LTA completes ownership takeover of all rail assets in Singapore
On April 1, rail networks under SBS Transit - the North East Line (NEL) and Sengkang and Punggol Light Rapid Transit (SPLRT) - will come under the New Rail Financing Framework (NRFF).
It will mark the end of the transition of the entire Singapore rail network to the NRFF.
Under the NRFF, the Land Transport Authority (LTA) holds ownership of all rail assets like the trains and signalling and power systems.
The value of the assets in the final transition announced yesterday is estimated to be around $30.8m.
The NRFF was introduced in the 2008 Land Transport Master Plan and SBS Transit's Downtown Line was the first to make the transition in 2011, followed by SMRT's train lines in 2016.
Under the previous financing system, operators SMRT and SBS Transit owned the operating assets and bore the cost and full financial risks of building up, replacing and upgrading rail assets.
With the NRFF, the Government owns the assets previously bought and all future assets.
Rail operators are now relieved of the heavy capital expenditure to replace assets due to wear and tear or upgrading and can focus solely on operations and maintenance needs and providing better service.
The LTA will continue to emphasise enhanced maintenance standards for improved rail reliability through the Maintenance Performance Standards, first introduced in 2016 under the NRFF.
Transport economist and senior lecturer at the Singapore University of Social Sciences (SUSS) Walter Theseira said: "It's easy to make money when your train systems are new but it's difficult to keep profits when the systems are old and have hit their lifespan and you have to spend money to keep it running.
"It's not sustainable for private companies to take responsibility of the entire lifespan of the rail network."
With the NRFF, rail operators pay a licence fee to LTA, which will be set aside in the Railway Sinking Fund (RSF) for the renewal of operating assets. The licence period is now for 15 years, with a possibility of a 5-year extension.