SMRT Corp has just announced that they are happy to hand over their operating assets to the Land Transport Authority (LTA):

This is despite the fact that SMRT has yet to get the approval from its shareholders regarding the asset transfer. (Shareholders can exercise their vote and vote "No".)

SMRT will also have a shorter operating licence, down from 30 to 40 years under the previous financing framework, to 15 years.

Lastly, SMRT will have new Maintenance Performance Standards (MPS) to adhere to. These includes KPIs that ensure high reliability and availability (time between train incidents and breakdowns).

Their press release contains numerous points, but the portion the public can take note of is this:

4. The Current Rail Financing Framework (CRFF) has become unsustainable. SMRT’s rail fare margins have been declining since Financial Year 2012 as operating expenses have increased significantly due to our rigorous maintenance regime and replacement programmes for the ageing network. On the other hand, actual fares over the years have not kept pace with the cumulative maximum allowable fare adjustments based on the prescribed fare adjustment formula by the Public Transport Council. Under the CRFF, SMRT Trains as an operator is also obliged to comply with changes to regulatory standards at its own cost.

5. Over the next five years, the total estimated capital expenditure of SMRT Trains under the CRFF could reach about S$2.8 billion. This includes the procurement of new trains and taking over of the operating assets of the Circle Line where applicable, while keeping up with the provision of enhanced service levels to the commuting public.

Basically, how the MRT system is being run has not been profitable and neither has it been the best arrangement for years -- despite high salaries paid out.

The end.

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