Rail operator SMRT has clinched the operating contract for the upcoming Thomson-East Coast Line (TEL) with a bid that is 30 per cent lower than rival SBS Transit's.
SMRT had submitted a bid of $1.7 billion to run the new line - which will open from 2019 - for nine years.
In announcing the award yesterday afternoon, the Land Transport Authority (LTA) noted that recently privatised SMRT also scored higher for quality in the tender, which involved only two parties.
"Its proposal featured a commitment to invest heavily in predictive and reliability-centred maintenance to enhance reliability," said LTA. "SMRT Trains also undertook a set of contractual guarantees in the form of service fee deductions should key obligations not be met."
SMRT runs the North-South, East-West and Circle lines, as well as the Bukit Panjang LRT.
SBS Transit, despite having a higher rail reliability track record going by performance statistics in the first half of this year, lost out. This will relegate it to being a minor player in the growing rail industry with only about 20 per cent market share. SBS Transit, owned by transport giant ComfortDelGro, runs the North-East and Downtown lines, as well as the Sengkang-Punggol LRT.
SBS Transit spokesman Tammy Tan said: "We congratulate SMRT on being awarded the tender. We are naturally disappointed. Nevertheless, we remain ever committed to improving our rail reliability and the performance of our existing lines to continue to serve our commuters well."
SMRT's recent track record has not been stellar, with trackside fatalities and a higher frequency of delays standing out. For instance, its eight-year-old Circle Line chalked up one delay per 518,000 train-km in the first six months of this year, while SBS Transit's 14-year-old North-East Line clocked one per 978,000 train-km.
Asked how SMRT managed to land the contract despite its poorer track record, its chairman Seah Moon Ming said: "I think we have learnt good lessons from all the problems and challenges that we faced so far. This is a 30-year-old system and is in the process of renewal, and all the problems and challenges we faced, we take them as a good lesson learnt, and that is very useful for us, especially for the new line."
He added that SMRT will hire 600 new people by 2019 for the TEL. The number could reach 1,500 by 2024.
Last month, SMRT was invited to be part of a venture to run the cross-border rapid transit link to Johor Baru. The link is a northern extension of the 43km, 31-stop TEL, which joins Woodlands and East Coast to the city.
National University of Singapore transport researcher Lee Der-Horng said: "Even though SMRT has a lot of baggage from the older North- South, East-West lines, it has no excuse for not having a better performance with a new line. In any case, it has given a contractual promise to meet performance targets."
Singapore University of Social Sciences transport researcher Park Byung Joon said: "The award is based on a promise. I guess SMRT promised better."
Meanwhile, LTA said it will be calling a separate tender next year for the TEL's non-fare business - such as rental of commercial space and advertising. This is the first such arrangement as all MRT operators also run the non-fare businesses today.
• Additional reporting by Cheow Sue-Ann