Minister confirms cost of terminating Singapore Sports Hub partnership

The Singapore Government has revealed that the cost of terminating the public-private partnership (PPP) for the operation of the Singapore Sports Hub will reach S$2.3 billion (US$1.67 billion).

Edwin Tong, Singapore’s Minister for Culture, Community and Youth, advised in a ministerial statement on Monday that the aggregate sum would be “comparable to the financial obligation committed under the PPP if we had chosen to continue with it, without termination”.

In June, Sport Singapore (SportSG) announced that it will take over the ownership and management of the Sports Hub from current operator SportsHub Pte Ltd (SHPL) on 9th December.

SHPL, a consortium set up to build and operate the Sports Hub and which has been running the complex since it opened in 2014, had been due to run the precinct until 2035.

Minister Tong was responding to questions filed by MPs after the announcement that SportSG would take over the facility.

As reported by ChannelNews Asia, a number of MPs asked how much the Government would pay in total for the early termination of the public-private partnership (PPP), and how that amount compares to what the Government would pay had the partnership continued until 2035.

Minister Tong explained that SHPL funded the full initial capital expenditure for the construction of the Sports Hub by taking out a loan, advising “this meant that Government did not have to contribute any upfront capital for the construction in 2010.”

SHPL, which currently consists of three equity partners - Infrared Capital Partners, Global Spectrum Asia and Cushman & Wakefield Facilities & Engineering - was engaged under the PPP in 2010 to design, build, finance and operate the Sports Hub.

The cost of the project was borne by SHPL, and SportSG has paid an annual fee from 2014, to finance and operate the Sports Hub. The PPP was due to expire in 2035, but the terms of the project agreement allowed for SportSG to decide if and when the project should be terminated, and thereafter, for SportSG to take over the ownership and management of the Sports Hub.

Commenting on how the termination fee compares with the costs of retaining SHPL, Minister Tong noted “if we were to draw a parallel comparison against the balance tenure of the project agreement … that brings us to approximately S$800 million over the balance period until 2035.

“Taking the two buckets of costs to be paid for the termination - the sum to be paid to SHPL which largely reflects the upfront capital expenditure and future operating costs - this would be a fair deal for the government on which to take back the assets.”

SportSG is planning to launch more community programs and organise more high-profile events at the Sports Hub, which Minister Tong said will likely lead to higher expenditures and increases in operating and maintenance costs.

Using the current operating assumptions and costs incurred by SHPL, the Singapore Government expects to incur about S$68 million per year in operating costs.

This includes future lifecycle replacement, maintenance and programming costs, as well as the day-to-day costs of operating the Sports Hub.

The Singapore Sports Hub precinct includes the 55,000-capacity National Stadium, OCBC Aquatic Centre, OCBC Arena, the Kallang Wave Mall and the Singapore Indoor Stadium, built in 1990.

Image credits: SportsHub Pte Ltd/ActiveSG.