Sports Hub: Building A Lasting Legacy
Sports Hub: Building A Lasting Legacy
27 November 2009 - 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 the PPP arrangement, 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 they would only start receiving the government?s annual payments when the facilities are built and available.
The project was unfortunately delayed by a steep rise in construction costs worldwide in early 2008. 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 2008, bank funds either became unavailable, or only available 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 (SSHC) 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 that a PPP arrangement can bring.
No major renovation works are planned for the existing National Stadium as it will be demolished to make way for the Sports Hub soon, and it would not be prudent to incur a large amount of money to improve aesthetics. In the meantime, the SSC has been and will continue to upkeep the facility to ensure safety and operational standards so that it can continue to be used for sports events that require a large seating capacity.
The Sports Hub will be one of Singapore’s national icons that will be with us for the next 25 years and more. We must build it expeditiously but not at all costs or at the expense of 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.