I REFER to Mr Chew Chee Meng’s letter, ‘End the delay and start building’ (Nov 20).
The Singapore Government is fully committed to building the Sports Hub. The Sports Hub is being developed using a Public-Private Partnership (PPP) approach, under which the successful consortium is responsible for designing, financing, building, operating and running programmes in the Sports Hub over 25 years.
The Government will, in turn, make annual payments to the consortium for making the facilities available.
The Government has chosen to adopt a PPP approach as having the same consortium undertake all these functions will help to optimise life-cycle cost and operations efficiency. For example, the consortium will design and build the facilities in a way that enables efficient programming while keeping operating costs as low as possible. The consortium is also incentivised under the PPP arrangement to complete construction as soon as possible, as it will start receiving the Government’s annual payments only when the facilities are built and available.
The project was unfortunately delayed by a steep rise in construction costs worldwide early last year. In addition, under the PPP arrangement, the selected consortium will raise funds from the market to finance the project, but with the global financial crisis from October last year, bank funds became either unavailable or available only at very high costs.
Given the unprecedented scale of the global financial crisis, any consortium selected for the project, be it the Singapore Sports Hub Consortium or any other consortiums, would have faced similar challenges in raising funds. Many PPP projects around the world faced similar difficulties.
Liquidity is gradually returning to the market and banks have started to extend long-term loans again.
The Government therefore agreed for the selected consortium to go out to the market again to raise the loans required. We have chosen to continue with the PPP model, not because the Government is short of funds, but because we believe in the benefits a PPP arrangement can bring.
The Sports Hub will be one of Singapore’s national icons that will be with us for the next 25 years or more. We must build it expeditiously but not at all cost or ending up with a sub-optimal facility.
We seek everyone’s patience as we build a Sports Hub that will be a lasting legacy, and one which we can all be proud of for decades to come.
Corporate Communications & Relations
Singapore Sports Council
Source: Straits Times, 27 Nov 2009