Council grants Rama power to negotiate city’s SRP loan

No nod yet, though, on prepayment

CEBU, Philippines - The Cebu City Council has passed a resolution allowing Mayor Michael Rama to negotiate with Land Bank of the Philippines on behalf of the city government for the prepayment of the South Road Properties loan.

The body, however, refused to grant already its approval for the city to pay off the remaining P2.4 billion of the SRP loan, which is set for full payment on 2025 yet.

The city incurred the debt after it entered into an agreement with the Japan International Cooperation Agency in 1996, for a Y12.315-billion (around P4.65 billion) loan to finance the reclamation of the 300-hectare SRP.

“It’s too premature yet to authorize the mayor for prepayment until such time the SB-1 (P3.32 billion Supplemental Budget-1) will be duly approved by the City Council. Second, the requisites should be complied with,” said City Councilor Sisinio Andales, a member of Bando Osmeña-Pundok Kauswagan, which dominates the council.

The city’s executive department is pushing for the approval of SB-1, the bulk of which is intended to pay the P2.4-billion loan balance.

During the session and prior to the decision, Andales said the original resolution approving the prepayment of the loan and at the same time authorizing Rama to sign the agreement with LBP for the prepayment needed to be deferred since the council still has to discuss the source of funds cited under SB-1.

(Members of the City Council Committee on Budget and Finance and the city’s executive department will meet today for a special budgetary discussion on SB-1.)

Andales said the city should also comply with the minimum requirements set forth by LBP, which asked for an opinion from the Banko Sentral ng Pilipinas.

The minimum documentary requirements asked are a City Council resolution approving the prepayment, certification from the Bureau of Local Government Finance that the transaction is within the city government’s debt servicing limit; justification for the prepayment; and concurrence from the Department of Finance as well as from the LBP.

City Councilor James Anthony Cuenco, who penned the resolution, however, said the resolution is the first step in paying off the loan.

“Let’s keep things moving by giving our acquiescence that we want the loan paid. The other requirements can follow later on. The important thing is we are expressing our agreement on the payment of such loan,” Cuenco said.

City Councilors Margarita Osmeña, Eugenio Gabuya, and Andales, though, said that they are not against paying the loan for as long as the documentary requirements are complied with.

“We have no problem on paying the loan. We are in accord with that, but we have to comply with some requirements and processes before it (loan) can be paid,” Andales said.

City Councilor Noel Eleuterio Wenceslao, who said he had worked in a multinational bank for 25 years, said banks need the council resolution from the entity (in this case the city) first before entertaining the intent to pay the loan.

“The documentary requirements nga dili kompleto, dili man sad na nila ma-approve. What we need now is the authority,” he said.

The City Council then agreed to amend the resolution by allowing the mayor to negotiate with LBP without giving its approval of the actual prepayment of the loan.

Vice Mayor Edgardo Labella, council presiding officer, said any final agreement between agencies will be coursed through the legislative body before the mayor would sign it.

Sought for his comment, Rama still said he was elated by the council’s move. – (FREEMAN)