‘CUC as a monopoly is attractive to Fund’

The Commonwealth Utilities Corp. is a good opportunity for the NMI Retirement Fund to invest in because it is a monopoly, according to Fund chair Juan T. Guerrero yesterday.

Senate President Pete P. Reyes has also expressed support for the plan that, according to him, could be done in partnership with Marianas Public Land Trust and the Commonwealth Development Authority.

Reyes presided over a meeting on the proposal yesterday morning with officials from the Fund, CDA, and MPLT in the Senate chamber.

Some senators and representatives have questioned why the Fund is investing in CUC when it has been refusing to let Fund members retire due to the lack of available pension funds and in light of CUC’s worsening financial condition.

In an interview with Saipan Tribune after the meeting, Guerrero said they are still in the exploratory stage and that they want to conduct due diligence to ensure that it would be a sound investment move.

“We’re interested but we need to satisfy that due diligence,” Guerrero said.

He defended the proposal, saying that, as trustees for the Fund, it is their responsibility to invest the Fund’s money, whether it is with CUC or not.

Guererro said the Fund’s assets must be invested to ensure that the agency will meet its obligations to Fund members.

“Of the assets that we have, about $100 million is paid from the government. The rest were all earned from investments,” he stressed.

When asked how much the Fund is planning to invest in CUC, Guerrero said it is still too early at this stage to suggest an amount.

He disclosed that they are inviting MPLT and CDA to join in the investment and set up a structure for this new investment plan that the Fund is proposing.

“Our role would be basically as investor, nothing else. We are interested to invest, just like when we invest in the U.S stock market or international market,” he said.

Guerrero said CUC is a monopoly, so they are looking at this investment plan as an opportunity to make money.

“We feel that if outsiders are going to make the bulk of the money, we want the same opportunity because we have the assets or resources,” he said.

The chairman emphasized that their proposal is not a loan but an investment.

“All the criteria have to be set and if it meets all those criteria, then it would probably be the opportunity [to invest],” he said.

Guerrero said if handled correctly, CUC as a monopoly is supposed to make money.

“CUC is one of the last monopolies. In most places, utility is a monopoly. A good return on investments should be derived from the operation of CUC,” he said.

Citing three other Fund’s investments in the CNMI, Guerrero said this is an opportunity for them to invest locally.

“But we need to correct the deficiency [at CUC] if we are going to put our money in,” he added.

Sen. Reyes, in a Tuesday letter to Guerrero, said the Fund’s interest in investing in CUC in possible partnership with MPLT and CDA is a “welcome surprise” for him.

“Not only do I believe that such an investment would benefit CUC, especially now as it struggles with the electrical power crisis on Saipan and its overburdened financing, but also to the Fund members who stand to gain as direct stakeholders in the CNMI’s sole electrical utility provider,” Reyes said.