The Public-Private Partnership (PPP) model was chosen for the development of Sports Hub as no upfront costs were needed and allowed the Government to tap on international expertise, said Minister for Culture, Community and Youth Edwin Tong.
He was delivering a ministerial statement in Parliament on the termination of the PPP on Aug 1.
No upfront costs to the Government
Importantly, taking the PPP route ensured that the Government did not need to fork out any upfront costs.
“The Government did not pay any of the upfront construction costs at all, the entire sum and amount in excess of 1.3 billion was borne by the consortium upfront and they took out a loan to finance this cost.”
The minister added that the Government only started paying the annual fee of S$197.3 million when Sports Hub was fully operational in 2014.
“Overall, having no upfront costs for government turned out to be useful. For instance, when the global financial crisis in 2008 hit unexpectedly. As the government’s fiscal resources were not tied up, we were able to use those resources to meet other pressing economic and other needs,” he shared.
The PPP also allowed the government to mitigate unexpected risks. For instance, the Sports Hub Pte Ltd (SHPL) bore unexpected costs from construction delays and defects like roof leaks, poor pitch quality and sound quality because under the PPP, SHPL assumed the risks for both timing and quality.
“This is a groundbreaking, novel project and we had not undertaken this project, at least on this scale before. It is therefore important for the government to ensure that the costs will not run away,” he said.
The PPP also ensured inherent financial discipline in the project as the consortium would bear any costs
above expectations and return assets at zero cost at the expiry of the project term in 2035.
Tapping on expertise
One other major factor why the PPP model was selected was that the Government could tap into international expertise due to the lack of depth in bringing in marque, international events back then.
Minister Tong reminded the House of the initial objectives laid out in 2003 of an integrated sports entertainment lifestyle hub that was to be the first of its kind in the region and be able to attract live entertainment events from all over the world, as well as provide a first class spectatorship experience.
“At that time, neither the government or local sporting nor lifestyle and entertainment industries had at that time sufficiently matured and developed depth of experience in bringing in marquee sports and entertainment events from all over the world,” he explained.
“Given the unprecedented scale and complexity of such a major sports infrastructure project in Singapore, and the limitations at that time, of not having sufficient depth and breadth of such expertise in Singapore, including in the private sector, we chose to adopt the PPP model,” he said.