Coolalinga engineering company Option Group Pty Ltd (NTEX) has been awarded the contract to demolish the long-vacant building for $257,840.

Removal of the asbestos-riddled clubhouse is hoped to attract more interest to redevelop the two hectare site in Giles Street.

The club was closed in 2015 blaming poor governance and a decline in patronage.

The amount of the demolition contract matches the money secured in 2016 by then Katherine MLA Sandra Nelson who received $250,000 from the NT government to develop the club as "an all-purpose community centre in Katherine".

That money has since been given to Katherine Town Council to help fund the new pavilion at the sportsgrounds.

That project has also been struck with problems and is yet to begin.

The Giles Street clubhouse was found to be "beyond repair" and would have cost "more to fix it than we had" and zoning problems also emerged.

It has been for sale by the NT Government ever since.

The NT Government said a second "structural inspection report" was commissioned in March which again found "the asbestos structures would require extensive works to make them compliant with the National Construction Code and found they were beyond economic repair".

In February the government said it had found a "potential buyer" for the site after an approach was made by the council to temporarily use the grounds while the sportsgrounds upgrades were under way.

The Department of Infrastructure, Planning and Logistics also said Giles Street did not have the necessary certification for either the oval or the change rooms/toilets to allow them to be used.

DIPL's northern region senior director Claire Brown said the department was "currently dealing with an application for a direct sale" of the site.

"Given these dealings the department cannot guarantee the grounds will be available to use during the 2020 sports season," Ms Brown told council earlier in the year.

The Katherine Times has questioned the government on this "potential buyer".

"The future use and redevelopment of the site is still being determined," a spokeswoman said last month.

"Discussions with a prospective buyer remain ongoing."

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