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Admin wants DOI to redirect CIP monies to address Hawaiki 'liability'

Lt. Gov. Lemanu Palepoi Sialega Mauga

Pago Pago, AMERICAN SAMOA — The Lolo Administration has asked the US Department of Interior to redirect federal Capital Improvement Project (CIP) monies to address Hawaiki cable “liability” and American Samoa TeleCommunications Authority’s (ASTCA) new products development.

This is according to Lt. Gov. Lemanu Palepoi Sialega Mauga’s summary report of a meeting in Washington D.C. on Oct. 30th, with US Interior Assistant Secretary of Insular and International Affairs, Douglas Domenech and other DOI officials.

The Governor’s Office had previously told Samoa News that Hawaiki cable was among the issues up for discussion with DOI officials, and Gov. Lolo Matalasi Moliga told a cabinet meeting late last month that American Samoa needs another economic pillar as a way forward, and hopefully DOI will realize that fact through Hawaiki.

Additionally, DOI has been asked to assist with telecommunications development.

There are no specific details on the type of assistance the Lolo Administration had sought. Lemanu’s report to the governor following the DOI meeting shows the two issues that were presented to DOI for “financial assistance”.

Top on the list is the governor’s request to rewrite the Tobacco Loan to its original amount of $20 million, according to Lemanu’s report. Samoa News notes that this is the loan ASG received from the federal government during the first year of the Tauese Administration, to pay off several major ASG debits.

American Samoa had given up its share of the National Tobacco Settlement with the tobacco companies, in exchange for a lump sum loan — the Tobacco Loan. 

According to Lemanu’s report, the governor’s request to “rewrite the original amount from which $8 million would be available to liquidate our outstanding liability to Hawaiki was not feasible, as DOI had no authority to rewrite the loan, let alone make loans”.

It explains that the Tobacco loan was a one-time deal and that DOI only manages the loan activities.

The governor’s “intention, inherent in the request to rewrite the Tobacco Loan, was the availability of repayment source of fund which would not burden local funds or require the introduction of new revenue measures was likewise raised” with DOI, the report notes.

The governor’s second request for financial assistance, is to “re-direct CIP funds to address Hawaiki liability and ASTCA new products development.”

According to the report, Domenech’s response was “positive” and it indicates the acceptance of the governor’s reasons prompting the decision to invest in the Hawaiki cable. This reflects the governor’s “long-term struggle to diversify our economy by creating a third economic pillar to StarKist and the American Samoa Government,” the report states.

While the request for CIP funding “was doable and acceptable,” the “release of the funds cannot be done immediately because DOI is under continuing resolution”.

According to the report, the “underpinning element, targeting the creation of a third economic pillar”, to advance the governor’s “economic development diversification vision, which compelled” Lolo’s decision to invest in Hawaiki, was throughly presented, addressed, and presented to DOI leadership.

It was explained that, “Amidst the downward spiral of our economy, evidenced by the negative 5.3% drop in our Gross Domestic Product in 2017; down from a negative 2.9% fall in 2016, and the challenges being faced by StarKist Samoa, options available” to the governor “to recoil our descending economy were, and continue to be, glaringly limited.”

Additionally, the development of the local tourism industry as a third economic pillar has been “stymied and remains hampered by impractical federal policies."

The stark contrast between the booming US economy and the resultant historic low unemployment rate, versus our faltering economic and double digit unemployment rate,” were also highlighted at the meeting.

The report expresses appreciation to the Governor’s Special Advisor on Telecommunications Aoe'e Adolfo Montenegro, for his compelling presentation, laying out a Financial Recovery Plan to capture the economic and financial benefits inherent in the investment in the Hawaiki cable, resulting in the “positive financial impact” for ASTCA's financial viability.

Also summarized in Lemanu’s report is the American Samoa Economic Development Authority’s (ASEDA) rating presentation early last month to Moody’s in Honolulu on the proposed new $50 million bonds for 2018.

Proceeds from the bonds sale will be used to fund the construction of a new Fono building and to fund the cost of a connection to, and capacity on, the Hawaiki broadband cable.

Late last month, Moody's Investors Service assigned a “Ba3 rating” to the planned 2018 bond series, but it also noted that adding this proposed new bond to the previous bond series - in 2015 and 2016 — gives a “negative outlook” for the territory. (See Samoa News Nov. 29th edition for details).

Samoa News should point out that ASTCA has been notified by the American Samoa Government's Employees' Retirement Fund (ASGERF) Board of Trustees in a letter dated Dec. 10, 2018 that it is — as of close of business on Dec. 8, 2018 — in loan default for the $17 million it borrowed.