Cebu City Mayor Michael Rama is requesting the Land Bank of the Philippines (LBP) to waive the P43-million penalty for the prepayment of the city’s loan for the South Road Properties (SRP).
In a letter to LBP Vice President Elsie Fe Tagupa dated Nov. 4, Rama said waiving the prepayment is allowed as long as the OECF, or now known as the Japan International Cooperation Agency (JICA), will also agree.
“Your assistance upon the matter will greatly aid the City of Cebu in realizing its objective of a debt-free City and achieving better service for the city’s constituency. We hope that you can be of service to the City of Cebu upon the matter,” Rama said in his letter.
Under section 6 of Article 1 of the Subsidiary Loan Agreement between the LBP and the city government for the SRP loan, the LBP should not charge the city government for handling and commitment fees. No prepayment penalty should also be charged provided that the the JICA would also waive it.
At the same time, Rama is asking the LBP to favorably endorse their request for the loan prepayment to the Bangko Sentral ng Pilipinas (BSP) and JICA.
LBP earlier told the city that the estimated amount due for the SRP loan is P2,357,416,225. The amount already includes the P43,088,002 prepayment penalty.
Rama also said in his letter that the city has already obtained a resolution from the City Council approving the loan prepayment; a letter from the Bureau of Local Government Finance (BLGF) and Department of Finance (DOF) concurring with the city’s plan to prepay the loan.
“Likewise, JICA poses no objection to the intention of the city government to prepay the loan, subject however to consultation with the Land Bank of the Philippines, among other related authorities and agencies,” he added in his letter.
JICA chief representative Noriaki Niwa said in a reply to the mayor’s letter that the city needs to consult with LBP before asking for JICA’s concurrence.