A lawmaker has said that the government is to reduce the amount of funds assigned to a “cash for bids” plan at the Kai Tak Sports Park construction project.
To attract bidders, the government initially planned to provide incentives of up to HK$60 million – or half of the bidding cost, whichever is higher – for each of the three potential construction firms. They will receive the sum even if they fail to win the project.
It is the first case of the government using such measures to attract companies. It said the huge project would mean firms would need to dedicate a large amount of time and money in order to make a bid.
But pro-Beijing lawmaker Edward Lau Kwok-fan said the Home Affairs Department has told him it has decided to reduce the total amount following criticism. It will only provide incentives up to a maximum of HK$60 million for only two bidders who fail to win the project.
Thus, the total sum on offer would be reduced from HK$180 million to HK$120 million.
“I am happy that the government listened to us and took action,” Lau said.
Lau also said the government will also increase the deposit that the winning bidder needs to provide from HK$200 million to HK$1 billion.
The guarantee period would also be increased from between six to nine months, to three years. The goal was to increase the risk for the winner, and ensure the winner would operate the sports park well into the 25-year build and operate period.
The HK$31.9 billion funding proposal for the project was passed by the Public Works Subcommittee of the Legislative Council last week.
The Finance Committee will be the final stage needed to green light the funds, where the updated “cash for bids” proposal will be discussed.
But the updates have not attracted support from the democrats.
Roy Kwong Chun-yu of the Democratic Party said his party supports sports development, but the bidding proposal set a bad precedent. He said there were concerns over whether public funds will continue to be provided to subsidise construction bidders who failed to win projects in the future.
He also complained that increasing the amount of deposit may not guarantee the winner would operate diligently during the 25-year period, and that the government should have an active role during the time – such as conducting mid-term reviews and forming monitoring mechanisms.