CDA to restructure $15.5-M CPA loan

The board of the Commonwealth Development Authority has agreed to grant longer repayment terms to the Commonwealth Ports Authority over a $15.5 million loan it secured some eight years ago for Saipan seaport improvement project.

The decision followed a recent appeal from CPA for greater flexibility on the loan payment due to declining revenue collections resulting from lower volume of cargo shipment.

But CDA Board Chair John S. Tenorio urged the ports authority to control its spending and trim excess fat in the personnel in order to meet its mounting financial obligations.

“I am questioning their expenditures because we are denying other projects the necessary funding by granting their request,” he told a recent board meeting. “They should practice austerity measures.”

Mr. Tenorio, however, maintained this has been the policy of the government’s chief lending agency towards its borrowers because the state of its revolving funds is very critical in determining availability of resources for other local programs, like the capital improvement projects.

“Any entity that we are dealing with, I would like to see it practice austerity because we are denying funds to future projects by cutting its payment dues. The public also would like to see us handling the funds properly,” he explained.

CDA extended the loan at a lower interest rate in 1991 for the improvement and expansion plan on the seaport on condition that CPA pays it back in the amount of close to $700,000 each year.

The ports authority, however, has been unable to meet its obligation because of the economic difficulties confronting the islands, that have pulled down seaport revenues over the last two years.

According to Mr. Tenorio, CPA officials have asked the board that “since the economy is bad and the volume of cargo has decreased, whether they can prolong or stretch payment of the loan.”

A new repayment term will also help the ports authority get a favorable rating from international rating agencies for the $33 million seaport bond between now and March 2000. The funds from the bond flotation were used for the modernization project on the Saipan seaport that was completed early this year.

Marylou S. Ada, CDA executive director, said the term now will be for 27 years similar to the deal forged by CPA with investors on the bonds, but added that financial analysts will still have to compute how much the latter will be paying under the new conditions.

“They will be paying lower… because they are not generating enough revenues,” she said.

So far, the ports authority has carried out a 30 percent hike in seaport rates, wharfage fee and port entry fee to improve its collection. Other steps, such as parking fee, are expected to be implemented in the next few months.