CPA slashes working time, hikes port fees

In a desperate move to save its operation, the Commonwealth Ports Authority board yesterday cut down the working hours of its employees from 80 to 72 hours per pay period starting April 1, 1999.

However, the cash-strapped ports authority also approved the increase in airport fees and charges effective March 1, 2000. The board also gave the go signal to raise seaport rates, charges and fees beginning July 1, 1999.

The reduction in manhours would give the ports authority some $550,000 in savings for 12 months. At the same time, the board approved to reduce its contribution in the employees’ health insurance benefit.

Five months from now, the wharfage fee shall increase by $3.25 per revenue ton while port entry fee, dockage rates, bunker fee and home port fee shall increase by 30 percent.

If the CNMI government and the Legislature would be able to provide the needed funding for the ports authority to meet its airport bond debt service obligations and operating expenses before March 2000, the board will no longer raise the fees.

CPA executive director Carlos H. Salas told employees who attended the board meeting that cutting down staff salaries was the last thing which management wanted to do, thus, the delay in making such a decision.

“It is a painful decision which would hurt us all. But we have to make tough decisions to weather the crisis that has hit us,” said Salas.

With a projected 4.5 percent growth in aviation division this year by the airport consultant Ricondo & Associates, CPA would have to increase its passenger facility charge by 39 percent from $5.79 to $8.00 per passenger and a 65 percent hike in landing fee from $.85 to $1.40.

The planned airport fees increase was opposed by various sectors in the CNMI including airlines, tourism officials and even some members of the Legislature claiming the timing was wrong because the tourism economy has been on a decline and efforts are being made to save the half-a-billion-dollar tourism industry.

Every month since 1998, the ports authority has been incurring huge losses due to shrinking revenue brought about by the plunge in tourism economy since Asia’s financial crisis began in July 1997.

Board member Roman S. Tudela, chairman of the finance committee, said management looked at all the options to save the operation so that the services at the airport and the seaport are not compromised.

“In the end, we are doing this to save everybody by keeping them employed,” he said.

Financial consultant Rex Palacios said deferment in raising of airport fees would allow for some administrative changes and give the Legislature the chance to make good its promise that it will help in providing funds to pay for its financial obligations.

He said it is crucial for CPA to show that has the intention to raise the fees not only to satisfy the rating agencies but also to prove to the bond holders that management is doing something to save its operation and meet debt service.

“It is up to those people who made certain promises to carry them out before the raising of airport fees,” said Palacios. Even without the obligation to service the bond debt, the ports authority is still financially troubled because of the worsening economic situation, he said.

Although the seaport consultant Booze, Allen and Hamilton has advised the raising of seaport fees must begin in the year 2000, the ports authority decided to implement it earlier to provide CPA with the needed fund in the event the garment industry pulls out of the CNMI.

According to the study conducted by the seaport consultant, the pullout of the garment industry in the Northern Marianas would cripple seaport operation since it is the main source of its revenue.

The raising of the airport fees was a condition imposed by the rating agencies to prevent the increase in interest rates for the airport bond. Without carrying out a fee hike one year before the bond flotation was carried out in March 1998, the interest rate will jump from 6.25 percent to 6.70 percent.