Serious BREAKING: Government and SMRT reach agreement on new rail financing framework

[Sammyboy RSS Feed]

An honorable member of the Coffee Shop Has Just Posted the Following:

fter more than four years of negotiations, the government and rail operator SMRT have reached an agreement to transfer to a new rail financing framework. In this framework, which will kick off from Oct 1 pending approval from SMRT shareholders, the government will take over all operating assets from the Temasek-owned company.

The assets will be bought over at around $1 billion, with trains making up the bulk of the value. In turn, SMRT will pay a licensing charge annually to run the North-South and East-West Lines (NSEWL), the Circle Line (CCL) and the Bukit Panjang LRT (BPLRT).

The operator will have to abide by a more stringent maintenance regimen, as well as service standards. On top of current penalties for breaches, more will be added.

To reflect its asset-light status, the new framework will reflect a risk-and-reward sharing formula which will result in SMRT posting an average EBIT (earnings before interest and taxes) margin of 5%.

In turn, SMRT will pay a licensing charge annually to run the NSEWL, CCL and BPLRT for 15 years, with a possible extension of five years. The Land Transport Authority will decide when to renew assets or increase capacity, freeing up SMRT to focus fully on meeting service standards.

The operator will have to abide by a more stringent maintenance regimen, as well as service standards.

On top of current penalties for breaches, more will be added.

The Land Transport Authority will decide when to renew assets or increase capacity, freeing up SMRT to focus fully on meeting service standards.

13:42


Click here to view the whole thread at www.sammyboy.com.