Some questions on our MRT system

[thefarside]

Well this might not be the best forum to ask this question - but does anyone know who is responsible for capacity investments into our transport network. I am not entirely clear on the responsibility of the privatised operators. For the MRT system, the capital to build and equip the system upfront is provided by the taxpayers. SMRT then gets it handed over to them on a golden platter to operate and ostensibly, to earn a profit "efficiently".

However in recent years we have had the PM himself saying that "we have ordered additional carriages to increase capacity, so bear with us while we get them up and running". Does this mean that the operator has no responsibility to ensure sufficient train capacity to meet demand? And what about signalling investments to increase train frequency? Who picks up the tab for this? If the taxpayers are supposed to do all these heavy lifting then why are these transport companies allowed to gouge hundreds of millions of dollars out of the system ...

Well we all know that PAP is pretty fucked up when it comes to their dogma on privatisation and free enterprise (which basically translates to you-die-your-problem) but welcome a discussion here from the knowledgeable people...

 

[hairylee]

For the MRT system, the capital to build and equip the system upfront is provided by the taxpayers. SMRT then gets it handed over to them on a golden platter to operate and ostensibly, to earn a profit "efficiently".

This is how it should be but our politicians turns business tycoon think they are smarter in doing business.

 

[halsey02]

For the MRT system, the capital to build and equip the system upfront is provided by the taxpayers. SMRT then gets it handed over to them on a golden platter to operate and ostensibly, to earn a profit "efficiently".

This is how it should be but our politicians turns business tycoon think they are smarter in doing business.

Handed over to the operators at cost or at market value? or deducting depcreation, at a discounted price?

 

[Confuseous]

Well this might not be the best forum to ask this question - but does anyone know who is responsible for capacity investments into our transport network. I am not entirely clear on the responsibility of the privatised operators. For the MRT system, the capital to build and equip the system upfront is provided by the taxpayers. SMRT then gets it handed over to them on a golden platter to operate and ostensibly, to earn a profit "efficiently".

However in recent years we have had the PM himself saying that "we have ordered additional carriages to increase capacity, so bear with us while we get them up and running". Does this mean that the operator has no responsibility to ensure sufficient train capacity to meet demand? And what about signalling investments to increase train frequency? Who picks up the tab for this? If the taxpayers are supposed to do all these heavy lifting then why are these transport companies allowed to gouge hundreds of millions of dollars out of the system ...

Well we all know that PAP is pretty fucked up when it comes to their dogma on privatisation and free enterprise (which basically translates to you-die-your-problem) but welcome a discussion here from the knowledgeable people...

This is a perfectly legitimate question. Shitface Lui was on TV news on Friday night, saying in effect, that the government will work closely with SMRT to have more carriages, by 2013. Who is paying for it?

 

[DoctorEvil]

Well this might not be the best forum to ask this question - but does anyone know who is responsible for capacity investments into our transport network. I am not entirely clear on the responsibility of the privatised operators. For the MRT system, the capital to build and equip the system upfront is provided by the taxpayers. SMRT then gets it handed over to them on a golden platter to operate and ostensibly, to earn a profit "efficiently".

However in recent years we have had the PM himself saying that "we have ordered additional carriages to increase capacity, so bear with us while we get them up and running". Does this mean that the operator has no responsibility to ensure sufficient train capacity to meet demand? And what about signalling investments to increase train frequency? Who picks up the tab for this? If the taxpayers are supposed to do all these heavy lifting then why are these transport companies allowed to gouge hundreds of millions of dollars out of the system ...

Well we all know that PAP is pretty fucked up when it comes to their dogma on privatisation and free enterprise (which basically translates to you-die-your-problem) but welcome a discussion here from the knowledgeable people...

The additional carriages and signalling upgrade are paid for by the Ministry of Transport. You can find them in the 2011 budget. If you read its annual report, SMRT doesn't pay for or own any of the train carriages; it only leases them from MOT at a very highly discounted rate.

 

[thefarside]

Thanks for the clarification. I will check out SMRT's annual report.

Given the perverse set of incentives it is no surprise then that SMRT has no incentive to improve any service quality. Even when they do not have to pay much for new capacity they probably will not want to operate more trains as it just means more cost and not more revenue (as the number of commuters are mostly constant given the lack of competition). In this case, better customer experience does not translate to better profits for the company so we have the track record of SMRT not making a peep about the fact that commuters are having a horrendous experience on their system.

MOT is also sleeping on the job by not monitoring the extent of MRT asset utilisation and frequency especially at peak interchanges. Complete failure at every level including the much vaunted KPIs and made worse by the CEO's apathetic "we are not at crush load yet" reply. There is no use of the train being on time 99.9% of the time when the frequency is like once in 5 minutes during peak hours.

SMRT should not have been privatised, and its not too late to renationalise it.

 

[DoctorEvil]

Thanks for the clarification. I will check out SMRT's annual report.

Given the perverse set of incentives it is no surprise then that SMRT has no incentive to improve any service quality. Even when they do not have to pay much for new capacity they probably will not want to operate more trains as it just means more cost and not more revenue (as the number of commuters are mostly constant given the lack of competition). In this case, better customer experience does not translate to better profits for the company so we have the track record of SMRT not making a peep about the fact that commuters are having a horrendous experience on their system.

