Public Transport Fare Hike obtained by Fraud and Misrepresentation?

Did PTOs Lie to obtain Latest Fare Increase?

By MIKOspace

The True Lies of Singapore Public Transport Operators (PTOs)

Was Law Broken in order to Profiteer?

The Case is strong, definitive and irrefutable. The glaring implications of fraud and misrepresentation are prevalent to demand clear and unequivocal answers from the PTOs. The PTOs, ComfortDelgro and SMRT, are reported to have cited incredulous rising costs and lower profits to justify a public transport fare hike, and to which the Public Transport Council (PTC) have agreed as 2.8% effective April 2015. 

According to Section 24 of the Public Transport Act (Chapter 259B), the PTO’s case for any fare increase has to be supported by submitting to the PTC such documents it desires. None of these documents have been deposited in the public domain in the interest of transparency.

These documents should not be fraudulent or contain misrepresentation to the extent that such misconduct would render any approval voidable.

The PTC shall thereafter consider any fare increase request from the PTOs according to whether such fare increase was NEEDED to maintain the financial viability of the PTO and whether the public interest is safeguarded, among other things.

The Financial Viability of PTO

No reason has been evinced to support any conclusion that the financial viability of Singapore PTOs would be adversely impacted without the approved fare increase.  The over-whelming facts and evidence from various sources are unanimous in their happy finding that both PTOs would be reaping revenue and profit windfalls in 2014-2015 and in the years ahead mainly due to the drastic drop in global oil prices of more than 50% in the last 6 months of 2014.  The financial viability of the PTOs DOES NOT require the 2.8% fare increase because their expected windfall revenue and profits far exceed this amount significantly.

The following paragraphs are adapted from an independent DBS Bank Report dated 20 Jan 2015 BEFORE the transport fare increase announcement.

“Factoring in lower fuel prices, we’ve raised 2015 earnings for Singaporetransport operators SMRT and ComfortDelgro significantly by 7% and 4% for 2015 respectively.”

“The top performers over the last 12 months (of 2014) were led by Singapore’s land transport stocks, with SMRT up 38%, followed by ComfortDelgro with 29%. This can be attributed to the May 2014 announcement of the transformation of the public bus operations into a Government Bus Contracting Model [thereby making ComfortDelgro asset light].”

“Energy and fuel account for 9% and 14% of ComfortDelgro’s and SMRT’s costs respectively, and ComfortDelgro has hedged 70% of its diesel requirements for 2015.  Positive changes their EPS (earning per share) also take into account lower oil price, offset by stronger S$ and lower fare increases.”

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“ComfortDelgro has actively hedged its fuel/energy requirements to the best of its ability. It has hedged around 70% of its Singapore diesel requirements in view of the lower oil price. Even if oil price were to trend upwards, the positive is that we would see a lower diesel cost for the Group, given its hedges that are in place.”

The main conclusion of the independent DBS Bank Report is that BOTH PTOs are in the best of financial health in 2015-2017 (at least) and at the top of unprecedented profitability windfalls.

The savings from falling global oil and gas prices are real and substantial. Between July 2014 and January 2015, average gas prices fell by 19 per cent. As fuel costs make up around half the tariff, the electricity tariff between July 2014 and March 2015 has been accordingly reduced by 9.3 per cent.  SMRT depend more on electricity to drive its train and diesel for its buses. Prices at petrol pumps have fallen by 15 per cent between July and December 2014, and are expected to continue falling into 2015. 

Did Fare Increase Safeguard the Public Interest?

Public Transport Fare increases must be “Affordable” and “Justifiable” is the Test for public interest stewardship. 

The latest fare increase requires a S$7.5 million subsidy in the form of 250,000 public transport vouchers of $30 each to help needy commuters to mitigate its negative impact on them.  This is tantamount to subsidising the profits of highly profitable private PTO companies.

It is further announced that ComfortDelgro and SMRT would contribute $13.5 million of the increased fare revenue to the Public Transport Fund for the subsidy of $7.5 million!

Whither then the case of non-financial viability?  The subsidy is also unnecessary if the fare increase were affordable.  It is conclusive evidence that the public interest has not been safeguarded in this fare increase.

Investigation of Fraud by PTC

The Betrayal of Public Trust has finally come to a head as our public transport operators (PTOs) traded social conscience and responsibility for profits when they gradually erode the sacred Social Contract in Public Transport with Singaporean commuters.

Under the PTC Act, the PTC can revoke any approval for public transport fare increase if it found that the increase has been obtained by fraud and misrepresentation.  The PTC should now initiate an investigation as to whether such is the case, if indeed the PTOs did cite rising costs and lower profits to justify a public transport fare hike.

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Singapore – The True Lies of Public Transport Operators