SMRT puts up Expression of Interest Notice for Sale of OC500LE and Citaro buses

SMRT Corporation has recently sought Expressions of Interest (EOI) for the sale of its Mercedes-Benz OC500LE and Citaro buses, due for retirement in several years’ time.

In a tender released on the procurement section of its website dated 18 January 2021, QX20-063 Expression of Interest was published, with the accompanying description “Sales of Mercedes OC500 Buses and Citaro Buses (EOI)“.

While the lifespan expiry of these buses is not expected until 2025 and 2027 respectively, the recent tender hints at SMRT’s plans for these buses ahead of their 17-year statutory lifespan amid shrinking fleet requirements as a result of the Bus Contracting Model (BCM).

Background

The two Mercedes bus models were purchased by SMRT Buses at least ten years ago, and have been on revenue service ever since. In addition, all public buses in Singapore are subject to a 17-year statutory lifespan.

A combined total of 185 buses were procured.

Purchase of Buses

Between 2008 and 2009, a total of 134 Mercedes-Benz OC500LE buses were registered to SMRT Buses. These buses were SMRT’s first wheelchair-accessible buses, and the first buses in Southeast Asia to meet the stringent Euro V emission standards.

Following the Mercedes-Benz OC500LE orders, SMRT purchased a total of 51 Mercedes-Benz Citaro buses, which were registered between March 2010 and November 2011. These fully-low-floor buses were also Euro V-compliant.

A combined total of 185 buses were procured.

Bus Contracting Model

Under the BCM which took effect on 1 September 2016, most existing bus services continue to be operated by SBS Transit & SMRT Buses (hereinafter called SMRT) under Negotiated Contract (NC) terms, which are agreed upon between Public Transport Operators (PTOs) and the Land Transport Authority (LTA). Buses that SBS Transit & SMRT purchased before BCM, not under the government’s Bus Service Enhancement Programme (BSEP) nor under procurement contracts which were taken over by LTA, are leased to LTA for availability fees.

In other words, buses previously bought by SBS Transit and SMRT continue to be owned and operated by these PTOs. At the same time, LTA leases these buses from the PTOs to be operated on revenue service, to cover up for the shortfall of Government-owned buses. This scheme allowed PTOs to continue holding on to existing bus assets, and at the same time, LTA avoids having to directly buy over thousands of buses at the onset of the BCM in 2016, which would have cost hundreds of millions of dollars upfront. To sum up, LTA pays PTOs an availability fee for the use of PTO-owned bus assets. This is separate from the service fee, which LTA pays out for the day-to-day operation of revenue bus services.

During the months leading up to a transition from Negotiated to Tendered Contract involving a change of bus operator, the incumbent PTO (SBS Transit or SMRT) typically assigns LTA-owned buses to the affected bus routes, facilitating the imminent transfer of ownership to the new operator. For PTOs, this entails the redeployment of PTO-owned buses to other bus services/depots which are still under the Negotiated Contract scheme, and vice-versa for LTA-owned buses, which are transferred from Negotiated Contract regions to the Tendered Contract services slated for transfer. Such bus redeployments were previously observed prior to the start of the Tendered Bulim, Loyang & Seletar Bus Packages.

The transfer of buses from PTO to LTA ownership is elaborated at: Transitioning of Buses to BCM | Land Transport Guru.

Sembawang–Yishun Bus Package Award

In September 2020, Tower Transit was awarded the Bulim & Sembawang-Yishun Bus Packages in a setback to SMRT’s operating presence in Singapore. SMRT would hand over a total of 28 bus services to Tower Transit, comprising 3 bus services which were newly transferred to the Bulim Bus Package (653, 657, 944), and 25 bus services under the Sembawang-Yishun Bus Package (167, 169, 171, 656, 663, 825, 853/853M, 854, 854e, 855, 856, 857, 858, 859/859A/859B, 882, 883/883M, 963, 963e, 963R, 965, 966, 969, 980, 981, NR1 & NR2). Service 167e was withdrawn in December 2020.

As such, SMRT would only be operating the Woodlands Bus Package & Choa Chu Kang-Bukit Panjang Bus Package after September 2021. This leaves SMRT in ownership of close to 700 single deck buses.

Currently (as of January 2021), SMRT operates about 510 single deck buses based in Gali Batu Zone (Kranji, Bulim, Ulu Pandan Bus Depots & part of Woodlands Bus Park) & Woodlands Zone (Woodlands Bus Depot & part of Woodlands Bus Park). At current levels of bus utilization, it appears that SMRT is left with an excess of roughly 190 single deck buses come late 2021. Conveniently, this figure is conveniently nearly equal to the combined total of SMRT-owned Mercedes-Benz OC500LE and Citaro buses (total: 185 buses).

The LTA is also unlikely to pay availability fees for these buses which the Government does not own. The availability fees cover the depreciation of the buses and are separate from the service fee which LTA pays out for the day-to-day operation of revenue bus services—thus, not being able to earn availability or service fees from its non-utilized buses results in depreciation losses for SMRT.

The possibility of LTA buying over SMRT’s excess buses is also improbable, given that LTA is currently mothballing excess registered buses whilst continuing to take in new bus models. In view of this looming excess of buses, it is plausible that SMRT would seek ways of disposing of its older buses ahead of their statutory lifespan to cut down its financial losses.

Transfer of Buses – COMET

A recent transfer of excess SMRT Buses out of the revenue service fleet happened last year, when twenty MAN A22 (Euro V) buses were retrofitted into dedicated COVID-19 patient transport vehicles, known as COMET MAXI.

Conversion work was undertaken between April & May 2020. The COMET MAXI buses were part of Temasek Foundation’s Stay Prepared initiatives in support of Singapore’s COVID-19 testing efforts. This was conducted in partnership with SMRT Corporation, HOPE Technik, and Sheares Healthcare.

Ownership of these buses was transferred from SMRT Buses to a Temasek subsidiary. As of January 2021, these buses are in storage, with no signs of returning to revenue service.

Gathering Information – Purpose of EOI

The tender notice is put up for SMRT to evaluate the potential actions that they may take to dispose of these buses when there no longer is a need to use them in the provision of public bus services under the Bus Contracting Model. This does not necessarily mean that the buses will be disposed of.

As tender documents are not released publicly, the number of buses listed in the documents and the exact terms of the EOI is unconfirmed.

Expression of Interest – Possibilities

Possible proposals to the Expression of Interest to SMRT Buses might include:

• Sale/Transfer of ownership to Private Bus Operators
• Export of vehicles to other countries, such as Thailand, Indonesia, etc.
• Scrapping of vehicles by Scrap Vehicle Dealers

Retiring public buses have been sold to other countries in the past. In 2010, some of SBS Transit’s retiring Mercedes-Benz O405 buses were sold second-hand to Bangkok, Thailand, where they were converted to Compressed Natural Gas (CNG) buses.

Updates

As of 21 January 2021, the tender notice was removed from SMRT website.

In March 2021, a Mercedes-Benz OC500LE bus (SMB9L) was transferred to Tower Transit for training and familiarisation in the lead-up to Tower Transit’s operation of the Sembawang-Yishun Bus Package from September 2021. More Mercedes-Benz OC500LE buses are expected to be transferred over to Tower Transit.

See Also:

• Transitioning of Buses to BCM | Land Transport Guru
• Bus Contracting Model (BCM) | Land Transport Guru

References

• Tender Notice – SMRT Corporation [Accessed 19 Jan 2021]