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CUC sees $1.7M shortfall
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Posted on Jan 13 2005
The Commonwealth Utilities Corp. is projecting a $1.7-million budget shortfall by the middle of February, when the firm pays $5.1 million for power generation fuel.
In a cash flow analysis dated Jan 12, 2005, a copy of which was obtained by Saipan Tribune, CUC comptroller Sohale Samari indicated that the utility firm will face the shortfall next month with or without implementing a fuel surcharge.
At least one board member, however, expressed doubt that CUC could predict how the utility firm’s cash flow situation will be in the next months, given the various alternatives still left available to CUC.
“At this point in time, we really don’t know what the shortfall might be. Until we as a board get together and meet with the governor to find out the short-term solutions he can offer, then we can’t really tell. We have yet to see all the different alternatives that we can take to generate money for the corporation,” said director Allen Perez.
He said, however, that he supported the proposed fuel surcharge because he believed it was feasible as a short-term solution to CUC’s financial problem.
The board of directors deferred making a decision on the fuel surcharge on Wednesday, in view of its scheduled meeting with Gov. Juan N. Babauta yesterday. The governor is expected to suggest solutions to CUC’s financial crisis in the meeting, which was postponed and moved to today.
Another CUC official, who asked not to be named, also expressed skepticism about the projected shortfall, citing recent moves by oil companies to lower prices.
Samari’s report showed that CUC will begin February with $1.8 million in cash and certificates of deposits. The corporation expects to collect $2.7 million from customers, bringing to $4.5 million the total cash available to CUC by Feb. 15.
However, CUC has payment obligations reaching $6.2 million, including a $5.1 million payment to Mobil and $480,000 for personnel expenses.
The report also showed that if the fuel surcharge is implemented, CUC will face another shortfall of $2.8 million when the next fuel payment becomes due on March 15. With a surcharge of 1.5 cents per kwh in place, the shortfall will reduce to $2.4 million, according to the report.
