Payment details about bus contracting model to be revealed in Budget 2016, says OCBC

The transition will start in 2H16.

Policymakers are expected to provide more clarity on the new bus government contracting model (GCM) in this year’s Budget announcement, according to analysts from OCBC.

OCBC said that the timeline of the transition to GCM is clearly defined to take place in the second half of this year, but the market is yet to be informed of how the Land Transport Authority (LTA) will pay for the bus assets.

The LTA can either pay for the bus assets in lump sum or spread the payments progressively over a period of time.

“With a combined (both PTOs) NBV of bus assets estimated at more than S$1.0b, we believe Singapore’s 2016 budget will give a much clearer picture as any spending of such magnitude will be a key point of mention by the minister,” said OCBC.

OCBC noted that apart from the question of payment, the GCM seems on track to complete in the second half. The LTA has already awarded two of the three bus packages set aside for competitive bidding, while both ComfortDelGro and SMRT have said that they are already in discussions with the regulator on the transition.

"In our view, as GCM transition gets nearer, it seems like actions taken by LTA are also on track to meet the planned timeline,” said OCBC.