State will take part of arena’s risk
Sunday, May 25th, 2008
If the 2011 IIHF Ice Hockey World Championship will be held in Bratislava, they will be played in state arena. Government passed a resolution that arena will be financed through PPP project. Was it the only and the best solution?
There are more ways of financing the arena. Money should came from state budget, loans or from private investments. It is estimated that expenses should reach 4 milliards Slovak crowns (about € 135 mil.).
Slovak government decided that the best way of financing will be the public-private partnership (PPP). Minister of education Jan Mikolaj has idea, who can take entrepreneurial risk.
“Investor will build the hall, which will belong to state. State allows him to use it for 30 years. Investor will manage state property and all he earns on it, will belongs to him. State will pay back him the hall,” said Mikolaj.
Government model is disadvantageous for state
That investor will get repayments from state, but he also keeps the earnings from concerts or sport events is according to Radovan Ďurana from Iness institute disadvantageous state investment. “State expects that income from operation the hall wouldn’t be enough,” he said.
He would propose different proceeding: Government should prepare the land and offer it to investors to find out who can build it and who can pay the most expenses. “If such investors won’t be found, then it is not profitable,” said Ďurana.
Against PPP project agreed by government has reservations also analyst from Ineko Peter Goliáš. He would advise tender for building the Arena. He mind that such projects should over-price the building. He recognized that public-private partnership projects should be advantageous only when government should manage them well. “But they should learn it first on smaller projects,” he added.
Peter Chovanec from Dexia Bank claims, that public-private partnership projects have many advantages. The biggest one is that private investor is more effective than state, mainly in maintenance and operation.
All three analysts agree, that if partnership with private investors will be contribution depends on contract’s conditions. Minister Mikolaj says, that he is ready for it. The very detailed contract will have several hundred pages. “We will define million conditions the investor will have to supply. In case he couldn’t accomplish it, the arena will be taken away from him,” he said.
It is possible, that arena should be build without public money. It depends on the offers. According to him Wellfree should enter the tender. Wellfree announced, that they can build arena without any public expense.
One of the reason, why PPP was chosen, is according to the minister check up of the interested parties. “We need to be sure, that they have money and are able to do build it up.”
