The Singapore Land Transport Authority (LTA) today (July 15) announced that it will pay S$1.06 billion to nationalise the assets of SMRT. Temasek Holdings, who own 55% of SMRT, will be the greatest beneficiary of this sale – which is seen as an alleviation to the embarrassing S$24 billion losses reported last week.
The S$1 billion deal is considered finalised even though it is to be pending approval from shareholders of SMRT on the 1st of Oct, because the country’s sovereign wealth fund company is the single major shareholder. The CEO of Temasek Holdings is the wife of Prime Minister Lee Hsien Loong.
Physical assets like trains and signalling system will be nationalised but SMRT will however continue to operate the assets on a 15-year license-basis. SMRT will also be forced to increase its maintenance staff strength by 20% to about 700 employees over the next three years, as the company has been under-cutting maintenance budget resulting in a series of train breakdowns. Although the LTA said that the 15-year license will be open for bidding, there is no open tender this time and SMRT will be the default train operator awarded.
In 2000, SMRT was privatised and now 16 years later, it is nationalised due to greed-driven business principles and a lax transport authority. Many Singaporeans believe the dilapidated state of public transport will remain the same as before because the Transport Ministry and SMRT are still equally forgiving of train breakdowns and mistakes.
The Singapore ruling party government decided the S$1 billion SMRT purchase without consulting Parliament.