LTA to take over North East Line, Sengkang-Punggol LRT assets worth $30.8m

Passengers aboard the harmony-concept train on its way toward Punggol from Harbourfront on June 26, 2017. PHOTO: ST FILE

SINGAPORE - The Land Transport Authority (LTA) is to buy operating assets on the North East Line and Sengkang-Punggol LRT lines from SBS Transit, and will take control of them from April as part of the new rail financing framework (NRFF).

The value of these assets, which include trains as well as signalling and power systems, is currently estimated to be about $30.8 million including GST.

The move, which comes after more than six years of discussion between the LTA and the transport operator, brings all of the Republic's rail assets under the Government.

The Downtown Line was the first to come under the framework in 2011, when SBS Transit won the bid to operate the line.

This was followed by SMRT's assets on four lines - the North-South, East-West, Circle, and Bukit Panjang LRT lines - worth an estimated $1.06 billion, in 2016.

As part of the arrangement, SBS Transit will have to pay LTA an annual licence fee to continue operating and earning revenue from the two lines.

However, both parties declined to disclose the amount that will be paid.

The fee, which varies according to SBS Transit's profitability, will go into a sinking fund for asset replacement.

The LTA will share some of the shortfall in fare revenue and profits when fare revenue growth fails to keep pace with cost growth.

In addition, new regulatory changes imposed by the LTA - resulting in higher operating costs or revenue loss - may see the authority reimbursing SBS Transit.

These include changes to operating and maintenance standards, performance indicators, as well as reduction of rentable and advertising spaces.

The licence period for transport operators, between 30 and 40 years under the previous framework, will be shortened to 15 years, with the possibility of a five-year extension.

As part of the new arrangement, SBS Transit will also have to adhere to a set of maintenance requirements, first introduced as part of SMRT Trains' transition to the new framework two years ago.

The LTA stressed that the move will not affect day-to-day rail operations or SBS Transit staff.

SBS Transit chief executive officer Mr Gan Juay Kiat said the transfer of assets to the Government will allow it to focus on the operations and maintenance of the rail systems.

"It relieves us of the cost of asset renewal and upgrade, and of procuring additional operating assets when ridership demand increases, in order to meet service level and reliability standards set by the LTA," he said.

First announced by in 2008 as part of the Government's Land Transport Master Plan , the framework relieves rail operators of capital expenditure and revenue risks, and allows it to focus on operating and maintaining the rail network.

The LTA said: "With all our existing rail lines now on the NRFF, the Government will be able to plan network capacity holistically and improve rail capacity for Singaporeans in a timely manner."

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