Insider sources working with the Land Transport Authority (LTA) said that the Singapore government is going to nationalize the existing public transport system by buying over trains and buses of SMRT and SBS Transit.
SMRT has a market value of S$2.4 billion while SBS Transit is S$624 million. According to its 2014 Annual Report [Link], physical inventories like trains and buses of SMRT alone are estimated at S$1.64 billion. For SBS Transit [Link], the inventories are valued at S$43 million. The combined potential cost to the Singapore Government may be around S$1.7 billion, which is relatively cheap compared to the generous tax reliefs and “gifts” LTA gave to the two transport companies in recent years. In 2012, under the Bus Service Enhancement Programme (BSEP), the Singapore government gave S$1.1 billion worth of buses to the two companies to ramp up on service supply. Last month, the LTA again announced that it will be giving more than S$1 billion worth of trains and manpower training to the two companies in a bid to cut down the increasing frequency of train breakdowns due to lack of competence and expertise on SMRT and SBS’s part.
Singapore’s Transport Minister Khaw Boon Wan have also hinted the government’s interest in taking over the ailing public transport system, which saw breakdowns as frequent as once a week. The new model will be on a lease-basis like the recent tender of the two bus depots to two UK-based operators Tower Transit and Go-Ahead.
The news however have led to suspected insider-trading which led to a spike of more than 5% in the shares of SMRT and SBS Transit. The Singapore Stock Exchange responded by issuing trading enquiries to both companies and an investigation of any foul play is underway.