Patwant Singh Channel NewsAsia 12 Dec 11;
SINGAPORE: The Singapore Sports Council (SSC) announced that it is terminating the Changi Motorsports Hub project that was awarded to SG Changi.
SSC said it has given SG Changi a notice on 7 December to terminate the Project Delivery Agreement.
Both parties had agreed to the termination and all arrangements are to be sorted out by the end of this year.
SSC said it is "a difficult decision".
But it has to terminate the contract in light of current circumstances, one of which being SG Changi's inability to meet the contractual agreement to complete the project by this month.
"In the course of the year, SSC had also met with SG Changi's management team on several occasions to discuss and address their attempts to salvage the situation. However, it is evident, in spite of all their efforts, that they do not have a remedy that we can agree to, and we have to hold them to account," said SSC CEO, Mr Lim Teck Yin.
SSC added it has not yet decided if it wants to call for a re-tender at this point of time, as it wants to reassess the market conditions before making any decisions.
SSC had awarded the tender to SG Changi in March last year.
The group had beaten two other bidders - Singapore Agro Agriculture and Haw Par Corporation - to build and manage Singapore's first permanent race track (measuring some 3.7km) at Changi.
The S$380 million project had also planned for a 1.2km karting track and racing academy.
It was supposed to be completed by the end of 2011.
But SG Changi ran into various problems, from construction delays due to a lack of funds, to a corruption probe into alleged irregularities in the tender process.
While SG Changi is expected to make a loss after the termination of the contract, the SSC said that no public funds were invested in the project. However, the SSC is looking at conducting a full post-mortem on the entire process.
- CNA/ir
Major rethink of motorsports hub
Sports council to terminate contract with consortium
Leonard Lim Straits Times 13 Dec 11;
THE Singapore Sports Council (SSC) is doing a major rethink of the Changi Motorsports Hub, a multi-million-dollar project that has been dogged by delays, corruption allegations and financial difficulties over the past year.
First, the council is working on a mutual termination of its contract with a consortium that won the tender in March last year to build the hub. This should be completed by month's end.
Next, it will gauge market interest before deciding whether to call a second tender, or drop the project for now.
SSC chief executive Lim Teck Yin told a press conference yesterday the aim was to see if it would be 'in the public and national interest' to pursue the project.
The market consultation for a motorsports hub would be the second such exercise, after one in 2008.
Pressed on whether the $380 million project was being called off, Mr Lim would only say: 'If the conditions are not right, not suitable, if market players are not sufficiently interested to invest at this time, it could certainly mean a delay in any future motorsports hub.'
The SSC would also conduct a post-mortem of the hub and the industry, he said, stressing several times that the project had not used any public funds.
News of yet more delays - and the possibility of the entire project being shelved or cancelled - came as a blow to the motorsports fraternity.
They had been looking forward to a permanent race track that could host any race except Formula One, and which would fuel the growing interest in the sport.
SG Changi trumped bids from two other bidders and committed to completing the hub by the end of this year.
Construction began nine months later. But reports that the Corrupt Practices Investigation Bureau was probing alleged irregularities in the tender process spooked investors.
Work at the 41ha site near the Singapore Airshow grounds was halted in January, when SG Changi missed a $10 million instalment for piling works. The consortium was still trying to source for funding a few weeks ago.
Mr Lim said: 'It is evident, in spite of all their efforts, that they do not have a remedy that we can agree to. We have to hold them to account.
'We have together concluded that it would be very difficult for this project to succeed, because of the problems that arose.'
The SSC gave notice to SG Changi last Wednesday that the contract for the hub would be terminated. This was a difficult decision and not one taken lightly, Mr Lim added.
SG Changi issued a one-line statement yesterday, confirming it was working with the council on a mutual termination arrangement by the year's end.
It is understood that the consortium has pumped more than $50 million into the project, including paying for the land.
It was to build a track at least 3.5km long and stage at least two international events, such as MotoGP and Japan's Super GT, annually. Other facilities included a karting track and a racing academy.
Any new tender process would probably mean the hub would be ready in 2014 at the earliest.
This would mirror the delays that dogged another high-profile sports project, the $1.33 billion Kallang Sports Hub.
Originally slated for completion last year, it will be ready only in 2014. Another privately funded project, it was affected by the 2008 financial crisis and rising construction costs.
Commenting on how the motorsports hub saga turned out, Mr Lim said one important lesson was that private sector bidders 'understand all the necessary conditions that surround a particular project before they step forward to make a bid'.
