CUC revenue, $91M; its expenses, $105M

Under existing conditions, the Commonwealth Utilities Corp. does not have adequate resources to pay its short-term or its long-term financial obligations, according to Sen. Maria Frica T. Pangelinan yesterday.

Citing CUC’s latest statements of net deficiency, Pangelinan pointed out that the agency is on track to invoice approximately $91 million to customers (operating revenues) in Fiscal Year 2008.

CUC, however, is also on track to spend approximately $105 million to provide the service (operating expenses) that justifies the $91 million in billings, the senator told Saipan Tribune.

In addition, CUC has other financial obligations that are in excess of its operating expenses, said Pangelinan, who chairs the Senate Committee on Fiscal Affairs.

“Any company must bring in more income (operating revenue) than it costs (operating expenses) to do business,” she said.

The senator said income that is left over after covering the day-to-day expenses of operation is needed to pay for other expenses, such as loans and upgrades (capital improvements).

“These items are important as it allows a company to stay modern, and continue to provide services by investing in replacement equipment and advances in technology to keep its equipment and facilities functional and safe,” Pangelinan said.

CUC’s net deficiency statements indicate that, as of March 31 this year, CUC total assets was at $129.9 million, but its total liabilities was a staggering $215.5 million.

To address CUC’s financial issues, Pangelinan said the Saipan delegation’s Public Utilities and Infrastructure Committee is actively working with the Fitial administration and CUC, and that they are committed to finding solutions—both short- and long-term.

On the short-term solution, Pangelinan said they are focused on providing reliable power and water.

With respect to long-term solutions, she said they are focusing on CUC’s operational expenses and its debt load, and ways to relieve both.

In yesterday’s PUIC meeting at the House chamber, Pangelinan said she is really worried after reviewing CUC’s financial report.

“I just don’t have any solution for the short-term on their cash flow and how to relieve them of their debts,” the senator said.

The situation, she said, is also bad for the FY 2009 budget because if CUC doesn’t have the money to meet its current obligation, this means it will be eating into somebody else’s budget or the general fund’s budget

“I’m just stressed out and I take this personally. I think we should really look at the current situation and let’s not worry whether they are complying or not. It’s too late to do that,” the senator added. She earlier stated that CUC is “basically bankrupt.”

The meeting was still ongoing when Saipan Tribune left the chamber yesterday afternoon. The other lawmakers present in the meeting were Reps. Christina Sablan, Edward Salas, and Francisco S. Dela Cruz.