SMRT Trains and SMRT Light Rail to Transit to New Rail Financing Framework

The Land Transport Authority (LTA) and SMRT Trains Limited (SMRT Trains) have concluded discussions on the transition of the North-South and East-West Lines (NSEWL), the Circle Line (CCL) and the Bukit Panjang LRT (BPLRT) to the New Rail Financing Framework (NRFF), which had been announced by the Government in 2008 and implemented for the Downtown Line (DTL) in 2011. The transition will benefit commuters by bringing about five changes.

• First, SMRT Trains and SMRT Light Rail will transfer ownership of their respective operating assets, such as the trains and signalling system, to LTA. This will put LTA in the driving seat to make timely investments in capacity expansion and the replacement and upgrading of operating assets.
• Second, SMRT Trains, relieved of ownership responsibility over the rail operating assets, will be able to better focus on the operations and maintenance of the rail network.
• Third, LTA will shorten operating licences from 30-40 years under the previous financing framework, to 15 years under the NRFF. This allows LTA to re-tender the operation of rail lines more often, making the industry more contestable.
• Fourth, LTA will impose new Maintenance Performance Standards (MPS) to improve maintenance performance and consequently the reliability of the rail system.
• Fifth, the new licence under the NRFF provides for some risk and profit sharing between SMRT Trains and LTA, to make for a more financially sustainable rail system. For example, the structure provides for an increased Licence Charge to be paid by SMRT Trains should their profits outperform.