Members of the motorsports community were not hopeful of any new initiative taking off given the uncertain economic climate next year. Some felt the Government should take over the project.
Said Singapore Motor Sports Association president Tan Teng Lip: 'The Government funds the building of football fields, basketball courts. Why must the Government treat motorsports differently?'
Economist Song Seng Wun, a MotoGP fan, doubted that the Government would pick up the tab.
'It will be mindful that taxpayer money is being used for spending that is considered very discretionary,' he said.
Parties that had previously expressed interest or put in bids - Group Exclusiv executive director Kevin Kwee, Haw Par Corporation executive director Chng Hwee Hong and marina owner Arthur Tay - said they would wait to see any new tender's terms before deciding whether to make a bid.
Rocky road
October 2007: Government announces plans for design tenders for a permanent race track in Changi.
March 2009: After more than six months of delays owing to market research on the hub's potential, the Singapore Sports Council (SSC) releases the request for proposals.
August 2009: Three consortia submit proposals: SG Changi, Singapore Agro Agriculture and Haw Par Corporation.
March 2010: A panel of government agencies picks SG Changi to design, finance, build and manage the hub, and it is to be ready by the end of 2011.
December 2010: About six months later than targeted, construction begins.
January 2011: Reports that the Corrupt Practices Investigation Bureau is probing alleged irregularities in the tender process spook investors. Construction is halted when the consortium misses a $10 million instalment for piling work.
May 2011: A former SG Changi director lodges a report with the Commercial Affairs Department, alleging that a bank guarantee submitted as part of the tender process might have been forged.
August 2011: The consortium gets a final warning letter from the SSC.
September 2011: SG Changi reiterates commitment, says it has secured funding. But construction does not resume.
December 2011: SSC announces it is working towards mutual termination of the contract.
Motorsports hub builder 'in last-ditch bid to save project'
Leonard Lim Straits Times 14 Dec 11;
A CONSORTIUM in charge of building the Changi Motorsports Hub is making a last-ditch attempt to salvage the beleaguered project.
A day after saying it was working with the Singapore Sports Council (SSC) towards mutual termination of their contract, the SG Changi group is scrambling to secure cash and stay on to complete the $380 million hub, according to sources.
The SSC's stance in a press conference on Monday was that it was having a major rethink of the project.
It would be sounding out the market to see if it would be in the public and national interest to pursue it.
Still, the Japanese-backed SG Changi is apparently not giving up. It is understood that executive chairman Fuminori Murahashi and other representatives are trying to finalise funding deals with overseas financial institutions.
Once that is sorted out, the group could put in an appeal to the SSC, a source said, adding: 'He really wants this to work out.'
It is believed that Mr Murahashi was the one who tipped off the Corrupt Practices Investigation Bureau (CPIB) last year, after suspecting irregularities in the hub's tender process.
News reports in January of a CPIB probe spooked investors who had committed funding.
Short of cash, SG Changi missed a $10 million instalment for piling work to CSC Holdings.
Construction work was halted soon after. The hub, the centrepiece of which is a 3.7km track capable of hosting any race except Formula One, was supposed to be completed by the end of this month.
The SSC had sent a final warning letter to the group in August, giving it two weeks to prove it had the means to finish the project.
SG Changi replied to reiterate its commitment, but work did not resume.
The 41ha site near the Singapore Airshow grounds in Changi remains virtually empty.
SSC chief executive officer Lim Teck Yin said on Monday that the consortium was served notice last Wednesday that its contract to build the hub would be terminated.
This process should be completed by the end of the month.
Asked if the consortium was appealing, he had replied: 'I think SG Changi has come to terms that we need to work towards a mutual termination arrangement, and that was the essence of our meeting with them.'
It is understood that SG Changi has pumped more than $50 million into the project, including paying for the land.
One industry insider, aware that SG Changi was still trying to secure funding after the announcement that its contract would be terminated, was pessimistic about its chances.
'The question is, if you can't do it for the past few months, what is the difference now?' he said.
The consortium declined to provide an official statement yesterday and referred to what had been sent out on Monday, that it 'is discussing and working towards a mutual termination arrangement with the SSC by the end of December 2011'.
SSC spokesman Alvin Hang said yesterday: 'We are in touch with SG Changi, and nothing has changed.'
A statement from CSC Holdings yesterday said the company would explore all viable options for recovering $6.9 million owed by SG Changi.
