SMRT

[lonewolf]

SMRT held a media briefing this afternoon to announce plan for renewal of ageing MRT assets.

At the media conference , SMRT says the planned additional maintenance, upgrading and renewal of assets will cost in the region of $900 million.

Its interesting that SMRT is spending so much considering that they only has an 'operating and maintenance' license from LTA to operate the NSL and EWL (which is where all the 900 million will be spend). The license was awarded in Apr 1998 for 30 yrs (to run till 2028).

[ Source: SMRT Investor Presentation Slide #6 ]

If that is the case, I wondered if its in the operating license that SMRT is responsible for renewing and replacing the ageing assets and infrastructure. But I did recall our previous Transport Minister mentioning something about co-financing of the upgrading project; so maybe they dun have to fork out the full sum. Or maybe SMRT's share of the cost is the $900 million.

Whatever the case, this will definitely be hit to SMRT's bottomline for the next 7-8 yrs. But if the renewal leads to higher efficiency and fewer breakdowns, then SMRT may still get a positive ROI from its remaining term of the operating license.