SBS Transit, SMRT Buses to get $7.2b in new deals to run buses

The Land Transport Authority has reached a multi-billion-dollar agreement with SBS Transit and SMRT Buses to run buses under a new government bus contracting model.
The Land Transport Authority has reached a multi-billion-dollar agreement with SBS Transit and SMRT Buses to run buses under a new government bus contracting model. PHOTO: ST FILE

Govt phasing in new contracting model for 11 bus packages operated by incumbents

The Land Transport Authority (LTA) has reached a multi-billion-dollar agreement with SBS Transit and SMRT Buses to run buses under a new government bus contracting model.

The transition will take effect from Sept 1, and there will be 11 bus packages under the model, the LTA said yesterday.

The packages are of varying sizes, and have different compositions of bus services with different route lengths. The authority estimated that the total contract fee for SBS Transit would come to $5.3 billion, and that for SMRT would amount to $1.9 billion.

SBS Transit operates eight of the packages with 196 bus services, and SMRT Buses operates three with 77. The packages have an operating tenure of between two and 10 years.

When the packages expire, each will be put up for competitive tendering - like the two clinched by foreign players recently.

The LTA said this phased approach to competitive tendering minimises the risk of service disruption and allows the LTA to refine the management of contracts.

 

The bus contracting model - where the Government owns all operating assets and collects fare revenue - has been in the works for at least four years.

The Government took the first step when it set aside $1.1 billion in 2012 to buy 550 buses to beef up the fleet on the back of a surge in public transport demand. This was soon expanded to 1,000 buses.

In May last year, the first competitive route tender was won by Australia's Tower Transit for $556 million, for a five-year contract to run services out of Jurong West.

Six months later, in November, Britain's Go-Ahead clinched the second contract operating out of Loyang for just under $500 million.

In June, LTA called tenders for a third parcel in Seletar.

The new model is meant to incentivise operators with revenue certainty and shield them from heavy capital expenditure so they can focus on meeting service standards.

LTA chief executive Chew Men Leong said moving to the new model puts the bus industry "on a financially more sustainable footing".

"But commuters can expect higher bus service levels throughout Singapore," he said.

With this model, buses will arrive at intervals of no longer than 15 minutes during the morning and evening peak periods, with at least half of them doing so at intervals of no longer than 10 minutes. Feeder services will run at intervals of six to eight minutes.

Mr Sitoh Yih Pin, chairman of the Government Parliamentary Committee for Transport, said: "It is too early to tell if service will effectively improve. We will have to allow the new model to be in play for a sustained period before any judgment can be made."

But Mr Sitoh added that the new model allows the LTA to be more responsive to ridership changes.

A version of this article appeared in the print edition of The Straits Times on August 12, 2016, with the headline 'SBST, SMRT to get $7.2b in new deals to run buses'. Print Edition | Subscribe