Bukit Panjang to city stretch of DTL incurs $60m subsidy a year

Figure revealed after petition to rescind plan for bus route changes

Senior Minister of State for Transport Chee Hong Tat (in red shirt) and MPs (from right) Edward Chia and Liang Eng Hwa meeting residents yesterday to hear their concerns about the bus route changes. PHOTO: EDWARD CHIA/FACEBOOK
Senior Minister of State for Transport Chee Hong Tat (in red shirt) and MPs (from right) Edward Chia and Liang Eng Hwa meeting residents yesterday to hear their concerns about the bus route changes. PHOTO: EDWARD CHIA/FACEBOOK

About $60 million a year in public funds goes towards subsidising operations for a stretch of the MRT Downtown Line (DTL) connecting Bukit Panjang to the city, Transport Minister Ong Ye Kung said.

He revealed this figure in response to a Bukit Panjang resident who had submitted a petition with more than 2,000 names asking the Land Transport Authority (LTA) to rescind its plans to remove some bus services from the area and change the routes of others.

In an e-mail reply obtained by The Sunday Times on Friday, Mr Ong noted that the Government built the DTL - which runs from Bukit Panjang to the Expo in the east - at a cost of $21 billion.

"It is not a profitable line, so the Government uses public funds to subsidise the running of the line, and operation subsidy comes up to over $60 million a year for the DTL stretch connecting Bukit Panjang to the city," he said.

At the same time, ridership on bus services that run parallel to the DTL has fallen significantly, he said.

For bus service 171, which will see its route changed, ridership fell by more than 30 per cent from 2015 to last year. For bus service 700, which will be removed, it was more than a 50 per cent drop in the same period.

Mr Ong said services 171 and 700 are also being subsidised, costing taxpayers $14 million a year.

"If the bus services are the only public transport option available to residents, LTA is able to justify the public spending," he said.

"But with the DTL available, LTA needs to exercise prudence in public spending, and is hence making the changes announced."

The same $60 million subsidy figure for the DTL was cited by Senior Minister of State for Transport Chee Hong Tat in a Facebook post on Friday evening.

SBS Transit (SBST), the subsidiary of transport giant ComfortDelGro, beat rival SMRT to land the contract with a bid of about $1.6 billion over 19 years from 2013. Annualised, the licence charge works out to be around $84.2 million a year.

 
 
 

Under the licence charge structure, if SBST's revenue falls below a certain threshold, it pays a smaller fee to LTA.

Asked why taxpayers were subsidising the running of a line which a private company had undertaken to operate in a competitive tender, the LTA said the sum was necessary to make up for a shortfall in funds necessary for the eventual asset replacement of the line.

"Under the New Rail Financing Framework (NRFF), the operator pays the Government a licence charge for the use of operating assets, such as trains and signalling system. This goes towards their eventual replacement and renewal," an LTA spokesman said.

"As the DTL is not a profitable line, the licence charge paid by SBST is insufficient to cover the annual depreciation and hence the eventual replacement of the DTL operating assets. The difference between the annual depreciation and licence charge paid is the Government's subsidy for DTL operations. This comes up to about $60 million a year for the DTL stretch connecting Bukit Panjang to the city."

The DTL is the first line operated under the NRFF, where the Government owns all fixed and operating assets, and the operator focuses on maintenance and meeting service standards.

Last August, SBST reported that average fares for the DTL had risen by 7.7 per cent in the second quarter of the year, while average daily ridership had grown by 6.9 per cent to 467,000 trips - close to the projected 500,000.

Analysts were expecting the line to break even this year. This forecast, however, was made before the coronavirus outbreak.

Overall, public transport ridership is now at half the volume it was before the outbreak.

 
 
 

Commenting on the $60 million subsidy, Singapore University of Social Sciences transport economist Walter Theseira called for more transparency on rail funding.

"We know that on a system-wide basis, operating costs are now subsidised for rail but there is little information put out about the basis for these calculations, where subsidies are going, to whom, etc."

In the case of the DTL, Dr Theseira said, "we should be open" about how the revenue shortfall came about.

"We can accept that it is necessary to rescue a commercial operator which made a mistake in bidding - especially if factors that caused the financial distress are beyond operator's control - but we don't know how exactly it came about and to what extent it is beyond operator control," said the former Nominated MP.

A version of this article appeared in the print edition of The Sunday Times on August 09, 2020, with the headline 'Bukit Panjang to city stretch of DTL incurs $60m subsidy a year'. Print Edition | Subscribe