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LGE was lying in sPICE project costing justification

LGE said the council (MPPP) will save RM25 million in upgrading Pisa and the Aquatics Centre and it will also receive RM13.5 million from the sale of the hotel land. Thus the MPPP would only have to stump up RM11.5 million instead of RM50 million.

LGE was tried hard to twist and juggle the number. To claim state government only need to come out RM 11.5 million is a fallacy and misleading statement.

Why?

LGE’s argument on MPPP can save RM25 million for initial capital outlay for the repair of swimming pool and aquatics center, etc. is WRONG.

Actually SP Setia is paying MPPP RM25 million in exchange for 30-year leasehold rights, meaning the state government is losing all opportunity incomes generated from the aquatics center and swimming pool which may be higher or lower than RM25 million.

In other word, MPPP is paying SP Setia with future income, therefore he cannot claim RM25 million is a gain.

Similarly for the land, MPPP is losing a piece of land worth RM13.5 in exchange for RM13.5 million cash which is used by MPPP as sPICE initial capital. There is no gain in this case, the net income for MPPP is zero after disposing a piece of land.

In other word, MPPP is still paying RM13.5 million to SP Setia (or Tetuan Eco Meridean)

In the nutshell, state government still have to fork out RM50 million from the disposal of land and future income cash flow.

Those attending sPICE’s public consultation session, please expose this BS from LGE without mercy.

sPICE plans open for public viewing

Opalyn Mok

http://www.thesundaily.com/article.cfm?id=56619

GEORGE TOWN (Jan 21, 2011): The Penang Island Municipal Council has put the project plans of Penang International Convention and Exhibition (sPICE) centre for public viewing at the ground floor of the Penang International Sports Centre (PISA).

The public may submit their views or feedback on the state government’s proposed subterranean exhibition centre to the council directly or send an email to the council president at hiyah@mppp.gov.my in the next two weeks.

In a press conference held there last Friday, Penang Chief Minister Lim Guan Eng said many had objected to the project without looking at the overall project.

“The sPICE is but one part of the whole project which will be Penang People’s Park,” he said.

Lim said the whole project will consist of five component – sPICE, a new 7-acre public park, a refurbished and upgraded PISA, a refurbished and upgraded Aquatic Centre and a new hotel and retail outlets with additional car park.

“This is a Penang People’s Park meant for the public and it will be full of greenery for children and the public to enjoy,” he said.

Lim said the council will finalise the feedback received in the next two weeks and discuss them in a meeting.

“We will look at the feedback first and we may modify the project plans according to the views submitted, if any, before we sign the agreement with S P Setia Bhd which was awarded the project,” he said.

Lim again explained that while the sPICE is a RM300 million project, the council is supposed to pay only RM50 million for the project.

“However, the council is only paying RM11.5 million for the project because the council will have saved RM25 million for the refurbishment and upgrading of PISA and the Aquatic Centre which S P Setia will be undertaking.

“The council also sold a portion of the land to S P Setia to build a 4-star hotel to complement sPICE for RM13.5 million,” he said.

Therefore, Lim said the council will ultimately pay only RM11.5 million for the RM300 million project.

The council expects to hand over the project site to S P Setia by the middle of this year and the refurbishment and upgrading works of PISA and the Aquatic Centre will start first.

The project is estimated to take three years to complete.

S P Setia was awarded a 30-year contract to build and manage sPICE and it will recoup their initial investments from rentals, hotel and retail related activities.

The nkkhoo.com comment board with Facebook account.
Ong Eu Soon says:

Big Time Bullshit! No public consultation and feedback booth as claimed in news report. Only ghosts are there to receive your feedbacks if you don’t mind communicating with them. The sPICE is just a concept not a proposal,no detail, no plan, no layout, no financial projection, no data for justification, nothing at all.
Penangites should be ready to buy low cost flat at the price of RM110,000 if LGe make it in the next general election.

nkkhoo says:

I read the same thing from Anil blog. Seems LGE tries to be different from BN, but MPPP is still behaving as before with old mindset.

Email sent to MPPP was returned as address not found error.

MPPP does not know what is public consultation, probably LGE has to hire Idris or Mckinsey Consultant. 🙂

AS Khoo says:

Penang need this convention center in order to lead the country. After all Penang will have nothing to lose, as SPSetia is absorbing all the risk thru Build Operate and Transfer. I went to PISA last Friday, all information is given adequately. Please make your trip there. Your email was returned with error is because the email was flooded with feedbacks. Mine email sent to them was successful.

nkkhoo says:

I was one of the invited guests for a private forum with MPPP this Monday, unfortunately Monday is a working day for salaried kuli like me.

Actually I was in Penang last weekend, but have to rush back to KL after two weeks of long CNY holidays.