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Legislation proposed to allow CUC to borrow $40M from Fund
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Posted on May 21 2006
Legislation has been proposed in the House of Representatives to allow the cash-strapped Commonwealth Utilities Corp. to borrow $40 million from the Retirement Fund.
Authored by Rep. Crispin M. Ogo, House Bill 15-132 would authorize the Fund to provide the CNMI government with a $40-million loan for the improvement of utility services.
H.B. 15-132 also seeks to establish a sinking fund to guarantee the CNMI government’s repayment of the loan.
“This bill was proposed by the administration to finally address the power generation issues on Rota, Tinian and, most especially, on Saipan,” Ogo said in an interview Friday.
Ogo is the chairman of the House Committee on Ways and Means.
“The Legislature finds that over the past few years a combination of several factors, such as rapid escalation of fuel prices, aging and inadequate utilities infrastructure, failure to utilize preventive measures and poor operating and management practices, have all contributed to the existing [CUC] problems.
“The Legislature further finds that it is critical to breathe life and jumpstart the CUC with a $40,000,000 loan from the Northern Mariana Islands
Retirement Fund for the maintenance and improvement of the power, water, and sewer facilities,” states a portion of H.B. 15-132.
The measure proposes a simple loan interest rate of 7.5 percent over a 20-year period, with payments due annually beginning on the loan’s first anniversary.
The proposed legislation also provides that, in the event of privatization of CUC, the contractor should assume the obligation to repay the loan over its remaining term and reimburse CUC of all the loan payments made by the utility before the privatization.
