THE GOVERNMENT will lose €15m instead of gaining €11m if puts plans to build the Cyprus Cultural Centre on the backburner, according to a recent study on the project.
The final design plans for the massive Cultural Centre were formally unveiled to much fanfare in July by the Education Minister at the Cyprus Cultural Foundation (CCF). Head of the CCF board, Kikis Lazarides, described the planned Cultural Centre as “the largest cultural infrastructure project in the country”.
However, as Cyprus waded deeper into the global financial crisis, the future of the project was thrown into doubt. Conflicting responses to the crisis from the Finance Ministry failed to shed any light on the situation.
The ministry first announced it would push ahead with large-scale projects to inject money into the falling economy and hired more staff to do so. It then made an about-turn, suggesting some projects would have to be put on hold, and appointed a ministerial committee to prioritise pending projects.
According to a recent study on the Cultural Centre by a relevant agency, if the project went ahead in 2010, even a year behind schedule, the government would not have to pay a cent for that year, considered crucial in terms of the depth of the crisis, and could even inject €10.8m from EU structural funds into state coffers after claiming 85 per cent back on costs already paid (amounting to €12.7m).
If the project is postponed, there is a risk it will never be implemented, said the study, noting that €15.1m (€12.7m on development costs plus €2.4m on operational costs) already spent between 2006 and 2009 will be lost. On top of that, the government has spent an estimated €8m on re-housing government offices situated on the planned site for the Centre.
The Water Development Department (WDD) has already been relocated to new offices, while the Town Planning Department has had to rent office space until its own purpose-built offices are completed. Meanwhile, a large amount of money has already been spent on renovating the old Nursing School next to the old Nicosia general hospital which will serve as temporary residence for the Migration Department when it finally vacates its current abode, situated on the site planned for cultural rejuvenation.
The CCF was ready to start work on the Centre in May this year but had to postpone due to delays by the relevant government services responsible for knocking down old buildings to clear the site for delivery. The old Town Planning offices have yet to be demolished while it took six months for the WDD offices to be flattened.
Once the site is delivered ready for work, the CCF needs eight months to complete its tender process for separate contracts on the underground parking (350 spaces) and the actual building with its surrounding areas.
It is estimated that if the project starts in September 2010, the government won’t have to pay a cent for that year. Money already earmarked for the project in 2009 will be used instead for 2010. Also, once the project starts, the application for 85 per cent back from EU structural funds may begin. For 2011, the CCF is working on a loan from the European Investment Bank on favourable terms which will give a five-year grace period, while the loan will not be written as part of the public debt.
The study highlights that the government can claim 85 per cent back on all costs as the EU has shown great enthusiasm in supporting the project. It is not clear whether the same enthusiasm will be shown to other projects that have not reached the same level of “maturity” as the Cultural Centre.
The original cost of the project was calculated at €100m, but due to additions like the underground car park, massive public square and park, plus the delays in the start date, the current estimated cost is €132.6m in total. If the project starts next year, and finishes in time before the expiration of the EU financial budgetary period, the government will only pay 15 per cent of the cost, amounting to €19.8m. Since it has already paid €12.7m, the real cost to the state will be around €7-8m, concluded the study.
