Cebu City shells out P240M for SRP loan

CEBU, Philippines - The Cebu City government has paid the first amortization amounting to P240.36 million for its loan on the South Road Properties (SRP).

Acting mayor Margarita Osmeña said the amount represents the amortization payment due in February this year.

In a June 15 letter, City Hall authorized the Land Bank of the Philippines to debit  P240,360,893.19 from its account. The amount represents the principal loan and interest for the amortization payment.

Osmeña said she was told by acting City Treasurer Arlene Rentuza to settle the amortization otherwise the city might incur penalties.

The amount, Osmeña said, was charged against the 2015 reenacted budget since the city government does not have an operational budget for this year.

“We authorized Land Bank to debit the amount because the penalties might start. But, you know, we have to pay it anyway,” she told reporters yesterday.

After the authorization, LBP Branch Head Maximo Lasaca, Jr. informed Osmeña that the city has already paid the amortization through debit.

Earlier this year, suspended mayor Michael Rama asked LBP to extend the deadline for the payment of the amortization due last February after its failure to allocate amortization payment for the SRP loan.

Rama proposed a P13.4 billion budget for this year, which included P2.6 billion for the prepayment of the outstanding balance of the SRP loan, aiming to wipe out the city’s loan.

However, Bando Osmeña Pundok Kauswagan (BOPK)-dominated City Council stood its ground not to prepay the whole balance of the SRP loan, since it is not a contractual obligation. The council then slashed the proposed budget from P13 billion to P6.4 billion.

However, Department of Budget and Management-7 declared the P6.4 billion as inoperative for the city’s failure to allocate the yearly amortization of the SRP loan.

In 1996, the city government has incurred the Y 12,315,000,000 loan or about P2.83 billion for the reclamation of the SRP.

To date, the city has already paid more or less P5.6 billion to its lender already, excluding the P240.36 million which was paid recently.

The remaining P2.4 billion balance of the SRP loan is due in 2025 yet.

On August 20, the city is mandated to pay its second amortization payment of the year. –(FREEMAN)