In a press conference after the announcement of nationalisation of assets, SMRT CEO complained that the company is not making enough profits and that public transport fares are too cheap.
Former army general, Desmond Kwek, gave three reasons why he wanted the deal to happen. Firstly, the rail network is ageing and he does not want to pay around S$2.8 billion to upkeep the maintenance. Secondly, Desmond Kwek complained that transport fares is too cheap and SMRT is absorbing up to S$1.9 billion losses from concession and “shortfalls from rail fares”. Thirdly, SMRT does not want to further spend more money on maintenance and operational costs especially when the expenses reached 45% of the rail fare revenue.
According to Desmond Kwek, the yearly-licensed charge impose by the government will “fluctuate from year to year”.
From the S$1.06 billion windfall, Desmond Kwek claimed that the amount will be used to pay for a “projected debt of S$762 million”, of which he did not give details how he came out with the figure. SMRT saw it’s net profit jumped 20% to S$109 million for FY2016 while the CEO himself took home S$1.87 million.
The Singapore government will be giving SMRT the first contract of 15 years by default without an open tender. Subsequent contracts of 5 years will be bid for in an open tender.
According to Desmond Kwek, it appears the Singapore government is incurring huge losses by overtaking the assets of SMRT. Transport Minister Khaw Boon Wan did not present his calculations, if any in the first place, and seek approval to nationalise the assets from Parliament.