SCC: Administration’s action on FSF indicative of maturity

Saipan Chamber of Commerce president Charles V. Cepeda said the Fitial administration’s decision to temporarily retain the fuel surcharge is a sign of “maturity,” noting that while the fee is burdensome, it is deemed necessary.

“Removing the fuel surcharge is something that the business community would like to see but we understand that even with the FSF, the government still has to come up with subsidy. …I’m glad this administration is looking into the rationale of the fuel surcharge. It shows the maturity of this administration,” said Cepeda.

Gov. Benigno R. Fitial, as opposition House speaker then, had criticized the previous administration for allowing the CUC to impose the 3.5-cent fuel surcharge per kilowatt hour. He said that he would eliminate the surcharge once seated as governor.

In a press conference last Friday, acting Gov. Timothy P. Villagomez said that the administration still favors the eradication of the fuel surcharge but it may take some time.

Meantime, Cepeda said that the business community agrees that payment of electricity should depend on consumption.

“What we would like to see is, whoever is using the utility should pay for it. We don’t want to subsidize what others are using. I understand that even with the surcharge right now, there’s at least $2 million that the government has to come up with in the form of subsidy,” said Cepeda.

The chamber official believes that the government could not afford to get rid of the surcharge right now because this would mean a bigger subsidy.

He said that right now, it costs CUC 24 to 25 cents to produce power but it sells this to customers at 14.5 cent to 19.5 cent per kwh.

“This clearly tells you that CUC is losing. There’s a gap that the government has to fill in as a subsidy. If you remove the surcharge now, the government has to fill in a bigger gap. Can the government afford it?” asked Cepeda.

The administration said that it provides $2 million subsidy to CUC a month. This is an increase of $1 million to what the previous administration was giving the CUC.

The CUC earlier said that it spends some $6 million in fuel a month, but it gets to collect only about $4.1 million from customers.

The fuel surcharge amounts to some $1 million, prompting the Babauta administration then to chip in an additional $1 million.

The previous administration had maintained that getting rid of the surcharge would mean the collapse of the utility firm, and eventually the local economy.

The incumbent governor currently has unrestricted emergency authority to reprogram funds for CUC and other government offices until the passage of a new budget.