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London 2012 officials admit they could go over budget
(Agencies)
Updated: 2007-12-05 10:23

 

LONDON -The London Olympics could go over its 9.3 billion pound (US$19.1 billion; euro12.9 billion) budget.

John Armitt, the chairman of the Olympic Delivery Authority, told a British parliamentary committee Tuesday that the 2.7 billion pound (US$5.5 billion; euro3.7 billion) fund set aside for budget overruns may not be enough.

Armitt said the ODA, which is responsible for building the venues and infrastructure for the 2012 Games, was sticking to tight budgets, but he couldn't promise there would not be overruns.

"If you say to me do I guarantee absolutely that this is going to happen, no I couldn't do that," Armitt told the Department for Culture, Media and Sport Committee investigating Olympic costs.

In March, the British government announced the budget for building the Olympic venues and regenerating east London had increased to 9.3 billion pounds (US$19.1 billion; euro12.9 billion) from the 3 billion pounds (US$6.1 billion; euro4.1 billion) estimated in the bid documents.

Part of that new budget was the 2.7 billion pound (US$5.5 billion; euro3.7 billion) contingency.

"We expect a substantial part of the contingency to be spent on a program of this complexity," ODA chief executive David Higgins said. "Clearly we want to minimize the expenditure."

Olympics Minister Tessa Jowell will produce a more detailed budget by the end of the year.

"As the project develops and you have more certainty so it (costs) goes down," Armitt said. "All we're doing is saying we have very limited information at the moment."

The Olympic Park site in Stratford, east London, is being prepared for construction to start next year. It will be home to the Olympic stadium, aquatics center, velodrome, fencing, field hockey, handball and basketball arenas, with the athletes' village and main press and broadcast centers adjacent to the site.

The London Olympic organizing committee has a separate operational budget of 2 billion pounds (US$4.1 billion; euro2.7 billion), raised through sponsorships, television rights fees, merchandising and ticket sales.

International Olympic Committee president Jacques Rogge said the huge budget increase had confused the British public.

The original bid budgetary figure was based on 2004 prices, did not include a contingency fund or Value Added Tax, which is placed on consumer expenditure and is collected on business transactions, imports and acquisitions.

"That creates confusion among the general public, who think that the budget has exploded," Rogge was quoted as saying in Tuesday's edition of The Guardian newspaper. "There is a perception that there is a big difference but if you look at the constant impact of inflation, it's not such an explosion."

However, Rogge was happy with preparations.

"London is an example in terms of respecting a deadline," he said.

Also Tuesday, London signed accountancy firm Deloitte as its first tier two sponsor. Its status as "professional services supporter" is worth at least 20 million pounds (US$41.1 million; euro27.9 million) in funding and the company will also provide advisory services.

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