Saturday, 30 April 2016

Rail breakdowns: Where does the buck stop?

Design of the system and state of the infrastructure among the tough areas that need fixing
By Christopher Tan, Senior Transport Correspondent, The Straits Times, 28 Apr 2016

Monday's four-line failure of Singapore's rail system should not have happened.

The July 7, 2015 breakdown which crippled the entire North-South and East-West lines - which account for three-quarters of all rail trips - should not have happened.

The March 22 accident this year which killed two young SMRT workers should not have happened.

Perhaps the same could be said of previous security breaches of highly secured train depots by vandals. Or even the SMRT bus driver strike that broke Singapore's 26-year blemish-free record.

If one were to look at these incidents coldly as scores in a report card, SMRT chief Desmond Kuek, who has been in the job for 31/2 years, would have a lot to answer for.

But is it fair to lay it all on the shoulders of Mr Kuek, a retired general and former chief of defence force?

The short answer is "no", even if he must be held accountable for some lapses. SMRT shareholders and its board of esteemed directors should decide which.

In his first interview with The Straits Times over three years ago, the suave and candid helmsman declared: "There are clearly managerial, structural, cultural and systemic issues (within SMRT) that need addressing." Fixing those "deep-seated" issues, he said, "is one of my top priorities".

Was Mr Kuek too gung-ho? After all, is it realistic to expect one man to undo things which have taken years to develop?

To put it bluntly, Mr Kuek has inherited a company which has not been focused on its core business for nearly a decade in its pursuit of enhancing "shareholder value". Perhaps in not so many words, a Committee of Inquiry convened after two massive breakdowns in December 2011 indicated as much.

The company underwent a hollowing out of its engineering expertise as executives disenchanted by the corporate emphasis on retail and rental left.

And yet the way SMRT has turned out is not all the doing of the company itself and its board. The Land Transport Authority (LTA), as regulator, has a part to play, and perhaps even the Ministry of Transport.

For instance, a plan to upgrade the MRT network's signalling system had been proposed as far back as the late 1990s, when former navy chief Kwek Siew Jin was heading SMRT. Yet, nothing was done until recently.

Meanwhile, Singapore's population exploded. Between 2004 and 2010, the number of residents grew by nearly one million.

The transport infrastructure was one of the first to feel the strain. Complaints of crowdedness and long waits became incessant. As a quick fix, train services were ramped up, followed by injection of additional trains.

But the system, already time-worn, could not cope with the extra load. Not just physical load, but also electrical load.

Increasingly, power-related incidents - usually the ones with the highest impact on commuters - began to feature prominently.

According to LTA statistics, rail disruptions caused by power and trackside faults more than doubled between 2011 and 2014.

Things came to a head last July, when a power trip brought the North-South and East-West lines down. It was an unprecedented event - but it held its dubious record only briefly.

Nine months later, another power trip caused the western portion of four lines to fail. That was Monday.

Now, multiple-line failures are extremely rare. And they are rare because rail systems are inherently robust. They have to be, as they move millions of people across billions of kilometres a year.

So, why is it happening to us? And twice within nine months?

No doubt loading any system will put extra strain on it. And so, until we renew the network's power system - which is on the cards - we will experience occasional power trips.

But surely the system should not be designed to allow a singular flaw to propagate into multi-line failure. A design that allows that is simply a bad design, period.

In Monday's incident, it was a trip within the Buona Vista power intake station - a facility that draws 66 kilovolts of electricity from Singapore's power grid before stepping it down to 22kV to distribute to the MRT network's substations.

There is, however, some redundancy in the system. If one intake station develops a fault, the operator can switch to another (there are five in the network).

Apparently, that was exactly what SMRT tried to do, but it could not get the switchover to work. And even if it had worked, it would have caused at least half an hour of service disruption.

Which was why a panel of electrical experts recommended an automatic switchover. The panel, which submitted its recommendations just days before Monday's mega failure, listed this as one of its urgent measures.

Separately, it is equally vital for SMRT and LTA to understand why a single flaw could result in a system-wide failure. Its joint probe into the July 7, 2015 incident was unsatisfactory because even though a salt-encrusted component was found to be a prime suspect, a similar power trip could not be replicated when investigators tested their hypothesis.

Until we understand the "why" instead of just "how", there is a high chance that a similar failure will recur. And such failures have a huge and lasting impact. If we cannot address these failures, it matters little if we are able to clock 200,000 train-kilometres between breakdowns, or even 300,000.

Not only that. If multiple-line failures continue, they will render impotent our redundancy plan - the one where we build many lines, and commuters faced with one failed line could walk to the next.

As for Mr Kuek, it is clear he has some way to go in addressing the issues he spoke of. The safety lapses that led to last month's fatal incident say as much.

And yet, it is also clear there are things which are beyond his control - like the design of the system, and the state of the infrastructure.

Someone will eventually have to decide where the buck should stop, and when it stops.

Plan for Government to take ownership of SMRT rail assets still struggling after 6 years
Stakeholders struggling to come to a deal nearly six years after the policy shift was proposed
By Christopher Tan, Senior Transport Correspondent, The Straits Times, 30 Apr 2016

A plan for the Government to assume ownership of all rail assets is stuck in second gear, with stakeholders still struggling to come to an agreement almost six years after the policy shift was mooted.

At yesterday's post-results briefing, SMRT Corp chief executive Desmond Kuek said talks with the authorities on a transition to the so-called new rail financing framework is "progressing" - something which SMRT has been saying for at least eight quarters.

Mr Kuek added that when the move is complete "SMRT Trains will be asset-light" as all operating and fixed assets will be transferred to the Land Transport Authority (LTA).

SMRT will then pay the LTA for an operating licence. It will focus on meeting service standards in order to re-tender for operating contracts that last for about 15 years - instead of 30 today. Under such a model, an operator's focus is not diluted by concerns of hefty and lumpy capital expenditures for asset renewal. And the Government can replace a non-performing operator more easily instead of having to wait 30 years.

Asked when the transition would take place, Mr Kuek said he was not at liberty to divulge more - another frequent refrain.

So far, only the Downtown Line operated by SBS Transit falls within the new framework. But even that company has not yet converted its North-East Line contract, which is valid till 2033. SMRT's North- South and East-West line contract expires in 2028, while its Circle Line deal ends in 2019.

The Straits Times understands that most major issues have been resolved, and that the only ones remaining pertain to earnings accrued from non-transit operations but which are tied to transit.

These are namely rental of retail space in train stations, and revenue from advertisements on trains.

In the case of SMRT, the two account for three-quarters of its operating profit. It enjoys an operating margin of about 60 per cent for the pair, largely because it pays only a token rental to the Government for the stations.

Under the new regime, the Government is said to be looking at these fat margins when devising the operating licensing fee it will charge SMRT. This is so that the operator's future margins are more in line with the lower risks it assumes in an asset-light regime.

It is said that this probable formula is spooking some shareholders, who feel it will impact SMRT's earnings in the near term.

Research analyst Abhishek Nigam at stockbroking firm Nomura predicts SMRT's rail margin will be in the region of 5 per cent. That would translate to an operating profit of $34 million based on revenue for the year ended March 31.

That compares with last year's loss of nearly $10 million, if not for a tax write back.

"It's better for SMRT to move to the new framework. It will help them with their cashflow quite a bit," Mr Nigam said. "I think it will happen, but the timing is uncertain."

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