MARINE CORPS AIR STATION IWAKUNI, Japan — Japan may be having second thoughts about whether Guam utilities could pay back $740 million loans that are needed before the U.S. can move 8,600 Okinawa Marines to the island territory, according to a Japanese newspaper.
The Japanese government is concerned that the debt will fall to the Japanese public, the Yomiuri Shimbun reported Sunday, citing anonymous sources close to the government.
A division director for the Japanese agency overseeing the loans traveled to Guam two weeks ago to gather information on the two island utilities that would receive the money: Guam Power Authority and Guam Waterworks Authority, said Simon Sanchez, chairman of the Consolidated Commission on Utilities.
“He gave no commitment one way or another,” Sanchez said Monday. “That is the last time we heard from anybody within the Japanese government.”
The two Guam utilities have hit rough financial times over the past few years, partly due to the international economic crisis, he said.
The power authority has $600 million in debt from bond issuances and the water authority has $100 million in bond debt but plans to take up another $118 million in debt this fall, Sanchez said.
The additional loans from Japan would be used to upgrade the existing electric and water system to handle tens of thousands of new residents and new military facilities.
The utilities have a monopoly on Guam and plan to pay back all the debt through the new customers brought by the military build-up, which is expected to peak in 2014, Sanchez said.
“Any financing is counting on future growth to pay for it,” he said. “It is all based on the build up demand.”
Japan is expected to issue a decision on how it will make the loans, which it has committed to do under an agreement with the United States to move the Marines to Guam.
