By Sharen Kaur
sharen@mediaprima.com.my
Published in NST, July 30, 2016
KUALA LUMPUR: Train-operating companies for the High-Speed Rail (HSR) connecting Singapore and here will make money within the concession period.
Malaysian developer and asset owner MyHSR Corp Sdn Bhd chief executive officer Mohd Nur Ismal Kamal told the New Straits Times that operators were expected to make money from day one of the concession.
Concession starts when the HSR is completed and ready for operation in 2026. Two train-operating companies will be appointed.
One will operate the cross-border services between here and Singapore, while another will run domestic services within Malaysia.
The HSR will have eight stops, a terminus each in Bandar Malaysia and Jurong East, and six transit stations in Putrajaya, Seremban in Negri Sembilan, Ayer Keroh in Malacca, and Muar, Batu Pahat and Iskandar Puteri in Johor.
Nur Ismal said the concession period would be between seven and 10 years.
He said operators would have to bid for the concession via an international open tender.
"It can be any private party, whether from Malaysia or other countries. They must have a good track record and the ability to perform."
A report from Nanyang Technological University said HSR projects typically struggled for years before turning a profit.
For example, the Eurotunnel linking the United Kingdom and France was profitable only after 26 years.
With operating deficits common among most HSR operators globally, the Kuala Lumpur-Singapore HSR might not be an exception, the report said.
But, Nur Ismal said Malaysia planned to use a business model similar to that in the UK, which demonstrated the ability of HSR systems to run profitably.
In the UK, operators would lease trains from Rail Rolling Stock Companies and they would pay Network Rail for the rights to use the track.
There are several ways to operate an HSR system. One is to separate the infrastructure that combines civil and railway assets versus the operator as another layer, or have everything integrated.
For the Kuala Lumpur-Singapore HSR, there is a separation between the infrastructure, rail operating assets and operator.
"In the model that we have adopted, the operators do not have to invest in civil infrastructure, rail operating assets and operations. MyHSR will build the civil infrastructure, and AssetCo will build the railway operating assets, which include the track, signalling, communication, power and rolling stock.
"The operators will use trains from AssetCo. They do not have to invest in anything other than human capital, and maybe, small infrastructure to support their operations. These are all minimal hard-asset investments."
Nur Ismal also pointed out that operators would not have legacy assets and liabilities that would eat into their margins.
All they had to do was focus on running operations as efficiently as possible and attract as much ridership as possible, he said.
He said if operators did not perform during the concession period or performed below expectations, then they would be replaced.
"We will know how they perform. We can see the number of people taking flights and how many still drive (from here to Singapore and vice versa). If operators fail to migrate these people, then we know they are not performing, and we will go out to the market and re-tender."
sharen@mediaprima.com.my
Published in NST, July 30, 2016
KUALA LUMPUR: Train-operating companies for the High-Speed Rail (HSR) connecting Singapore and here will make money within the concession period.
Malaysian developer and asset owner MyHSR Corp Sdn Bhd chief executive officer Mohd Nur Ismal Kamal told the New Straits Times that operators were expected to make money from day one of the concession.
Concession starts when the HSR is completed and ready for operation in 2026. Two train-operating companies will be appointed.
One will operate the cross-border services between here and Singapore, while another will run domestic services within Malaysia.
The HSR will have eight stops, a terminus each in Bandar Malaysia and Jurong East, and six transit stations in Putrajaya, Seremban in Negri Sembilan, Ayer Keroh in Malacca, and Muar, Batu Pahat and Iskandar Puteri in Johor.
Nur Ismal said the concession period would be between seven and 10 years.
He said operators would have to bid for the concession via an international open tender.
"It can be any private party, whether from Malaysia or other countries. They must have a good track record and the ability to perform."
A report from Nanyang Technological University said HSR projects typically struggled for years before turning a profit.
For example, the Eurotunnel linking the United Kingdom and France was profitable only after 26 years.
With operating deficits common among most HSR operators globally, the Kuala Lumpur-Singapore HSR might not be an exception, the report said.
But, Nur Ismal said Malaysia planned to use a business model similar to that in the UK, which demonstrated the ability of HSR systems to run profitably.
In the UK, operators would lease trains from Rail Rolling Stock Companies and they would pay Network Rail for the rights to use the track.
There are several ways to operate an HSR system. One is to separate the infrastructure that combines civil and railway assets versus the operator as another layer, or have everything integrated.
For the Kuala Lumpur-Singapore HSR, there is a separation between the infrastructure, rail operating assets and operator.
"In the model that we have adopted, the operators do not have to invest in civil infrastructure, rail operating assets and operations. MyHSR will build the civil infrastructure, and AssetCo will build the railway operating assets, which include the track, signalling, communication, power and rolling stock.
"The operators will use trains from AssetCo. They do not have to invest in anything other than human capital, and maybe, small infrastructure to support their operations. These are all minimal hard-asset investments."
Nur Ismal also pointed out that operators would not have legacy assets and liabilities that would eat into their margins.
All they had to do was focus on running operations as efficiently as possible and attract as much ridership as possible, he said.
He said if operators did not perform during the concession period or performed below expectations, then they would be replaced.
"We will know how they perform. We can see the number of people taking flights and how many still drive (from here to Singapore and vice versa). If operators fail to migrate these people, then we know they are not performing, and we will go out to the market and re-tender."
/ends
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