In 2012, local tour agency, DUCK & HiPPO wrote a long blogpost about how the Urban Redevelopment Authority (URA) poorly planned the water transportation tender, after it lost the tender to a new startup river operator, Singapore River Explorer (SRE). SRE is a joint venture with a $2 paid up capital between Global Yellow Pages (GYP) and Leisure Empire.
The water transportation tender was a project by URA to provide commuters working or living near the Singapore River with an alternative to land transport.
Poorly drawn out tender by URA and lack of market research
DUCK & HiPPO in its blogpost, explained how URA’s tender requirements back then, would create a lose-lose situation for them along with the appointed river operators. It also lamented on how URA did not conduct a proper market survey before coming up with the tender nor did it sought feedback from existing water taxi operators.
The three tender requirements that the river operator found to be poorly drawn out:
- $3 Service for the water taxis to operate similarly to buses
- $4 Service for a point-to-point service similarly to premium buses
- On-demand water taxi services similar to land taxi
DUCK & HiPPO had said that it could not match the requirements as the price does not allow sustainability.
It also forecasted that the appointed river operators with crippling losses would request URA for changes in pricing or services to stay solvent with specs being changed and goalposts moved.
As if URA did not want the forecast of DUCK & HiPPO to come true, the price was not revised upwards throughout the three years of operations by SRE nor the goalposts moved. Alas, SRE eventually ceased its operation after its three-year licence expired on 31 December 2015.
To highlight how serious is the company’s financial deficits three years into operation, GYP announced in a Singapore Exchange filing that SRE owes it S$5.9 million plus S$400,000 in interest. Also, GYP provided a corporate guarantee to secure SRE’s repayment obligations to a third party lender of approximately S$850,000 which it is trying to see if it can be paid by SRE.
More than 20 former staff of SRE claimed they were not paid termination fees, ranging from a week’s to a month’s wages; others were owed overtime pay and salaries for last month.
URA’s adjustment is what Ducktour operator predicted
After SRE’s departure, Singapore River Cruise is now left as the only river taxi operator at Singapore River, with its water taxi fees increased from $3 to $5 from 1 January 2016.
A URA spokesperson said adjustments were made to the timing, pricing and routes “to meet the demand accordingly”, as part of Singapore River Cruise’s licence renewal. “These changes will also apply to the new operator after we award the tender,” the spokesperson said.
Singapore River Cruise general manager See Toh Yew Leong said a review was done with URA to see “how best to maximise the hours and the man-hours”. The company wants to cater to daily commuters working in the Central Business District, as well as those heading to the Esplanade, Boat Quay or Clarke Quay in the evening.
Three years ago, DUCK & HiPPO had already criticised about the specifications set by URA for the water transportation tender. Its market research projected only about 100 pax of commuters for the 2.5 hours of morning peak while URA’s specifications would dictate 14 boats and 42 crews working from 7 am in the morning for just 100 pax.
With such water taxi service structure, the river operating expense would escalate to $8,600 a day. So to break even, each operator will need a ridership of 1,500 pax (of $3 taxi). However, the water taxi market does not have such numbers.
Ducktour’s deputy director, Pamela Wee said then, “According to our projections, by providing the full water taxi services as per URA’s tender specification, operators would incur a loss of up to S$1.6million per year,” said.
True enough, SRE suffered losses more than what Ms Wee projected.
Questionable award of tender
There were six bidders for URA’s tender in 2012. The top 2 bidders were Singapore Network Services Pte Ltd (SEN) and Global Yellow Pages/Leisure Empire at $101,000 and $88,000 respectively.
SEN is managed by Seow Nyuk Fong, who was also the ex-director/shareholders of the defunct Singapore Explorer Pte Ltd. Singapore Explorer incidentally was the previous Singapore River (water taxi) operator up to 2007.
DUCK & HiPPO wrote that SEN had the experience in the water taxi and tourism trade, making it a contender for the URA Water Taxi tender. Especially at the bid price of $101,000, it is an impressive 590% hike in monthly rental. It was curious that SEN was not awarded the river tender despite being the highest bidder.
Also, when the tender was awarded to Singapore River Explorer, a former member of parliament from People’s Action Party and former minister, Mah Bow Tan was the Non-Executive Chairman of Yellow Pages Global and still continues to hold the position.
DUCK & HiPPO voiced that as ex-boss of URA, GYP with Mr Mah as Chairman, should not be bidding for a URA tender. Furthermore, GYP told its shareholders that it had bid for tender not for the purpose of getting into water transportation business. Mr Mah was former Minister for National Development (MND) for 10 years between 1999 and 2011, and URA falls under the purview of MND.
The company wrote to URA on Aug 24, 2012, to seek clarification on why their bid was not selected and why the top bid was also not selected. No reply was ever given to them.
A URA spokesman said in 2012 that the tender was awarded “after careful evaluation which included study of the design of the routes and cost competitiveness”.
But apparently, three years after the tender has been awarded, DUCK & HiPPO’s understanding of the routes and cost seems to be more farsighted and accurate than URA’s so far.
Read what DUCK & HIPPO wrote in 2012.