French firm will operate Jurong Region Line together with SBS Transit

The Land Transport Authority (LTA) has awarded the contract to operate the Jurong Region Line (JRL) to a joint venture between SBS Transit Rail and RATP Dev Asia Pacific.

RATP Dev Asia Pacific is a subsidiary of French public transport operator RATP Dev.

The joint venture is called SRJV.

The appointment of SRJV marks the first time a foreign public transport operator is introduced to the local rail industry.

When LTA called for tenders to appoint an operator for the JRL in May 2023, existing operators SMRT and SBS Transit were invited to submit bids.

Foreign operators were allowed to participate in the tender, but only through joint ventures with local rail operators and as minority partners of less than 25 per cent shareholding.

SMRT and SRJV submitted proposals although the latter offered a more competitive price — about S$750 million for operating the JRL for 11 years (a nine-year licence with the option to extend for two years), which was eight per cent cheaper than SMRT's bid.

Price was not the sole factor. The LTA explained that they used a two-envelope process to evaluate tender submissions, one looking at quality and one looking at price factors, saying:

"The price submissions were only opened for assessment after the quality evaluation was completed. This process ensures a fair and independent evaluation on the quality of proposals before price is taken into consideration to ensure value-for-money."

S$750 million service fee

During the initial licensing period, the SRJV will be paid a service fee of around S$750 million to operate the line while the government retains all fare revenue.

This is because when new rail lines are launched, there are ridership and fare revenue uncertainties in the first few years. This presents a risk for operators who might not be able to sustain operations amidst uncertainty.

With this arrangement, the government will bear the fare revenue risk during the initial period.

The government also has a framework that provides incentives when operators perform well in key areas such as service reliability, customer satisfaction, and operational and maintenance processes. Conversely, they will get a service fee deduction if they do not meet regulatory and licensing requirements.

CRL operator not appointed

Another tender to operate the Cross Island Line (CRL) was called concurrently in May last year.

Both SRJV and SMRT submitted proposal for it as well. However, the LTA said that they decided not to award the CRL contract because the proposals did not adequately reflect the uncertainties of operating the line when service commences in six years’ time.

LTA will select the CRL operator at a later juncture.

The JRL will open in phases from 2027.

Top images: LTA