SMRT and SBS Transit given $173 million in rail reliability incentives last year

The incentive given last year was calculated based on a rate of 0.3 cent per place-km.
The incentive given last year was calculated based on a rate of 0.3 cent per place-km.PHOTO: ST FILE

SINGAPORE - Rail operators SMRT and SBS Transit were awarded $173 million in incentives for rail reliability last year, Transport Minister Ong Ye Kung revealed on Monday (May 10) in a written reply to parliamentary questions filed by three MPs.

Responding to Mr Saktiandi Supaat (Bishan-Toa Payoh GRC), Ms Cheryl Chan (East Coast GRC) and Workers' Party MP Dennis Tan (Hougang), Mr Ong said the incentives were awarded as the two companies had achieved more than one million mean kilometres between failures (MKBF) for the MRT lines they operated.

The operators had also fulfilled other operational and safety requirements.

Little is known about the incentive scheme, which Mr Ong said is a temporary grant that will last from 2020 to 2023.

He did not give a breakdown of how much each operator had received, saying only that the amount was proportionate to the operating capacity they provided. The incentive given last year was calculated based on a rate of 0.3 cent per place-km, he added.

Mr Ong also did not say whether public bus operators here, which include both SMRT and SBS Transit, were given any performance-related incentives or penalties last year.

According to SBS Transit's latest annual report released last month, performance incentives from the Land Transport Authority (LTA) for both rail and bus services accounted for about 5 per cent of the firm's total revenue of $1.23 billion last year.

Based on this, the incentives would have amounted to about $60 million in total. Assuming an equal split between buses and rail, SBS Transit's rail incentive would be some $30 million.

When queried by The Straits Times previously, SMRT, which is unlisted, would not say if it had received any incentives for rail reliability.

Mr Ong said in his written reply that the rail reliability incentive scheme was devised as a way for the Government to enhance its subsidy for rail operations.

It is part of the $1 billion the Government spends every year on the MRT system here.

Rather than getting an outright subsidy, operators are held to a set of performance standards, Mr Ong said. If these standards are breached, LTA may impose financial penalties. But if operators can meet the targets, they will be eligible for the incentive.

Operators must achieve an MKBF of at least 500,000 train-km to qualify. They will get the full amount if they achieve one million MKBF or better, Mr Ong added.

SMRT and SBS Transit both received the full incentive last year.

SBS Transit, which operates the North East and Downtown lines, posted more than two million train-km between delays of more than five minutes last year.

Meanwhile, SMRT's North-South and East-West lines clocked between one million and 1.3 million train-km between delays. Its Circle Line did better, with 1.7 million train-km.

Last year also saw a number of train faults, including the massive disruption on Oct 14 that affected three MRT lines and 123,000 commuters.

Explaining the need for the incentive, Mr Ong said the two operators had increased maintenance tempos and shifted towards preventive rather than corrective maintenance.

This has led to a tenfold increase in rail reliability over the past six years in terms of train-km, which is good for commuters but had also resulted in an increase in maintenance costs.

"It raises issues concerning the financial sustainability of the rail network as the operators will make huge losses," Mr Ong added.

Last month, SBS Transit chairman Lim Jit Poh said in his chairman's address that SBS Transit's public transport revenue last year fell by 13.6 per cent to $1.19 billion.

This was offset by the rail reliability incentive.

Mr Ong said: "We will continue to work with operators and other stakeholders to provide reliable rail services in a sustainable manner."