International Business & Economy SBS gets $5.3b from Govt and SMRT $1.9b to run bus routes

SBS gets $5.3b from Govt and SMRT $1.9b to run bus routes




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The following is a press release by Land Transport Authority (LTA)

More Responsive Bus Services, Higher Service Levels

1.  The Land Transport Authority has reached agreements with SBS Transit and SMRT Buses for 11 bus packages under the bus contracting model, which will come into effect on 1 September 2016. This will complete the transition of the public bus industry to the bus contracting model. (More on bus contracting can be found at Annex A.)

2.  When these negotiated contracts expire, they will also be put out for competitive tendering, like the Bulim, Loyang and Seletar packages. This gradual, phased approach to competitive tendering minimises risk of service disruption for commuters and allows LTA to refine and improve on the management of contracts, as well as the tendering and handover processes.

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3.  Of the 11 packages, SBS Transit will operate eight packages with 196 services while SMRT Buses will operate three packages with 77 services. (Details of the packages can be found at Annex B.) The contracts are of durations ranging from two to 10 years, taking into consideration, amongst others, the completion timeline of supporting infrastructure such as bus depots, and to ensure a gradual schedule of bus packages being put out for tendering. The packages are of varying sizes, and have different compositions of bus services with different route lengths. The estimated total contract fees are $5,322 million for SBS Transit and $1,865 million for SMRT Buses.[1] The contract sums were reached through negotiations with the operators.

4.  As there is no change in operators for the bus services and infrastructure in these 11 packages, no handover of assets is needed. Existing bus employees will not be affected.

5.  Mr Chew Men Leong, LTA’s Chief Executive, said, “With the completion of the transition, not only will the bus industry be put on a financially more sustainable footing, but commuters can expect higher bus service levels throughout Singapore.” All bus services will have scheduled headways of no more than 15 minutes for both directions during the morning and evening peak periods, with at least half of them having scheduled headways of no more than 10 minutes. Feeder services will run at intervals of six to eight minutes.

Scope of Contract

6.  Under the bus contracting model, LTA will own all operating assets including buses and lease them to the operators. This allows LTA to respond to changes in ridership in a more timely manner. In preparation for the transition, LTA has been buying additional buses since 2012 under the Bus Service Enhancement Programme and replacement buses since 2015.

7.  There remain about 4,000 buses that are owned by SBS Transit and SMRT Buses at the moment. During the tenures of the negotiated contracts, LTA will lease these buses from the operators by paying an availability fee that is equivalent to the depreciation value of the buses. The financial cost of this is the same as buying over the buses now at net book value.

8.  In addition to operating and managing bus services to specified performance standards, SBS Transit and SMRT Buses’ other responsibilities include:

i.   Operate, manage and maintain the buses and their on-board equipment;

ii.  Operate, manage, and maintain their respective bus depots, bus interchanges and bus terminals, including all equipment and systems therein;

iii. Charge and collect fares as approved by the Public Transport Council, on behalf of the Government, for travel on the bus services in the packages;

iv.  Provide bus service information at all bus stops and bus interchanges served by the bus services; and

v.   Provide customer management services, such as lost and found service, and a hotline for commuter feedback and enquiries.

Annex A: More about the Bus Contracting Model
Annex B: Details of the 11 Negotiated Packages

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