MPLT agreed to provide $4.5 million loan to CUC with a 7 percent interest rate.
Pangelinan, D-Saipan and chairwoman of the Senate Committee on Fiscal Affairs, said, “I want to clarify that the $650,000 [interest fee] actually belongs to the general fund. That is really how MPLT turns over the interest gained from investment.”
According to the senator, CUC, in effect, would be paying only the principal amount of its loan to MPLT as the utilities agency’s loan is interest free.
But Pangelinan said a problem might arise if CUC fails to meet its financial obligation to the land trust, adding that MPLT might not remit the interest to the general funds.
She noted CUC’s current outstanding debts to other power companies and vendors as well as its operational expenses.
“[CUC] is still having difficulty getting the cash to make payroll, to make vendors payment, to do contract obligations, but now they’re entering into a new contract agreement. How can CUC pay MPLT? Given the background history of CUC, we don’t want to do another debt write-off later.”
In earlier interviews, CUC Executive Director Antonio S. Muna said their contract with Aggreko requires the agency to pay $504,000 a month.
Under the $6 million contract, Aggreko will provide power to CUC for a 52-week period.
Pangelinan said the FY 2009 budget depends on the interest turnover from MPLT.
“It’s mind-boggling because you cannot continue to incur expenses when you’re planning a budget that is supposed to be balanced, and then you have these other emergency situations that have to eat into the budget. That’s why we’re into this mess,” the lawmaker said.
