All existing rail lines are now operating under the NRFF, which will allow the Government to plan the network holistically and improve rail capacity for Singaporeans in a timely manner. The only exception will be the Thomson-East Coast Line (TEL) which is operated on a model where the Government pays the successful tenderer a service fee to operate the line, while the Government collects fare revenue and bears fare revenue risk. Similar to the NRFF, the Government will own and be responsible for expanding, upgrading and renewing the TEL’s rail assets, while the Operator remains responsible for the operation and maintenance of the line.
To deliver reliable train services for commuters in a financially sustainable manner, LTA and SBS Transit (SBST) have concluded the review of the NRFF for the Downtown Line (DTL) . Since 1 January 2022 , DTL has transitioned to NRFF version two which is applied to the majority of other rail lines.
Under the NRFF version two, LTA strengthened both the profit and risk-sharing mechanisms to reduce commercial volatility for the operator, while calibrating the revenue risk borne by the Government. If ridership turns out much lower than projected and the financials of the operator suffers as a result, LTA shares some of the shortfalls in fare revenue and profits. Conversely, if profits outperform expectations, there is a greater component of profit-sharing, the operator will pay an increased licence charge that is channelled into the Railway Sinking Fund to be used for the renewal of operating assets. This also effectively caps the operator’s profit margins.
