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SCC wants CDA writeoff bill vetoed
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Posted on May 08 2006
The Saipan Chamber of Commerce has called on Gov. Benigno R. Fitial to veto a bill that aims to write off the Commonwealth Utilities Corp.’s debt with the Commonwealth Development Authority.
“The governor [has] informed everyone that the CNMI government is broke. A week or so later, our Legislature passed a bill that would eliminate CUC’s debt to CDA. This means we have so much money to throw away, let’s just forgive each and every debt there is to the government,” said Chamber president Charles V. Cepeda.
He urged the governor not to approve the bill as it would send a signal that the government tolerates loan delinquency.
Chamber vice president Alex Sablan said the government should “do away with the idea of forgiving debts.”
The Legislature has passed House Bill 15-64, which aims to forgive the $45.5 million debt owed by CUC to CDA.
The administration said, however, that the debt forgiveness is part of the bailout plan for CUC.
The bill, as amended by the lower chamber, would authorize CDA to waive the principal sum and interest due from loans extended to CUC, as referenced in an amended memorandum that CDA and CUC signed in 2004.
The terms of the agreement had provided for a waiver of a portion of CUC’s debt; authorized CUC to issue shares of preferred stock valued at $45 million to CDA; and provided for the repayment of debt for users fees for power consumption by the CNMI government.
The measure will also require any independent power producer taking over CUC’s power plants to pay half of the $45.5-million loan principal. The payment from the IPP would be reserved and used for CDA’s loan programs.
But the bill cited that CUC no longer has the authority to enter into a debt equity conversion settlement with and to issue stocks to CDA, especially when it is currently a division within the Department of Public Works.
The bill also said that CUC should not have to pay back the loan, since the funds came from a $140-million federal grant that did not require repayment.
It also that other government agencies received amounts from this grant for infrastructure development, but CDA is only pursuing repayment from CUC.
