The Downtown Line (DTL), a medium-capacity mass rapid transit (MRT) line, will transition to a new financing framework under which the Singapore government will cover a portion of any losses incurred by operator SBS Transit Limited in exchange for a larger share of earnings. This aligns the DTL with most of Singapore’s other rail lines, except for the new Thomson-East Coast Line (TEL), which operates under a separate financing framework where the government bears the entire revenue risk.
Starting January 2022, the DTL will follow the New Rail Financing Framework (NRFF) introduced in 2016, under which the LTA will share a portion of the shortfall in fare earnings if ridership falls short of estimates. If profits exceed projections, the LTA receives a larger portion of the profit through increased licence fees paid by the operator. These fees go into a fund that is used to replace operating assets. The operator’s profit margins are effectively capped under this framework.
Under the NRFF, SBS Transit will be granted a single 11-year licence to operate all three of its rail lines: the DTL, the Northeast Line, and the Sengkang-Punggol Light Rail Transit (LRT). SBS Transit is required to hand over its rail advertising business to the LTA beginning in 2024 as a part of the transition.
DTL’s new financing model has been evaluated by the LTA and SBS Transit to ensure that it can continue to provide reliable train services while remaining financially viable.