Delay seen in collection of retroactive wharfage fee

The Commonwealth Ports Authority may have to wait awhile before it can collect retroactive wharfage for fuel supplied by Mobil Oil Marianas to the Commonwealth Utilities Corp.

According to a settlement agreement signed between CPA and Mobil, CUC owes the ports authority $3.4 million for wharfage on fuel provided by Mobil from July 2004 through September 2005.

Mobil has already sent CUC a demand letter for the amount, giving the utility firm 15 days to pay up. The right to collect from CUC will be assigned to CPA if no payment is made before the deadline.

In an interview yesterday, CUC executive director Lorraine Babauta said the utility could not entertain Mobil’s demand, given CUC’s current financial situation.

“They caught us by surprise. We’re in a tight financial situation as it is; we’re currently under state of emergency,” Babauta said.

She bared plan to communicate with CPA and attempt to come up with a workable solution. She added that CUC was studying whether the firm could legally be forced to pay the back wharfage.

“Our contracts with Mobil [for the subject period] have been technically closed. We’re looking into whether such demand can still be imposed,” Babauta said.

In its settlement agreement with CPA, Mobil stated that it had discussed the issue with its legal counsel and believed that retroactive charges were collectible from CUC under the provisions of its previous and current fuel supply contracts.

The settlement was negotiated as a result of the ports authority’s discovery that Mobil had not been billed for wharfage fees for a seven-year period starting October 1997, when the Saipan Harbor Improvement Project was completed.

Mobil’s unbilled wharfage fees amounted to $6 million when CPA discovered the oversight last year. This amount includes charges from the Port of Saipan and the West Tinian Harbor, where Mobil maintains fuel facilities.

CPA charges a wharfage fee of $5.50 per revenue ton of goods passing through its ports.

Pursuant to the agreement, Mobil will be collecting $3.4 million from the CUC for wharfage on fuel supplied by Mobil to the utility firm during the subject period.

Mobil itself will have to make a lump-sum payment of $2.7 million to CPA within five days of execution of the agreement.

This includes $718,7755.03 in retroactive charges that Mobil asserts is due as a result of fuel products brought by Mobil into the Commonwealth for Shell Marianas.