Approved without parliamentary debate, the Land Transport Authority (LTA) of Singapore Transport Ministry confirmed they are spending S$7.185 billion to nationalise the public bus transport system assets of SBS Transit and SMRT. Divided into 11 packages, the agreement will commence on 1st of September.
Fattening SBS Transit and SMRT’s pockets are S$5.322 billion and S$1.865 billion respectively. SBS will operate eight of the eleven packages with 196 bus services while SMRT will take the remaining three packages with 77 bus services. The undisclosed contract packages range from two to ten years, and upon expiration will be open up for bidding by foreign transport operators.
The S$7.1 billion bill is to be paid for by Singapore taxes and will likely increase public transport fares to recover the hefty buy over. LTA refused to acknowledge the impact on transport fares and instead said “bus services will be better” without giving details.
The LTA CEO, a former army general, recently announced his resignation and no replacement has been found yet. Transport Minister Khaw Boon Wan is not available to comment over the expensive S$7.1 billion bill. It is unknown how much SMRT and SBS Transit paid the Singapore government in 2000 when the public transport system was privatised, but the S$7.1 billion deal is clearly overpriced for a “loss-making” asset as often-complained by SMRT and SBS Transit. There is no mention how the deal was valued or independently appraised.
Both SMRT and SBS Transit belong to Temasek Holdings, the country’s sovereign wealth fund company headed by the wife of the Prime Minister. With the S$7.18 billion “windfall”, Temasek Holdings’s balance sheet should beef up significantly after it reported a S$24 billion loss in their recent FY2016 annual report.