SRP loan too heavy

By: Jose Santino S. Bunachita August 22,2014 - 09:38 AM

Is the loan payment for the South Road Properties (SRP) too heavy to bear?

At P500 million to P550 million a year, it’s a burden that requires special action for Cebu City, such as changing the currency base, said Councilor Noel Wenceslao.

The “interest rate is too much,” he said.

“I’ve been in the banking industry for 25 years. The loan payment is P500 million a year. That’s P1.4 million a day or P16,000 an hour. We have to save on the interest,” he said.

Wenceslao, one of four councilors who bolted the Bando Osmeña-Pundok Kauswagan earlier this week, was in the office of Mayor Michael Rama on Wednesday with Councilor Richard Osmeña to discuss a solution.

Wenceslao said he was there to discuss his proposal to convert the foreign loan from Japanese yen to peso, which will be taken up in an executive session of the mayor soon.

“This is a better option since it will lower the interest rate from Land Bank from 11 percent to around five percent. There will be no more commitment and guarantee fees because it will be a peso denominator,” said Wenceslao.


Asked how much Cebu City pays in interest, he said he checked with the city accountant who said the figure varies every year, averaging P350 million to P400 million a year, including interest charges and commitment fees.

Wenceslao said that if SRP lots can be sold for a good price, Cebu city won’t need to take out another loan since proceeds from the sale would be “more than enough to pay all the principal and interest payment.”

Mayor Rama earlier said he wanted to restructure the SRP loan and possibly take out a new loan to buy out the balance of the debt.

The 300-hectare reclamation, formerly called the South Reclamation Project, was funded by a P4 billion loan from Japan payable in 25 years.

Amortization payments, made twice a year, will continue until 2025.


BO-PK founder Tomas Osmeña poked fun at the mayor’s insistence on selling SRP lots by public bidding as soon as possible.

“Mayor Rama says we have to pay off the loan because it costs the city P500 million a year. That is the value of one hectare of land in the SRP at a price of P50,000 per square meter.

So, we will sell 45 hectares of land to save one hectare? Pagka bright gyud ang mayor,” said Osmeña in a statement.

He clarified that the loan payment actually costs Cebu City P550 million a year of which P340 million is principal payment, while interest and other costs account for less than half the amount.

He said the public should know this because “it’s your future.”

Osmeña earlier said he believes SRP lots should be sold through careful evaluation of unsolicited bids, not public bidding in order to find out the actual development plans of a buyer and ensure they coexist well with the pioneer locators in area, SM Seaside City and Filinvest.

He also said he favors long-term leases and joint ventures to avoid investors who acquire property just for speculation.

Wenceslao was one of four B0-PK councilors, together with Richie Osmeña, Gerry Carillo and Roberto Cabarrubias, who voted in favor of an Aug. 13 council resolution authorizing Mayor Rama to sell SRP lots through public bidding to raise funds for the city’s major programs and pay off the balance of the city’s SRP loan.


Wenceslao said he has no regrets leaving BO-PK, his political party in the last eight years.

“It’s good for me since I don’t have to ask for approval or consultation (before acting). What I think is good for the people of Cebu, that’s what I will do,” he said.

He said councilors would seek approval from BO-PK leaders on “crucial issues” involving the City.

Wenceslao confirmed that he left the party over the Delute administrative complaint, which many believe Tomas Osmeña had a hand in filing or was at least capable of heading it off.

Reymelio Delute, a lawyer, filed the complaint with the Office of the President accusing the City Council of grave misconduct in approving P20,000 calamity aid for each City Hall employee and official, including themselves, after supertyphoon Yolanda, even though the storm did not directly affect Cebu City.

“I can’t say I was hurt. I just wondered why we only knew about the issue when the summons from Malacañang came and that we were included in the charges. We knew that Mayor Tom (Osmena) knew about it. We were only informed after the charges were filed. That was it,” he said.


Tomas Osmeña earlier expressed dismay over a report that his nephew Richie Osmeña had said “I don’t need him (Tomas) anymore.”

The councilor, however, denied the statement: “That is not true. I could not say that about my Uncle Tommy. Daku kaayo ko ug respetar niya. Never would that statement come out of my mouth.”

The younger Osmeña begged off from making further comments after Wednesday’s council session, saying “naa man sad tay utang kabubuton” (we still have a debt of gratitude). But he stood firm in his decision to leave the BO-PK and finish his term as an “independent” legislator.

Richard Osmeña , along with Wenceslao, was seen in the mayor’s office Wednesday but declined interviews and tried to avoid being caught on camera.

Aside from the two councilors, the mayor was with his core group of advisors, Joy Pesquera, Joey Daluz III, Jose Maria Poblete and city administrator Lucelle Mercado.

The Cebu South Reclamation Project is a P4 billion project of the national government funded out of a loan from Japan through the Overseas Economic Cooperation Fund.

Japan extended a total loan package of Y 101,964,000,000 YEN to finance various projects, including the 300-hectare reclamation of south Cebu.

The SRP was part of the third phase of the Metro Cebu Development Projects approved by President Fidel V. Ramos in a NEDA resolution in 1995.

Loan agreements between the two governments were executed between the OECF and Land Bank of the Philippines.

The City of Cebu was designated as the implementing agency with the Department of Public Works and Highways and the Metro Cebu Development Project Office.

Related Stories:

Rama to pursue loan to settle SRP debt

Rama eyes new P3.2 billon loan to settle SRP loan



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