All eyes on Singapore’s new transport minister

Will the rail financing model finally come to fruition?

A transition from the old rail financing model has been discussed for at least two years now, and for the clamoring Singaporeans, it’s becoming more of a pipe dream.

However, analysts are upbeat that Khaw Boon Wan, the new transport minister, will finally bring the rail financing model into fruition.

According to analysts from Maybank Kim Eng, the transport ministry may choose to adopt an approach similar to the bus operations and remove the fare-revenue risks from the operators.

“We expect Minister Khaw to bring all rail lines under a single sustainable business model, which is asset-light and independent of fares. We reiterate our concern about the treatment of off-balance-sheet liabilities for the operators during the transition,” Maybank Kim Eng said.

“It remains unclear if they would need to repay the cash owed to the government under the old regime. As SMRT does not have the balance -sheet strength to repay, we cannot rule out fund-raising. For now, we have assumed a status quo and not built any rail transition into our forecasts,” they added.

Meanwhile, Khaw is also expected to put pressure on the poor rail reliability which has bugged the sector for some time.

“We expect Minister Khaw to give top priority to rail reliability, which suggests there could be higher repair and maintenance spending by the operators,” Maybank Kim Eng said.