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Our MRT is 30 years old and needs to be upgraded or else maintenance costs will always be high
A review of the Public Transport Council (PTC)’s fare formula for rail transport must reflect increased operating and maintenance costs due to macroeconomic factors such as inflation, wages and fuel costs, said Transport Minister Khaw Boon Wan in Parliament on Mon (Jul 8).
Responding to Potong Pasir SMC’s Member of Parliament Sitoh Yih Pin’s question on the current level of Singapore’s rail reliability and how the operators and the Government are going to sustain and fund operations, Khaw said that while “commuters’ perception of MRT services have improved” based on PTC’s recent surveys, in addition to the MRT now being on par with “other world-class systems” such as the Taipei Metro and Hong Kong MTR, such improvements “come at the substantial expense of both of the operators and the Government”.
Highlighting that the total cost of running the rail network has increased by around S$270 million between 2016 and 2017, Khaw said that the rail companies are “operating at a loss”, as the fares paid by commuters do not cover operating costs.
SMRT Trains, he noted, incurred a loss of S$86 million, while SBS Transit’s train division also lost tens of millions of dollars, as seen the latest reported financial year.
“You may ask, why fares fell below operating cost? PTC’s fare formula is supposed to keep fares in line with macroeconomic cost factors, such as inflation, wages, fuel costs, and increases in the network capacity, with a productivity extraction. But until recently, the PTC fare adjustments were not fully implemented.
“If we had strictly followed PTC’s fare formula, the operators would have been better able to cover the costs of the intensified maintenance.
“As it is, the additional costs have been partly covered by increased government subsidy and partly absorbed by the operators who have been incurring substantial losses. So this is clearly not sustainable,” he said, adding that PTC’s current fare formula will only continue to be implemented until 2023.
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