Friday, August 19, 2005
Tomas junks earlier threat against National Government
Cebu City Hall yesterday issued a P300-million check to the Land Bank of the Philippines to pay for its amortization on the loan for the South Reclamation Project (SRP).
Mayor Tomas Osmeña said the check, which will be delivered today, will cover the first payment for the principal, amounting to P150 million, the interest of P140 million and the P10-million fee to the National Government as a guarantor of the loan.
The mayor’s announcement voids his earlier threat not to pay on Aug. 20, the due date for the City’s first payment of the principal, if the National Government refuses to release the titles of the SRP to the City Government.
This also makes good his promise in his State of the City Address last July 1 that Cebu City will be paying for its amortization this month.
Next year, the City is set to pay P600 million.
Cebu City got a 12.292-billion yen loan in 1996 from the then Overseas Economic Cooperation Fund (OECF), now the Japan Bank for International Cooperation (JBIC), with the National Government acting as the guarantor through Land Bank.
According to the loan amortization repayment schedule until 2025, the City’s loan could reach P10.16 billion (based on the current foreign exchange rate), including the interest and the guarantee fee.
Pay fast
But Land Bank Cebu officials said if City Hall is able to pay ahead of schedule a huge portion of the principal, its payables will be nowhere near P10 billion by 2025.
This because the balance of City Hall’s loan amortization will diminish, as well as the interest rates imposed by Land Bank and the guarantee fee collected by the Department of Finance.
Since the SRP is not yet earning because of the three-year delay in the issuance of its titles, the City Government is using its general funds to pay for its semi-annual amortization to Land Bank, the conduit bank of JBIC.
The Cebu Investments Promotion Center (CIPC), the marketing arm of the 295-hectare project, has negotiated with many prospective investors but they want to see the titles and the master plan of the SRP first.
Without the titles, no investor will take the risk of entering into contracts and a deed of absolute sale with the City.
“No titles, no master plan, don’t come back. But when the titles and the master plan are already there, then come back immediately,” Joel Mari Yu of CIPC quoted one investor.
The City needs funds to pay back its 12.291-billion yen loan plus the interest in the next 20 years.
Top city officials are banking on the “hopes” of SRP manager Nigel Paul Villarete that the documents, which are being reviewed by the Department of Environment and Natural Resources, will be out before the end of this month. (GAC)
(August 19, 2005 issue)
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