Govt. changes plan for '$4.2m waste'

The Minister of Public Enterprises, Lautafi Fio Purcell, is optimistic that an investor will eventually utilise the Samoa Land Corporation’s (S.L.C) $4.2 million headquarters.

But in what shape or form, he does not know.

In fact, the venture might not necessarily be a hotel as the government had initially planned. “We’re now looking at whoever has a plan to use the building,” Lautafi said yesterday.

“Whether it's a hotel, office complex or whatever they want to turn that to as long as the building is used so that the government can get a return on it."

“If they come and they don't want to build a hotel but something else, if the government deems it useful, then we will go with that.”

Lautafi, who is also the Minister of S.L.C, expressed his optimism during an interview with the Samoa Observer yesterday, where his opinion was sought over the lack on interest from potential investors about the multi-million-tala building, described by critics as a "$4.2m waste of money."

When the tender was closed in June, not one company had expressed interest in the project. But Lautafi yesterday said the tender was for a consultant to prepare proper tender documents to attract companies. Not one tender was received, he confirmed.

Lautafi said they wanted a consultant to prepare proper documentations to avoid a repeat of what happened when negotiations between the government and the Endeavor Investment Ltd (E.I.L), a Samoan company that owns the Samoa Traditional Resort, fell through.

“In terms of the tender with E.I.L, there were lots of loose ends,” he said. “So we needed a consultant to put together the tender documents, where the government can tell exactly what it wants in relation to the building, long term, medium term and short term."

“The idea is that whoever gets it will know exactly what they can and cannot do with this.”

But the Minister said no consultant expressed interest.

“So we’re looking now at just hiring a consultant or utilise the skills from within the government.”

Lautafi said he had spoken with the General Manager of S.L.C last Friday about the issue.

“I’d say in the next two or three weeks, then you’ll see something more concrete.”

Back in April, Cabinet announced that the negotiations with E.I.L to lease the Office complex at the Faleata Golf Course by converting it to a commercially owned accommodation complex, had reached a deadlock.

A statement from Cabinet at the time said the original tender did not stipulate non-negotiable conditions and that allowed the parties to include issues that were outside the original tender scope in their negotiations.

The government said it had exhausted all options available to accommodate the business proposals. In the end they could not agree on a compromise decision. And to that extend, Cabinet approved to re-advertise the tender.

“While every effort is made by Government to encourage and assist local business like E.I.L, we have to ensure Government assets are protected,” Lautafi said at the time.

“The new tender will include specific details, requirements will be very clear on what is on offer and what can be negotiated and what can’t. The tender document will be made very clear to parties involved.”

Contacted for a comment at the time, Su’a Tanielu Su’a, who operates the Samoa Traditional Resort, said the government’s decision to re-tender the complex stemmed from the failure between the parties to agree on the value of the property.

According to Su’a, the government wanted to sell the three-storey-building for $4.5 million. The businessman said he hired a structural engineer and a team to value the property and the valuation came to about $2.2 million.

With a four-year depreciation, he said the final value came down to about $1.7m to $1.8million.

“To look at the real value, there was no way that the building can fetch that much,” Su’a said. “So, from a business perspective, that’s not viable. $4.5 million on a building like that, that’s just too much. I did my best in trying to express my interest in terms of turning that into a commercially viable operation and from a business perspective that’s what I did. I don’t know, maybe Government has something in mind.” The government’s initial target was for the new hotel to provide accommodation for overseas athletes during the 2015 Commonwealth Youth Games, which starts on Saturday.