CUC allots $28 million for fuel

The Commonwealth Utilities Corporation has increased its budget by some $1.4 million in FY 2000 over last fiscal year to meet increasing fuel costs brought about by high oil prices in the world market, according to officials.

Over $28 million or roughly 41 percent of the total fiscal year’s budget of $68.4 million have been allotted by the government-owned utility corporation for the purchase of fuel alone to run existing power generators.

Yenny Tom, CUC comptroller, attributed the increase to the current costs of petroleum and oil products in the world market, which have jumped in recent months after OPEC decided to slow down in its production to push prices up.

“The price of fuel is pretty much the biggest factor, our biggest expense that we cannot control,” he said in an interview.

If fuel prices continue to go up throughout the year, Tom said CUC has to cut back on other expenditures in order to meet their financial obligations to vendors.

“We have to cut back on something else if we have to pay the bill,” he explained. “What else can you do, you have to pay the bill.”

Based on the budget package approved by the CUC board, more than $54 million or 80 percent of the spending level have been set aside for operations, while $14 million or 20 percent for personnel costs.

Operational expenses include fuel, repairs and maintenance of utility services, like power, sewer and water. CUC generates its own revenues and does not depend on government appropriations.

Despite ballooning costs, the utility corporation has managed to keep its financial situation at bay over the past few years due to austerity measures implemented by the management.

Moreover, it has been able to adjust to the situation when the government fails to pay its utility bills on time. More than $9 million have remained unpaid for the last few months.

Board Director Edward Sablan, who heads the finance committee of CUC’s policymaking body, said this has impacted CUC’s operations. “With no collections, how can we operate,” he asked.

“If we can’t collect them, we have to cut down on something else,” said Tom.

CUC Chair Rosario M. Elameto expressed concern that anticipated revenues from utility services will not meet expenses, saying the corporation still needs to control costs and tighten its belt.

“With the recent increases in fuel costs and the government delinquencies, we cannot afford to become lax with our expenses. Now more than ever is the time to increase efficiencies and avoid unnecessary obligations,” she said.

Revenues from its power division have declined for the past two years because of the economic crisis besetting the CNMI that forced closure of nearly 2,000 businesses since 1997.