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    Tuesday, June 18, 2019-8:55:33P.M.

     

     

     

     

     

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CUC faces cash-flow crisis

THE Commonwealth Utilities Corp. would soon be in a “hand-to-mouth” situation if it couldn’t get $8 million in reimbursement from the Federal Emergency Management Agency, CUC chief financial officer Greg P. Cruz said.

“What we collect goes out the same day to take care of our bills,” Cruz reported to the CUC board on Friday.

Without the FEMA reimbursement, he added, CUC would be unable to pay some of its contractors hired for the Typhoon Yutu restoration work.

“We should have a plan B in the event this money [FEMA reimbursement] doesn’t come in by the end of the year,” Cruz said.

Cruz said CUC’s shortfall amounts to $10 million while the government’s unpaid bill has reached to $29 million. Cruz was unable to give a breakdown but this amount includes the central government, the Commonwealth Healthcare Corp. and the Commonwealth Ports Authority. (See related story on page 2)

But on a positive, note, Cruz said CUC’s power sales are now back to pre-Typhoon Yutu level while water sales are about the same as the pre-Yutu level.

Cruz said the number of customers returning to the system after the typhoon has increased due to the immediate and continued restoration efforts of CUC.

Still, he added, getting the reimbursement from FEMA is crucial to CUC’s financial condition.

“The reimbursement [process] is very slow and that’s putting a lot of strain on our ability to pay our current operations,” Cruz said.

CUC has to pay a 10 percent match for FEMA-funded projects, he added.

CUC board member Ignacio Perez suggested using reserved funds which, he added, the previous board had approved to pay CUC’s prior obligations.

“You can borrow that and then pay it back when the FEMA [funds] come in,” he said.

He added that because CUC’s cash flow “is not good for the next four months” CUC should go after delinquent accounts.

Cruz said they have reserved funds but they are restricted and CUC can’t necessarily tap them.

But he said he will look into the policies adopted by the previous board to see what other alternatives CUC has.

CUC board vice chair Weston Deleon Guerrero, who presided over the board meeting on Friday, said CUC is supposed to pay 10 percent of the $50 million contract with Primary Source Electric, which assisted CUC in the power restoration projects on Saipan and Tinian.

Deleon Guerrero wants to know why the FEMA reimbursement has been delayed.

“What we really need to look at now is whatever money we have — how much money do we have to we to meet our payables,” he added.

CUC Executive Director Gary Camacho said they are paying their obligations to the contractors.

He said CUC is also working with the U.S. Department of Housing and Urban Development which will provide $350,000 as part of CUC’s 10 percent participation.

“We have to find ways to satisfy the 10 percent because the system is damaged,” he added. “There’s just really no way around that. The fact is, if we can’t afford it, we’re not going to fix the system.”

Camacho said their recent discussions with FEMA included a request to the president’s office to forego the 10 percent participation requirement.