“Having no in advance costs for Government turned out to be useful, for example, when the global economic crisis in 2008 strike unexpectedly, ” mentioned Mr Tong.
“As the Government’s fiscal resources were not tangled up, we were able to use those resources to satisfy other pressing economic and other needs. ”
The PPP structure also allowed Government to mitigate unexpected risks, like when the project encountered construction delays, for which SHPL underwrote the costs. SHPL also bore the costs of addressing the defects like the roof leaks, insufficient pitch quality plus poor sound quality for concerts, he or she said.
“The PPP structure also ensured that there would be inherent financial discipline in the project… It was a ground-breaking, new project, and we hadn’t undertaken a project of the scale before. It was therefore important for the Government to ensure that the costs would not run away, ” said Mr Tong.
“This was achieved by ensuring that the range would have to bear any costs above their expectations and also return the assets back to the Government at zero cost at the end of the particular project period within 2035. ”
FUTURE PPPS
Despite the initial advantages of this approach, the Government furthermore envisaged that there stomach a time when Singapore would be ready to work the project, said Mr Tong.
This is why the framework of the PPP offers an unilateral directly on the part of the Government, although not SHPL, to end the project, and also to take over ownership plus management at any time prior to the expiry of the task, with no penalty.
Mr Tong mentioned: “This reserves in order to Government the right in order to assess, at any time, in case its interests might be better served simply by stepping in, to run the Sports Hub directly… If so, there is an agreed mechanism upfront (to do this). ”
Responding to questions from MPs, Mr Tong furthermore spoke about how this early termination would affect future PPPs. He said that every venture has to be “considered on its own merits”.
“As I have discussed above, we had good reasons to terminate the particular PPP… but having reached this choice, it does not necessarily mean that every other PPPs will never be considered or how the Government should no longer be open to other PPP projects in upcoming, ” the minister added.
He added that regardless how projects are financed, there is a “sound assessment process” to review and assess infrastructure projects. For PPPs, a framework is in place to assess their appropriateness and this is “continuously refined”.
“We will therefore continue being open to leveraging PPPs as a model, where suitable, ” he or she said.
IS CERTAINLY PAYMENT TO SHPL FAIR?
MPs asked several supplementary questions on the ministerial statement, with Non-Constituency MP Leong Mun Wai (PSP) becoming the most persistent.
Mr Leong repeatedly asked Mr Tong about the projected payment of S$1. 5 billion to SHPL, saying that his queries on that have not been answered.
He questioned the decision to build and run the Sports Center as a PPP, and asked why the decision was made in the first place.
He or she also said: “Throughout the discussion we had today, no one requested the question is the S$1. 5 billion compensation or termination expenses given to the personal consortium fair, delete word?
“Of training course, then we have to get into a lot of details of monetary calculations and all that, but we still need to debate about that. But so far, simply no question has been raised. ”
Throughout, Deputy Speaker associated with Parliament Christopher de Souza urged Mr Leong to inquire his questions plus make them succinct so that other MPs would have a chance to speak.
In response to Mr Leong, Mr Tong reiterated that the Government chose the PPP model because it wanted its partners to have “skin within the game” and keep the risk of the project, that there would be economic and market self-discipline in the way the project was structured.
On whether the terms of the termination are reasonable, Mr Tong declared that it is based on a formula that was within the PPP agreement.
“The majority of this cost is the CapEx (capital expenditure) when i explained, and this is really a CapEx that we would have had to bear had we undertaken the particular procurement model anyway, ” Mr Tong said, repeating details that he had produced earlier.
He reiterated that the yearly sum of S$193. 7 million paid in order to SHPL goes toward servicing of mortgage obligations as well as functional and maintenance expenditures.
“I’ve decide the premise of the transaction, the formula through which this is done, plus why I believe this can be a fair assumption. inch
Following Mr Tong’s reply, the deputy speaker called on Ms He or she Ting Ru (WP – Sengkang) to ask a question, yet Mr Leong interjected, saying that Mr Tong had not answered his question.
Mr De Souza informed Mr Leong that they need to give MPs inside your home a chance to ask their questions, after which Ms He and Mister Sharael Taha (PAP – Pasir Ris-Punggol) both asked for clarifications on points in the speech.
Mr Leong was after that given a chance to ask another question, that was: “Can I know why the Government is so generous to pay S$193. seven million a year to the private consortium, whenever you just mentioned which the operating costs after we take over is going to be about S$68 mil (a year). ”
Mr Tong replied: “One, difficult about being nice, this is what the agreement says… And subsequently, Mr Leong may not have heard myself, but the S$193 million is not just (for) the particular operation and upkeep, it is for financial debt service as well. inch
He additional that “from memory”, the single biggest portion of the sum goes towards debt service. Upon additional questioning by Mister Leong, he additional that it was about sixty-five per cent of the complete.
Mr De Souza then called Leader of the Resistance Pritam Singh to ask a question following, but Mr Leong again interrupted, saying: “We haven’t got to the bottom of the issue.
“What is the point of having the particular debate without progressing to the bottom of the factor?… We must get to underneath of the issue. ”
Leader of the home Indranee Rajah interjected at this point to discuss Mr Leong’s perform saying: “What the particular Standing Orders require is for the Ressortchef (umgangssprachlich) to answer a question that is put. In cases like this, Mr Leong acquired put a couple of questions.
“Mr Edwin Tong had solved the questions. I think the fact that Mr Leong doesn’t understand the answer doesn’t mean that problem has not been answered. ”
Mr Leong protested this, and asked to respond to Ms Indranee because she was accusing him of not really understanding “certain things”.
Mr De Souza did not accede to his demand and said: “The Chair has been very fair, I think you might have spoken on this problem three or four times on this debate alone, and am asked you to cave in to the member which I’ve just known as, Mr Pritam Singh. ”
Mister Singh proceeded to ask a question on how much liquidated problems the Government has gathered from SHPL since 2014 due to non-performance or when sites are not available for make use of. Mr Tong estimated this to be about S$44 million, but said this number is “subject to checking”.