INQUIRER Global Nation

Cebu City administrator Francisco Fernandez need not “hand carry” the city’s Joint Venture (JV) ordinance to the Capitol.

Two staff from the office of Cebu Gov. Gwendolyn Garcia went to City Hall yesterday carrying a letter request for the document to show Capitol’s “serious” interest to invest in the same parcel of lot that Filinvest Land Inc. (FLI) is proposing to develop.

The letter-request, signed by Capitol consultant Rory John Sepulveda and addressed to Fernandez, was asking for a copy of the JV ordinance, which the city council passed last September and has been guiding City Hall in its negotiation with Filinvest.

Fernandez, who also chairs the city’s Joint Venture Selection Committee (JVSC), readily gave them a copy of the ordinance.

But at the same time, he said, it would be unlikely that the city would at the moment entertain a proposal from Capitol.

He said the JV ordinance strictly prohibits the city from negotiating with any other investors while in negotiation with the original proponent.

FLI has proposed to invest P80 billion in SRP by developing 50 hectares of the property in joint venture with the city government. The proposal includes an outright purchase of a 10-hectare parcel for P2 billion.

“As of the moment we are negotiating with FLI it is not proper that we negotiate with other parties. As soon as we have come to an agreement with FLI then we can publish it, and they (province) can present their proposal. And when they can present their proposal of course we can negotiate it with them,” he said.

Aside from the queries from Capitol, the governor’s brother, Cebu third district Rep. Pablo John Garcia, was also interested in finding out if a losing unsolicited proponent would have to be refunded of its development cost by the winning bidder.

Cebu City Mayor Tomas Osmeña, who is currently on leave, however assured the unsolicited proponent in the SRP project, which in this case is FLI, is not demanding for a development cost refund should it lose the project to another bidder-developer.

“Unlike Ayala water, which is demanding a refund (P100 million) from the winning bidder, FLI will not demand even P1 in refund. So the people of Cebu City is assured of getting the best deal,” Osmeña told in a text message.

The mayor was referring to Ayala Consortium’s unsolicited proposal on the Carmen Bulk Water Project to deliver water to the Metro Cebu Water District (MCWD). When the project fell through because MCWD found it to be too expensive, the Ayala group asked for a development cost refund, saying it spent millions to develop the project.

“Whether unsolicited proposals are entitled to a refund of a development cost, (it) has not been resolved. But we are very happy (that FLI), out of magnanimity, did not demand any refund because they are so confident of their proposal that they welcome all challengers,” Fernandez said.

On Monday, the city will meet with FLI negotiators to discuss development cost and to finalize the total project cost.

The total project cost should be determined before the publication of the invitation to bid because the JV Ordinance requires the proponent to deposit a percentage of its total project cost to show it its is a serious proposal.

If the total cost of development is less than P5 billion, the required deposit is 2 percent and one percent for costs over P5 billion, Fernandez said.

If FLI will stick to their initial proposal to invest P80 billion on SRP, it would need to make a deposit of P800 million in favor of the city government.

Fernandez said he expects that the city and FLI would come to an agreement after their meeting on Monday since the developer had already presented its proposal to City Hall.

It would then up to City Hall to finalize the negotiation, prepare the bid documents and have it published, Fernandez said.

Once the FLI proposal is published, the city will be give other investors a month to present their counter-proposal before the bidding process starts.

The bidding process is called “Swiss challenge,” which, Fernandez explained, is a “competitive challenge” that allows the original bidder to match the offer of the challenger.

While some view the province’s interest in SRP as a means to muddle the effort of the city government to finally get SRP off the ground, Fernandez believed it could be a blessing in disguise.

Fernandez said they could now expect more investors to get interested in SRP because even Capitol, which is publicly feuding with City Hall, has shown “confidence” in SRP by offering to invest in the city’s reclaimed property.

Fernandez, however, said he could only hope that Capitol’s interest in SRP was “sincere” and not just to “panglawgaw” (scuttle) the city’s negotiation with FLI.

But Osmeña, who is in Houston, Texas for a medical leave, was confident the FLI SRP project would succeed.

“Let them (province) do their worst, we will do our best. That's what BOPK (Bando Osmeña-Pundok Kauswagan) stands for. We are good at building. They (province) are good for nothing,” he said.

Governor Garcia meanwhile decided to visit today the 10-hectare site in SRP that FLI wanted to buy.

Fernandez said Nagiel Bañacia, SRP’s chief operation officer, would welcome the governor.

“That's always an honor, the highest ranking official in Cebu will be visiting us. Maybe they will be looking on the property that they are planning to buy.

They are doing their due diligence study and I think that is good,” Fernandez said.

Garcia, in a press conference yesterday, said she wanted to know if the said lot is worth the P2 billion that FLI is offering the city government.

“(Or) maybe we could offer even more,” she said.

The governor said she was very serious with her offer to invest Capitol funds on SRP.

If City Hall would accept Capitol's offer, this “may also save the City of Cebu from a possible disadvantageous secret deal (with Filinvest),” she said.

Sepulveda also noted in the same press conference that Cebu City is apparently already having difficulty coping with its debt servicing for the money it borrowed to develop SRP.

He noted newspaper reports that said that the Cebu City Council had deferred for the second time on Wednesday its discussion on the proposed P2.6-billion budget for 2009.

Of the allocation, P663.4 million was for debt servicing and Councilor Jose Daluz, chair of the committee on budget and finance, was worried they might be violating a constitutional provision that only allows the allocation of 20 percent of the year's budget for debt servicing.

Sepulveda also believed that FLI’s joint venture proposal and its offer to buy 10 hectares should be dealt with separately because the guidelines set by the National Economic and Development Authority (Neda) on joint venture project does not mention of outright purchase as a component of a joint venture agreement.

Sepulveda said that if outright sale was permitted in the Cebu City joint venture ordinance, the implementation of such ordinance could not supersede the Neda guidelines.

The ordinance was passed by the city council on Sept. 17, 2008 yet but Sepulveda said he has not heard of its publication in local dailies, a requirement for approved ordinance.

Sepulveda said Capitol is well prepared to challenge FLI's plan for outright purchase and joint venture endeavors. /With a report from reporter Doris Bongcac