PHILIPSBURG--Government is expected to save NAf. 360,000 per month when its departments relocate to the new Government Administration Building on Pond Island.
Prime Minister (PM) William Marlin told Members of Parliament (MPs) during a meeting of the Central Committee of Parliament on Tuesday that Government had a sizeable debt to General Pension Fund APS and Social and Health Insurance SZV and had received an instruction to resolve the debts. The method used was a “creative” way to solve the problem.
Marlin said the new Government Administration Building was valued at NAf. 45 million and the agreement signed by Government and SZV was for the building to be sold for this same price. Marlin said it never had been Government’s intention to make any profit from the sale of the building.
SZV’s investment committee and its finance department, supported by accounting firm KPMG, evaluated the project and it had been determined that the risk for SZV in this agreement was minimal. SZV also will be receiving a six per cent return on its investment.
SZV collected total premiums of NAf. 194 million in 2014. This means that the purchase of the building is 23.3 per cent of SZV’s turnover and is less than 10 per cent of SZV’s balance sheet.
In accordance with agreement with Government, SZV has reserved NAf. 15 million to complete the building. However, parties are discussing how much money realistically is needed to complete everything so that Government can move in.
Marlin told MPs that because there was not sufficient parking, the front of the building would be redone to accommodate new parking. The current barbed-wire fence of the building also is expected to change. Marlin said Government would be reshuffling funds on the capital budget of 2016 to accommodate some of the things that need to be done.
He said some 80 to 90 per cent of the departments would move into the new building. A decision has not yet been taken on what departments specifically will move into the new building once it has been completed. Government has sent letters to all ministries and department heads advising them not to sign any new rental contracts without first notifying Finance Minister Richard Gibson.
The Finance Minister, he added, also has requested an update on all contracts that have an automatic extension clause. The expiration dates and terms of termination for existing rental contracts are currently being checked. Once this process has been completed, Marlin said, Government will notify the landlords on terminations and nonrenewal of contracts.
As it relates to APS, Marlin said the former Government had been negotiating with APS for a loan for the building and APS had laid down several conditions that were not acceptable to the current administration, including pledging all Government land, Government accounts, Government income and the income from Government-owned companies, etc.
Marlin said the current administration had chosen to negotiate in a different manner, which resulted in the agreement for the sale and purchase of the building between Government and APS.
The agreement is to settle NAf. 83 million in debt Government owes the pension fund. The settlement has several components, one of which is an “asset swap” to transfer two parcels of Government-owned land, which will reduce the APS debt by NAf. 4.45 million – the amount at which the land is appraised.
A multi-level parking facility and commercial space will be constructed on the parcels of land. APS is expected to generate a return of 5.5 per cent yearly on this. Marlin said the return was intended to ensure that the pension fund can increase its capital to meet current and future obligations to participants.
