CPA exceeds debt payment requirement by 27%

The level of revenues currently generated by the Commonwealth Ports Authority from its marine division has started showing signs of improvement, empowering its ability to comply with the $33 million seaport bond indenture.

After previously falling short to meeting the 125 percent debt coverage ratio requirement, CPA managed to exceed the required debt service coverage by injecting additional revenues from its seaport operation in August.

A report prepared for the CPA Board of Directors disclosed the 125 percent required debt coverage ratio has been exceeded by 27 percent, with CPA posting a whooping 152 percent for the month of August 2000.

CPA managed to realize a modest growth of one percent in revenues during the period under review, from $397,463 last year to $400,545, spurred mainly by cash flowing out of the recently implemented automated public parking system at the Saipan seaport.

Gross revenue tonnage on Saipan soared 10 percent to 73,295 tons from 66,514 tons last year, while traffic on Rota grew by five percent despite the 87 percent decline in outbound revenue tonnage.

On Tinian, gross revenue tonnage increased by 120 percent with inbound and outbound traffic counts manifesting significant growth of 125 percent and 31 percent respectively.

The increased capability of CPA in meeting its seaport bond indenture was realized despite a 21 percent in the agency’s operating expenses over the same month which soared 21 percent from the year-ago level.

CPA officials have previously aired dim projections of the agency’s ability to meet its seaport bond indenture requirements despite a slight increase in revenues for the next fiscal year and reduction on expenses.

In response to the Administration’s call for austerity, CPA last year frozen salary increases, stopped overtime, reduced manpower hours by eight hours every pay period and slashed health benefits by 50 percent. This measure was implemented beginning April 1, 1999.

The ports authority trimmed salaries and benefits by more than 10 percent and 17 percent respectively during the FY 2000. With the exception of personnel costs, communication and utilities, operating expenses plunged by at least 15 percent.

The ports authority, however, expects a five percent annual interest rate on any cash from operating activities.

The 1:25 debt coverage requirement is the ratio of operating income to the summation of interest expense and revenue bond principal payment.