Extra capacity doesn't come free. It costs money. SMRT may lease the carriages at a discounted rate but it has to pay for staff salaries and electricity to run extra carriages. Staff salaries is the single largest item in its annual expenditure.

SMRT leases the tunnels, the stations, the Easylink, the tracks, the carriages, the signalling system, etc from the government in return for a rate that is fixed at 1 percent of its total revenue, if I remember correctly. I think it does own the TIBS buses though.

SMRT's MRT operations are very profitable, more profitable than its TIBS operations. In general, running the trains is more profitable than running the buses in Singapore.

 

[hairylee]

This is a perfectly legitimate question. Shitface Lui was on TV news on Friday night, saying in effect, that the government will work closely with SMRT to have more carriages, by 2013. Who is paying for it?

We pay taxes for what? Pay for a Rear Admiral as transport Minister? Taxes are reinvest into the public like transport, health care and education.
We are still paying a premium for public transport. That means we are paying double taxes.

 

[thefarside]

Extra capacity doesn't come free. It costs money. SMRT may lease the carriages at a discounted rate but it has to pay for staff salaries and electricity to run extra carriages. Staff salaries is the single largest item in its annual expenditure.

SMRT leases the tunnels, the stations, the Easylink, the tracks, the carriages, the signalling system, etc from the government in return for a rate that is fixed at 1 percent of its total revenue, if I remember correctly. I think it does own the TIBS buses though.

I went through the annual report on the SMRT and its listing of the operating agreements with LTA and found the following

1. Leasing rates are at 1% of passenger revenues for the older NSEW lines
2. Leasing rates are at 0.5% for the new soon-to-be-opened Circle Line (and this covers both passenger and non-passenger revenues)
3. LTA (i.e. taxpayers) subsidises capital equipment replacement for the train lines (the quantum is probably high especially for main infrastructure items such as trains, tracks, signalling, etc as the company do not seem to spend a lot on capex)
4. For CCL SMRT is required to buy at book value the asset base of the CCL line by 2019
5. Prior to the purchase of CCL asset base SMRT is required to fund a contingency amount for capex every year

I can draw a few conclusions from the above
1. NSEW lines are sweetheart deals (either wilfully or given away through ignorance)
2. Saw Phaik Hwa is developing NSEW MRT stations into thrashy mini-malls as revenues from this segment is not liable for any royalty
3. Taxpayers are paying through the nose and subsidising extraordinary profits for very little comfort in return
4. Government is learning from being abused in the first agreement to doing a few more things in the CCL agreements
- getting operators to eventually buy and carry the assets on their books instead of getting a free ride like the NSEW line agreement now
- getting operators to fund a fixed amount capex upfront rather than depending on LTA to provide almost all the funds (at least until they buy the assets)
5. CCL is likely to be less lucrative for SMRT compared to NSEW line, which is not a bad thing

Please correct me if I am wrong!

 

[DoctorEvil]

I went through the annual report on the SMRT and its listing of the operating agreements with LTA and found the following

1. Leasing rates are at 1% of passenger revenues for the older NSEW lines
2. Leasing rates are at 0.5% for the new soon-to-be-opened Circle Line (and this covers both passenger and non-passenger revenues)
3. LTA (i.e. taxpayers) subsidises capital equipment replacement for the train lines (the quantum is probably high especially for main infrastructure items such as trains, tracks, signalling, etc as the company do not seem to spend a lot on capex)
4. For CCL SMRT is required to buy at book value the asset base of the CCL line by 2019
5. Prior to the purchase of CCL asset base SMRT is required to fund a contingency amount for capex every year

I can draw a few conclusions from the above
1. NSEW lines are sweetheart deals (either wilfully or given away through ignorance)
2. Saw Phaik Hwa is developing NSEW MRT stations into thrashy mini-malls as revenues from this segment is not liable for any royalty
3. Taxpayers are paying through the nose and subsidising extraordinary profits for very little comfort in return
4. Government is learning from being abused in the first agreement to doing a few more things in the CCL agreements
- getting operators to eventually buy and carry the assets on their books instead of getting a free ride like the NSEW line agreement now
- getting operators to fund a fixed amount capex upfront rather than depending on LTA to provide almost all the funds (at least until they buy the assets)
5. CCL is likely to be less lucrative for SMRT compared to NSEW line, which is not a bad thing

Please correct me if I am wrong!

I was not aware of SMRT being required to buy the asset base of the CCL. Need to look that up because it seems to deviate from previous practices.

But you are right. The NSEW are very profitable although I think the original 30-year lease to SMRT will be up in a few years' time (late 2010s) . LTA may be putting up the leases for competitive bidding, instead of renewing them for SMRT.

 

[HedgeTrader]

This is a perfectly legitimate question. Shitface Lui was on TV news on Friday night, saying in effect, that the government will work closely with SMRT to have more carriages, by 2013. Who is paying for it?

Public transport should be nationalized instead of the cock-and-bull show about government working closely with corporatized service providers.