Transport Minister Khaw Boon Wan has asked the Land Transport Authority (LTA) to bolster its engineering capabilities and assemble its own engineering team, as reported in The Straits Times on Dec. 4.

Following this statement, plus a few others he made at the Joint Forum on Infrastructure Maintenance last Friday, certain segments of the public went into a frenzy as judged by what was happening in the markets.

To make some sense of what happened, here are 5 nuggets of information and implications to know about what Transport Minister Khaw Boon Wan said:

1. The Land Transport Authority is desperate for engineers, hinting strongly that the regulators can and might take over the MRT operations one fine day.

At the forum, Khaw essentially said: Should the need arise and the government decides to restructure the rail industry and to have one entity designing, building, operating and maintaining a line, the LTA would be ready to step in and fill some shoes.

His exact words were: "They must establish a team that is able to take on operations and maintenance, should we decide to move in that direction."

And in line with this plan, LTA engineers will soon be deployed to gain valuable on-the-job experience.

This could happen as early as next year.

2. The current MRT model kind of stinks.

At present, the downside of the current model is that it separates the designer-and-builder (referring to LTA) from the operators (in this case, SMRT and SBS).

Ideally, the operational experience should feedback into the design process and the outcome ought to get better over time.

The government is, therefore, seen as moving towards a type of contracting scheme similar to bus contracting to have more control over service quality.

And the government can only achieve this if it had sufficient depth of expertise from within, which is why, LTA is clamouring for more engineers.

3. This doesn't mean it is a step towards nationalisation though.

However, this move should not be seen as a step towards nationalising Singapore's public transport system, as noted by ST's Senior Transport Correspondent Christopher Tan on Dec. 5.

Even as Khaw mooted this concept of LTA taking over things and making it look and smell like it is a step towards nationalisation, this move should basically be see as the government creating a buffer: In the event any contractor fails (e.g. becomes insolvent), the authorities can step in to lead operations until the next better operator is found.

And it definitely would not mean that the public should expect rail employees to become public servants overnight.

Because currently, the precedent has already been set -- by the bus contracting model.

Here's a point to note: At present, the privatised model sees both SMRT and SBS own all buses and keep all fare revenue.

Under the new system, the Government will own the buses as well as bus infrastructure, such as depots, while the LTA will negotiate with the incumbents to run contracting routes in nine packages.

Using this development in the bus industry as a backdrop, the Ministry of Transport and SMRT Corp have been in advanced, long-running talks for more than two years to discuss a new rail financing framework.

Rail operators, like bus operators, should in the future only have to focus on meeting service standards. The heavy capital expenditures will be assumed by the government.

4. In the past, SMRT was a part of the government-run MRTC.

And here's some history: Previously, SMRT was part of the government-run MRTC, which built the first North-South, East-West lines in the 1980s.

The operations division was then taken out to form SMRT, which was privatised and listed in 2000.

MRTC then became part of the LTA, and in the process, lost its engineers.

Over the years, engineers then joined operators and rail developers locally and in the region.

Currently, exacerbating the problem is the fact that engineering has lost its appeal among tertiary students.

So, this means LTA is on an uphill task to hire engineers locally.

5. SMRT Corp. & SBS Transit share prices soared

All this talk about the regulator overseeing train operators' assets translated into some wild price movements in the market as shares of Singapore rail companies rose Friday.

This in turn led to the Singapore Exchange (SGX) to query both companies over the unusual trading activity.

SBS Transit Ltd. gained 5.2 percent to S$2.02 at the close in Singapore, the highest since February 2011.

SMRT Corp. rose 5.4 percent, the most since Sept. 17.

In response to SGX, SMRT said that there were media reports on the Joint Forum on Infrastructure Maintenance on Friday, in which Khaw again suggested the regulator should oversee the firm's assets.

But it said it was unaware of reasons for the unusual price and volume movement.

SBS Transit also said it was not aware of any reasons as well, adding that the public is aware that the public bus industry is undergoing a major restructuring that started in the second half of last year.

H/T The Straits Times, AsiaOne, Channel News Asia, Yahoo Singapore

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