Transport operator to pay licence fee to run service

Under the new rail financing framework

LTA will own rail infrastructure such as stations and depots, and operating assets such as trains

The transport operator will in turn pay an annual Licence Charge for the right and responsibility to operate and maintain the line and earn revenue

LTA shares in fare revenue risk with operator

The framework was first adopted for the Downtown Line awarded to SBS Transit

The transition

Affects the North-South, East-West and Circle Lines, and the Bukit Panjang LRT

LTA will pay SMRT Trains S$1 billion for the assets, which is the Net Book Value (cost less depreciation) of the operating assets capitalised in SMRT Trains’ and SMRT Light Rail’s books as at Sept 30, 2016.

The more than 60,000 operating asset items to be transferred to LTA include the trains, signalling system, maintenance equipment such as rail grinding vehicles, electrical and fire protection equipment, as well as equipment for power and building services

The new licences begin in October for the affected lines, and will expire on Sept 30, 2031

Before taking over

LTA will perform an audit on SMRT Trains’ and SMRT Light Rail’s financials to verify the net book value of the assets to be transferred

LTA will conduct asset condition surveys for older operating assets; can withhold payments for assets requiring rectification or replacement

Impact on fares

Fares will not be affected by the transition

Fares will continue to be regulated by the Public Transport Council based on the fare adjustment formula recommended by the Fare Review Mechanism Committee