THE cash-strapped Commonwealth Utilities Corp. is forced to cut down its operational expenses due to the pending approval of its debt settlement agreement with the Commonwealth Development Authority.
CUC Chairman Edward C. Sablan said the utilities agency will reduce spending and generate revenues.
CUC’s debt to CDA stood at over $106 million, but due to a settlement deal, CDA agreed to reduce the amount by 37 percent.
“As a result of the CUC-CDA deal, CUC will have stricter expenditure control. This settlement gives us a better picture of our finances,” Sablan told Variety.
CUC’s revenue-generating efforts will include connecting customers to the agency’s sewer system, Sablan said, adding that this will be complemented by reduction in travel expenses.
Bernard P. Villagomez, CUC executive director, said the agency had so far cut down its travel expenditures by as much as 70 percent compared to the same period last fiscal year.
‘No control’
Sablan said the settlement deal would not give CDA any form of control over CUC’s operations and finances.
“That’s been taken out. CDA’s earlier proposal included that, but it’s no longer part of the deal,” Sablan added.
The two bills containing the memorandum of agreement between CDA and CUC were passed by the House last week, and are on their way to the Senate.
Once House Bills 13-106 and 13-107 are signed into law, the memorandum of agreement will take effect.
Sablan said CUC and CDA do not see any reason for the Senate and Gov. Juan N. Babauta to reject the memorandum of understanding.
What poses a possible delay is the U.S. Department of the Interior’s approval, Sablan said. CDA still needs to get a clearance from Interior, he added.
CUC’s debt originated from three separate loans for capital improvement projects that totaled $ 51.6 million. This ballooned to $106 million due to interests.
