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‘It was USDA that pulled plug on $10M CUC loan
It was the U.S. Department of Agriculture-and not the Commonwealth Utilities Corp.-that pulled the plug on CUC’s $10 million loan with Rhode Island-based Independence Bank when the federal agency realized that the utilities agency does not have the ability to repay the USDA-guaranteed loan, according to Lt. Gov. Eloy S. Inos.
CUC is under a state of emergency because of financial, procurement and hiring crises, among other things. It is now again under the direct control of the Executive Branch.
Inos said USDA as the loan guarantor “has decided not to move forward” with the loan.
A USDA-guaranteed loan would have a much lower interest rate than a regular loan. Inos said CUC is not considering applying for another loan at this time, given its financial standing.
“My understanding is that it was USDA that felt that CUC is not financially capable of servicing the loan. That’s why they [USDA] are not guaranteeing the loan. And this is a loan guarantee program,” Inos told Saipan Tribune in an interview Friday.
CUC and lawmakers previously said it was CUC and the Office of the Attorney General that decided to back out of the $10-million loan.
Rep. Frank Dela Cruz (R-Saipan), chairman of the Saipan and Northern Islands Legislative Delegation’s Committee on Public Utilities and Infrastructure, is now asking CUC to give back to its customers an estimated $1 million that he believes the corporation started collecting from customers in July 2011 to help repay the planned $10 million loan that didn’t materialize.
“CUC should give back the estimated $1 million they collected since May or June 2011, whether in the form of offsetting their utility bills or refund. They have been collecting that supposedly to help pay for the $10 million but that loan is not moving forward anymore,” Dela Cruz said.
The PUIC Committee called on CUC acting executive director Alan Fletcher to attend a July 12 meeting to discuss the cancellation of the $10 million loan and additional collection from CUC customers since last year to help pay the supposed loan.
Dela Cruz’s committee listed eight sets of issues about CUC that they want to discuss, which also include CUC’s cash flow and operational status; the status of its alternative energy sources and their cost to CUC per kilowatt hour, as well as the companies that will be awarded contracts; update on two stipulated orders from the U.S. Environmental Protection Agency; status of Power Plant 4 on Saipan and the power plant on Tinian; and status of the request for proposal for trouble calls as well as payment branches to be held by IP&E.
“Please be prepared to answer questions regarding the above issues and to address other concerns that the other members in the committee may have,” Dela Cruz told Fletcher.
Sen. Juan Ayuyu (Ind-Rota), chairman of the Senate Committee on Public Utilities, Transportation and Communications, earlier said that CUC could no longer afford to enter into a $10-million loan and pay a monthly rate of $110,000, and this was coming from CUC officials that met with the panel.
Ayuyu and Senate President Paul Manglona (Ind-Rota) said CUC should also be mindful of the consequences of not addressing CUC’s stipulated order requirements as it could end up facing stiff fines from EPA.
CUC was supposed to use the $10 million loan to meet federal requirements under the U.S. District Court and EPA stipulated orders.
CUC had said the $10-million loan will be used to fund 27 projects and initiatives that will result in more dependable and reliable power, water, and wastewater supply in the CNMI. Some $3.859 million of it will be used to build the infrastructure for safe fuel storage, handling, and transfer at power plants.
By Haidee V. Eugenio
Reporter
