UPDATES ON SPORTS HUB

UPDATES ON SPORTS HUB

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(Public-private-partnership model): **

5.

Mdm Ho Geok Choo asked the Minister for Community Development, Youth and Sports if he can give an update on the public-private-partnership model upon which the Sports Hub is based and what is the state of progress and timeline for the completion of the Sports Hub.

Dr Vivian Balakrishnan: The Sports Hub Public-Private Partnership arrangement is one where the preferred bidder, Singapore Sports Hub Consortium (SSHC), will design, build and operate the entire

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project over a period of 25 years. The Consortium puts in equity and would tap on bank debt financing to build the facilities. After the facilities have been built, the Government would pay the Consortium a certain sum every year for delivering and operating the facilities. These payments would enable the Consortium to re-pay the debt they have taken. The Consortium will hand the entire facilities back to Government at the end of the 25 year contract period.

External events in the past two years, such as the steep rise in building materials and construction costs, and the global financial crisis, have delayed the conclusion of our contract negotiation with SSHC. With the financial crisis, SSHC had difficulties raising the required debt from the market. It would not have been prudent for the Government to proceed to finalise the terms of the project while construction costs or interest rates were very high. We would have ended up paying a lot more than necessary for the project.

The Government remains committed to the project. Our discussions with SSHC are ongoing and progressing well. With the stabilisation of construction prices and the gradual improvement in credit availability, we expect the project to get back on track in the coming months. The Consortium will be launching a financing competition to raise bank financing for the project in early November and is targeting to get the contract signed or what is known in the industry as financial close, by the first half of 2010. The Consortium can then start construction thereafter. On this schedule, the project construction completion date is estimated as end 2013 or early 2014.

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