LTA to buy SBS buses, take over contracts

SBS Transit buses at the Toa Payoh bus interchange.
SBS Transit buses at the Toa Payoh bus interchange. PHOTO: ST FILE

In another step towards overhauling the bus industry, the Land Transport Authority (LTA) will buy 50 buses from operator SBS Transit, and take over the contracts to purchase another 346.

SBS announced the deals yesterday on the Singapore Exchange.

It will be the first time that the LTA has purchased buses from SBS, as it looks to build its fleet in preparation for the restructuring of the industry to a contracting model.

Under the new regime, the Government will own all operating assets such as buses, the fleet management system and on-board equipment. Bus routes will be split into packages and tendered out to operators to run for a fee, with the Government bearing the revenue risk.

The LTA said it will take over SBS Transit's procurement contracts for new bus purchases scheduled for delivery next year and in 2017, with a contractual value of about $164 million.

Among the 346 buses to be bought under the contracts, 100 are single-deck and 246 double-deck.

Some 210 are scheduled for delivery next year and the rest in 2017.

Another 50 buses delivered to SBS between June and this monthwill be bought by the LTA for about $23 million. These comprise 12 single-deckers and 38 double-deckers.

"This transition arrangement allows LTA to build its bus fleet expeditiously, without incurring additional cost as the transaction is based on Net Book Value," an LTA spokesman said. The Net Book Value of an asset is its original cost with depreciation factored in.

In May, Anglo-Australian firm Tower Transit won a contract to operate 26 bus routes in western Singapore and, in November, British company Go-Ahead won the rights to run 25 services in Pasir Ris and Punggol.

Tower Transit is expected to start operations from the second quarter of next year and Go-Ahead, from the third quarter. The routes, currently run by incumbents SBS Transit and SMRT, will be progressively handed over to the new players.

The LTA is currently also in negotiations to buy buses from SMRT, The Straits Times understands.

Adrian Lim

A version of this article appeared in the print edition of The Straits Times on December 30, 2015, with the headline 'LTA to buy SBS buses, take over contracts'. Print Edition | Subscribe