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Announced yesterday (Nov 4), the Land Transport Authority (LTA) ruled that only Temasek Holdings-owned companies SMRT and SBS Transit are allowed to bid for the new Thomson-East Coast Line (TEL).

Profits of the successful bidder will be guaranteed under the new contractual model where taxpayers will bear the revenue risk. PAP MP Ang Hin Kee claimed that when profits are guaranteed, the company will focus on quality:

“When you remove the revenue risk, meeting the service standards becomes the focal point of an operator’s ability to deliver.”

An undisclosed service fee, estimated at around $1 billion over 9 years from 2019 to 2028, to operate the TEL, with a possible further two-year extension.

LTA gave no reason why only SMRT and SBS Transit are allowed to bid or why is the tender not open to other transport companies.

LTA also did not give a projection of how much “revenue risk” taxpayers will have to pay under the new contractual model.

The government then claimed that they will impose a new “incentive-penalty framework” that will fine the future transport operator if there are train breakdowns or if commuter satisfaction standards are not met. This framework is currently not in force at the moment.

The first stage of TEL will be completed by 2019, with only three stations at Woodlands area. Six more stations will be completed a year later in Thomson area, and the entire TEL will be completed in 2024.