Return of site delayed over refund clause in termination contract
Motorsports hub hits fresh set of obstacles The deserted construction site of the Changi Motorsports Hub.-- ST PHOTO: CHEW SENG KIM

THE brakes may have been put on plans to build the Changi Motorsports Hub but a rough road still lies ahead for parties involved in the aborted project.

The contract to build Singapore's first permanent race track was supposed to have been terminated last month, but now the return of the 41ha site to the Government is being delayed.

Sources say that SG Changi, which has a 30-year lease on the site, is concerned over aspects of the termination contract.

In particular, one clause says that any refund on the $36 million SG Changi paid for the land lease is tied to a second tender exercise. This opens up the possibility of the consortium not receiving any money back, as - depending on market interest in the $380million facility - there may not even be a second tender.

Proposed terms were tabled by the Singapore Sports Council (SSC) following a press conference on Dec12 to announce the termination of its contract with SG Changi, after the consortium failed to build the facility by the deadline at the end of last year.

The SSC also said then that the termination process should be completed by the end of December.

SG Changi has paid some $55 million in marketing, construction and leasing costs since beating two other parties in March 2010 to design, finance, build and manage the project.

It is believed to be reluctant to accept the proposal on current terms, and wants to hold out for a deal that would allow it to recover at least the $36 million, and not have this tied to any second tender.

SG Changi told The Straits Times it is studying the proposal and will reply to the SSC as soon as possible.

'Our hope is for a fair and amicable outcome for both parties, and that the Changi Motorsports Hub project continues,' it said in an e-mail message yesterday.

'Motorsports enthusiasts in Singapore, the region and the world deserve nothing less.'

SSC spokesman Alvin Hang said on Friday that both parties were settling the land lease and other administrative matters.

'SG Changi has some internal matters it is resolving,' he added. 'Nonetheless, we expect them to be settled soon.

He reiterated that the SSC is planning a market consultation for a motorsports hub - the second such exercise since the first in 2008 - to gauge interest before deciding the next step.

Last month, the SSC indicated that economic conditions and the level of interest in the project would determine whether a second tender was called, or whether the hub would be dropped for the time being.

Property analysts say the SSC can pursue several options in deciding how much to refund the consortium.

Mr Nicholas Mak, SLP International's head of research and consultancy, said: 'If the Government wants to be tough, it could cite economic losses from the loss of potential tourism dollars, and refund a smaller sum or apply liquidated damages.

But, he added, the 'least complicated way' would be to give the consortium the original amount it paid for the land.

The latest twist in the tale follows a series of missteps that saw SG Changi mired in corruption allegations and financial difficulties over the last year.

News broke in January last year that the Corrupt Practices Investigation Bureau had launched a probe into alleged irregularities in the tender process.

SSC deputy director Fan Chian Jen, who was in charge of the project, left the council in the wake of the investigations.

News of the probe spooked investors who had committed funding.

Piling work at the site then stopped soon after, following the consortium missing a $10 million instalment to the piling company.

The hub's centrepiece was to be a permanent track at least 3.5km long that could host any kind of race except Formula One.

Despite the problems surrounding the building of the hub, Singapore's motorsports fraternity, which had been looking forward to a permanent race track in Singapore, is hopeful of a quick resolution, so that the project can move forward.

Said Singapore Motor Sports Association president Tan Teng Lip: 'Things are just stuck now. But I also hope the SSC, for its part, starts the groundwork for a re-tender process rather than wait around.'

 

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