6 things you need to know about the New Rail Financing Framework

You should probably read this if you take the train regularly.


1. What does the New Rail Financing Framework mean for you?

With LTA as the owner of all operating assets, it will be able to build up, replace and upgrade the assets in a timely manner. Rail operators can then focus on providing reliable and well-maintained rail services for commuters. Fares will also not be affected as they are regulated by the Public Transport Council. Commuter interests remain at the heart of the transition to the New Rail Financing Framework (NRFF).

What does the New Rail Financing Framework mean for you?

2. What operating assets will be transferred to LTA?

The operating assets include the trains, signalling system and maintenance equipment such as rail grinding vehicles, electrical and fire protection equipment as well as equipment for power and building services. There are over 60,000 operating asset items.

What Operating Assets will be transferred to LTA?

3. Is the asset transfer a fair transaction?

Yes, LTA will pay SMRT Trains the Net Book Value (NBV), or the cost after depreciation, of the operating assets as stated in SMRT Trains’ and SMRT Light Rail’s accounts as at 30 September 2016. This fair and objective approach was also used when the transfer of assets from the Government to SMRT Trains happened in 1998.

LTA will conduct an audit of SMRT Trains’ and SMRT Light Rail’s finances to verify the NBV of the operating assets being transferred. At the same time, LTA will also assess the condition of the older operating assets to make sure they are in acceptable condition. LTA is entitled to withhold payments for assets that need to be fixed or replaced.

4. Will this transition affect SMRT Trains’ and SMRT Light Rail’s staff?

No. The transition only involves the transfer of ownership of operating assets and will not have an impact on SMRT Trains’ and SMRT Light Rail’s staff.

5. Is Singapore moving towards a nationalised rail sector?

No. The Government is not nationalising the rail sector. A nationalised system is one where the Government itself operates the rail services. Under the NRFF, private rail operators licensed by LTA will continue to run the rail services.

6. How are the discussions with SBS Transit on the transition of the North East Line to the NRFF going?

Discussions are still on-going. Transition will only proceed after both the Government and SBS Transit have agreed on terms.

New Rail Financing Framework

This article is accurate as of Oct 2016. For latest updates, head over to www.lta.gov.sg.

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Unless otherwise indicated, the articles here are generally accurate as of their publication dates. Please visit the relevant Goverment agency website for the latest updates.