New Rail Financing Framework

One of the new trains at Tuas Depot in 2018

Under the New Rail Financing Framework (NRFF), LTA owns the rail operating assets. This allows us to ensure more timely investments in capacity expansion, replacement and upgrading of the assets.

Besides the transfer of ownership of the assets previously held by Public Transport Operators to LTA, changes were also made to licence periods, profit and risk sharing arrangement and regulatory regime. The graphic below gives an overview of changes from the old financing framework to the new framework under NRFF:

An infographic on the National Rail Financing Framework

Image Credit: Ministry of Transport

The NRFF was first implemented for the Downtown Line in 2011, and SMRT Trains and Light Rail subsequently transitioned the North-South and East-West Lines, Circle Line and Bukit Panjang LRT (BPLRT) to the NRFF on 1 October 2016. With the transition of SBS Transit’s North East Line (NEL) and Sengkang and Punggol Light Rapid Transit (SPLRT) to new framework on 1 April 2018, all existing rail lines are now operating under the NRFF, allowing 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 will be operating on a model where the Government pays the successful tenderer a service fee to run 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 operation and maintenance of the line.

Regulatory Framework

Regulatory Framework

Together, rail operators and LTA are guided by a regulatory framework that covers four key areas:

Maintenance of rail assets with prescriptive maintenance requirements. Rail operators must conduct internal audits and submit annual maintenance plans and fault trends analyses.
Incident management to better integrate incident management plans. LTA takes the lead to establish clear roles and responsibilities to facilitate quicker and better coordinated responses during major train service disruptions. This is part of an overall Land Transport Emergency Plan. Working with rail operators, LTA's Crisis Management Team will provide prompt assistance during service disruptions by enhancing bus services, managing traffic for the better movement of buses, and coordinating the response across government agencies.
Operating Performance Standards (OPS) that establishes the performance required relating to service quality, safety and key equipment reliability.
A penalty framework in which rail operators can be subject to financial penalties for regulatory breaches. Under the Rapid Transit Systems Act, the maximum financial penalties that may be imposed by LTA is the higher of $1 million or 10% of the licensee's annual fare revenue.