His declaration was meant to be delivered at a previous parliamentary sitting last 30 days, but it was postponed until Monday because Mr Tong experienced contracted COVID-19.
A number of MPs, including Mr Seah Kian Peng (PAP – Marine Parade) and Ms Sylvia Lim (WP – Aljunied) asked just how much the Government is paying out in total for the earlier termination, and how this compares to what the Authorities would pay had the partnership ongoing until 2035.
Mr Tong described that SHPL funded the full initial funds expenditure for the building of the Sports Centre by taking out credit.
“This meant that Authorities did not have to lead any upfront funds for the construction in 2010, ” he stated.
When the Sports activities Hub was ready to go in 2014, the Government paid SHPL a fee of S$193. 7 million every year, and would have carried on to do so until 2035 if there have been no early termination.
With this fee from Government, SHPL would then be responsible for the full operating expenditure of the Sports Centre and the assets would have been returned towards the Government at no cost within 2035, said Mister Tong. This works to be about S$2. 32 billion.
He added this does not account for net present value and other financial adjustments.
“FAIR DEAL”
With the termination, the federal government would have to pay SHPL for the termination according to the project agreement, and it also would also have to spend on the future costs associated with running the Sports activities Hub.
Of this amount, a large portion – S$1. 2 billion – could be understood as the capital expenditure that Govt would have had to bear if it adopted the traditional procurement approach from the start, he said.
Another S$300 mil or so is primarily made up of the reasonable market value of the Sports activities Hub which is commercially negotiated, and other costs, expenses and deductions, based on the project contract.
Mr Tong added that the last amount will be based over the accounts in December in the handover, but the Federal government does not expect the “material variance” from the projected figure associated with S$1. 5 billion dollars.
He or she also outlined the costs of running and operating the Sports Hub post-handover.
Using the current operating assumptions and costs incurred by SHPL, the Government desires to incur about S$68 million per year as operating costs, said Mr Tong.
This includes upcoming lifecycle replacement, servicing and programming costs, as well as the day-to-day costs of operating the Sports Hub.
“If we were in order to draw a seite an seite comparison against the stability tenure of the task agreement… that offers to approximately S$800 million over the stability period until 2035, ” he said.
“Taking the two buckets of costs to be paid for the termination – the particular sum to be compensated to SHPL which usually largely reflects the upfront capital costs and future operating costs – this would be a fair deal for the Govt on which to take back the assets, ” he added.
He highlighted that will none of the components are usually penalties to the Authorities for the early end of contract.
“There are merely costs we would have had to incur or would have incurred going forward, ” the ressortchef (umgangssprachlich) said.
INCREASED OPERATING COSTS PROBABLY
“Notwithstanding the financial calculations plus due diligence, I should, however , make clear that the decision to terminate the particular Sports Hub task was not driven by financial reasons, or to save money, ” mentioned Mr Tong, incorporating that the Government will not operate the Sports Hub the same method as SHPL.
To make Sports Center more accessible plus open to Singaporeans, you will see more community programmes, investments to bring in more world-class events, plus opening up the Sports Hub and National Stadium more often pertaining to community use.
“All of this could possibly mean higher costs and increases within daily operating plus maintenance costs, ” he said.
“As this kind of, we should probably anticipate our operating costs on an ongoing base, once we take over, to become higher than what we would incur if we merely continued with the circumstances under the existing arrangement. ”
Yet at the same time, the full revenue generated from the Sports activities Hub will now visit the Government, Mr Tong pointed out.