Sustainable strategies for Mass Rapid Transit PPPs

• Main Authors: PHANG, Sock Yong, TAN, Bin Chye
• Format: text
• Language: English
• Published: Institutional Knowledge at Singapore Management University 2022
• Subjects: MRT; PPP designs; Risk allocation; Land value capture; Vertical integration; Asian Studies; Public Economics; Transportation
• Online Access: https://ink.library.smu.edu.sg/soe_research/2533; https://ink.library.smu.edu.sg/context/soe_research/article/3532/viewcontent/Sustainable_MRT_PPP_av.pdf
• Institution: Singapore Management University

Mass rapid transit (MRT) PPPs have proliferated in the past two decades. This chapter provides a framework to categorise and understand alternative PPP designs. As MRT systems are inherently large, unprofitable and risky projects, PPP design is critical to project success and sustainability. We study the experiences of MRT PPPs in London, Hong Kong, Singapore and Beijing to understand factors underlying success and failure and to arrive at policy recommendations for PPPs. Policymakers need to have additional governance improvement and risk mitigation measures in place when tied supply chains are utilised. Hong Kong’s experience illustrates that ‘Rail plus Property’ strategy can facilitate synergies and cross-subsidization of rail from land value capture. Appropriate mechanisms for allocation of revenue risks are key to financial sustainability. The government should own MRT systems, but there are benefits of design-build-finance-operate-maintain-transfer PPPs for lines, private financing of rolling stock and private sector maintenance of assets and operation of train services.