure it is an improvement from the half a million dollars.
“But at the same time, the reality of the situation with respect to what CUC requires in terms of debt [is that] everybody has to look at what’s in CUC’s books—what is required to bring CUC as far as fixing the financial foundation and come to terms of the reality of what that is,” Muña said.
He said he is afraid of a situation where, as CUC deals with certain banks or institutions and they get approval from that bank or institutions, that the due diligence effort that bank may have already done with respect to what CUC applied for will be duplicated again in the Legislature, which may not be necessary anymore.
Muña said as they make their report to the Public Utilities Commission or to the Legislature, there should be quick review and approval.
