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Why is LTA paying for the trains with taxpayers' money and SMRT reaps the profits????

(01-02-2012, 10:50 PM)weijian Wrote: [ -> ]It looks like LTA is paying the bill for the new trains for NEL/CL and Tuas West Extension, but SMRT has to pay for its own trains and signalling system at its NSEW lines...

More trains for North East and Circle lines

SINGAPORE - The Land Transport Authority (LTA) has awarded contracts to purchase more trains for the North East Line (NEL) and Circle Line (CCL), to increase rail capacity in the coming years.

The NEL will receive 18 new trains - instead of 12 as previously announced - progressively from 2015. This will increase the NEL's peak capacity by about 70 per cent, LTA said in an announcement today.

The peak capacity of the CCL will also increase by about 40 per cent with 16 new trains added progressively from 2015.

The contracts for the procurement of the additional NEL and CCL trains were awarded to Alstom Transport S.A / Alstom Transport (S) Pte Ltd consortium at a value of S$234.9 million and $134 million respectively.

The re-signalling of the NSEWL is also on track for completion in phases from 2016, following SMRT's award of the contract to Thales Solutions Asia Pte Ltd at a value of $195 million.

LTA has also awarded the contract for the signalling of the Tuas West Extension at $40.3 million. The upgrade of the signalling system will allow trains to run at intervals of 100 seconds at peak periods, compared to the existing intervals of 120 seconds.

This would translate to shorter waiting times for commuters and a potential 20 per cent improvement to the existing capacity.

adrianl@sph.com.sg

New financing framework from DTL onwards,

LTA Appoints SBS Transit Limited to Operate Downtown Line under New Rail Financing Framework

Extracts,
7. The appointed DTL operator, SBS Transit Limited will pay an annual License Charge. This will apply over the 19-year license period. This payment is expected to reach an estimated total of $1.6 billion at the end of the 19 years.


Key Features of the New Rail Financing Framework

Basically, it's not "free trains" from LTA, but rather, the operator would be paying a new license fee to LTA, who'd mainatain a sinking fund for such CAPEX.

hi KopiKat,
Yeah i knew that. But check out below..it only started in 2010, shouldnt be applicable for CCL and NEL.

Key Features of the New Rail Financing Framework
The new rail financing framework was put in place in 2010 to achieve the objectives stated in
the Land Transport Master Plan (LTMP). The objectives are to (a) facilitate the future expansion
of the Rapid Transit System (RTS) network in a financially sustainable manner; and (b) inject
greater contestability into the rail industry.

(02-02-2012, 05:47 PM)weijian Wrote: [ -> ]hi KopiKat,
Yeah i knew that. But check out below..it only started in 2010, shouldnt be applicable for CCL and NEL.

Key Features of the New Rail Financing Framework
The new rail financing framework was put in place in 2010 to achieve the objectives stated in
the Land Transport Master Plan (LTMP). The objectives are to (a) facilitate the future expansion
of the Rapid Transit System (RTS) network in a financially sustainable manner; and (b) inject
greater contestability into the rail industry.

You are right! But I doubt that LTA is giving the new trains to the licensees for free. I suspect LTA must have set up a new framework for existing licensee (prior to the 2010 Amendment Bill) to ensure continuity (Section 16A), but I couldn't find any useful info.

(02-02-2012, 10:14 PM)KopiKat Wrote: [ -> ]

(02-02-2012, 05:47 PM)weijian Wrote: [ -> ]hi KopiKat,
Yeah i knew that. But check out below..it only started in 2010, shouldnt be applicable for CCL and NEL.

Key Features of the New Rail Financing Framework
The new rail financing framework was put in place in 2010 to achieve the objectives stated in
the Land Transport Master Plan (LTMP). The objectives are to (a) facilitate the future expansion
of the Rapid Transit System (RTS) network in a financially sustainable manner; and (b) inject
greater contestability into the rail industry.

You are right! But I doubt that LTA is giving the new trains to the licensees for free. I suspect LTA must have set up a new framework for existing licensee (prior to the 2010 Amendment Bill) to ensure continuity (Section 16A), but I couldn't find any useful info.

Finally found something. From SMRT FY11 AR, pg 76,

The Licence to operate the Circle Line (“CCL Licence”) is for an initial period of 10 years from 4 May 2009 at an annual licence fee calculated at 0.5% of the gross annual fare revenue and 0.5% of the gross annual non-fare revenue, unless modified by LTA in accordance with the provisions contained in the Rapid Transit Systems Act. At least 12 months prior to the expiry of the CCL Licence, SMRT Trains may request LTA to extend the CCL Licence for a further 30 years, which is subject to LTA’s discretion and such other terms and conditions as LTA may impose.

SMRT Trains is obliged to purchase the operating assets of the CCL on 4 May 2019, based on the net book value recorded in LTA’s audited accounts with depreciation charged on a straight line basis over the useful lifespan of the operating assets. These assets include trains, permanent way vehicles, power supply equipment and cabling, supervisory control system, escalators and lifts, platform screen doors, environmental control system, signalling system, communication system, automatic fare collection system and depot equipment.

The infrastructure of the Circle Line MRT system, which includes tunnels, tracks and station structures, remains the property of LTA and is leased to SMRT Trains at a nominal annual fee. SMRT Trains is required to repair and maintain the infrastructure as stipulated in a separate lease and maintenance agreement. The salient terms and conditions of the CCL Licence are stated under the Licence and Operating Agreements section in the Notes to the Financial Statements.

Look at the figure on that page. Easier to understand. Extract (Click on pix below),


[attachment=186]

hi Kopicat,
Thanks for getting out the search. Just some additional information i got from SMRT IR:

Under the existing framework, the Government funds the one-off capital outlay for rail infrastructure, such as the stations, tunnels and viaducts, and the first set of operating assets, which includes trains and signaling systems. The PTOs are responsible for operating and maintaining the system as well as funding the replacement of existing operating assets and procuring additional operating assets needed for higher ridership growth. This framework of co-financing between the government and operations have helped to keep systems costs low for commuters. With the signaling system for the NSEW lines in place since 1987, SMRT has undertake to upgrade the system to address technical obsolescence and support a shorter operating headway. The Tuas West Extension, on the other hand, is a new extension where the Government is responsible for the first set of signaling system.

- Taken from 8 February 2012, Today Newspaper, Ms Helen Lim, Director, Media Relations and Public Education, LTA

-This explains why SMRT is paying for 17 new trains and signalling system for NSEW lines.
-In another seperate thread, i had questioned the stagnant CCL's ridership of 300k in 2Q and 3Q. The answer from IR was it was due to 'round off effects' and more importantly, seasonal factors like 'school holidays'.
-In light of higher maintenance costs, they had replied expected breakeven costs for CCL to be 400k now (raised from 350k previously)

Good search work by Kopicat. Appreciate that.

PAPAYA has said something like: "SMRT will not survive if it does't make money every year."
What do you people think? Will PAPAYA allow SMRT to be in the RED in one of the future years? If it happens, i will be very afraid.

(12-02-2012, 11:47 AM)Temperament Wrote: [ -> ]PAPAYA has said something like: "SMRT will not survive if it does't make money every year."
What do you people think? Will PAPAYA allow SMRT to be in the RED in one of the future years? If it happens, i will be very afraid.

PAPAYA always think pp are stupid. Of course SMRT must make money every year. But the question should be, must SMRT make INCREASING profit every year.

PAPAYA will still think some of the people are stupid(maybe the famous last 60% of the last election), but hey! PAPAYA have lost one GRC. If they are not careful they will lose more in 2016. At least 40 % of the people are not.