Cebu City can rake in P8B from 3 South Road Properties investors
By Doris C. Bongcac
Cebu Daily News
First Posted 02:46pm (Mla time) 01/08/2008
Revenues amounting from P8 billion to P10 billion may be added into the coffers of the Cebu City government if Mayor Tomas Osmeña closes a deal with three investors who wanted to acquire portions of the South Road Properties (SRP).
The city government can then take care of its P6 billion loan with the Japan Bank for International Cooperation (JBIC) and spend for basic services that will benefit especially the urban poor.
Osmeña said it will already be easy for the city government to negotiate with JBIC and convince the foreign funding agency to allow Cebu City to rid of its loan guarantors.
The city government allocates at least P500 million from its annual budget for debt servicing. Of the amount, only P300 million represent payment of the city's debt with JBIC while the remaining P200 million is shared by the national government and the Land Bank of the Philippines (LBP).
The national government, through the Department of Finance, acts as the guarantor of the city's loan while LBP is the city's depository bank.
“We plan to negotiate with Japan to waive the guarantee fee. If the project (SRP) is already moving, we will be in a position to take the project away from Land Bank,” Osmeña said.
Osmeña said he is now studying proposals that he received from two of the three investors who are interested at the SRP.
He said one investor is interested to construct a high rise condominium and a mall at the SRP.
He said each of the three investors is interested to acquire of 40 to 50 hectares of the SRP. One investor is interested in Pond F that is located near the sea.
If half of the 300 hectare- reclamation area is sold to investors, this will earn the city P8 billion to P10 billion, the mayor said.
Osmeña however said for this year, he wanted to entertain the best offer submitted by the three investors.
Income is only a secondary consideration. Osmeña said that he is more concerned on how these investors would develop the property to spur the city's economy and create employment opportunities.
The downpayment of P500 million that he expects to receive from one investor is already enough to pay for this year's amortization with the JBIC.
“We only need one of the three investors so we do not get bankrupt. If we close one deal safe na ta. I'm pretty sure of that granting that we do not have an Association of Southeast Asian Nations (ASEAN) crisis next week,” he said.
Having a major investment at the SRP is also expected to boost its marketability.
“I'm pretty sure that even if we get one investor, when the construction starts, the price of land at the SRP will go up anyway,” he said.