Singapore is preparing to transition fully to the new Electronic Road Pricing system, known as ERP2, on January 1, 2027. This change is part of a Bill currently being debated in Parliament, which proposes making on-board units, or OBUs, mandatory for all Singapore-registered vehicles.
Acting Transport Minister Jeffrey Siow explained the reason for the shift during his opening speech at the second reading of the Land Transport and Related Matters Bill. He said, “This is because ERP2 uses satellite technology, rather than gantries, to determine the vehicle’s location for charging.” The debate on the Bill was later adjourned to Wednesday.
According to the Land Transport Authority, vehicle owners who have already been invited to install the OBU but have not done so will receive a final reminder starting from Feb 15. After receiving the reminder, they will have three months to install the OBU for free. Once this period ends, installation fees will apply. Motorcycle owners will need to pay S$35, while all other vehicle owners will be charged S$70.
Foreign-registered private vehicles are encouraged to install OBUs so they can be charged based on usage. For visitors who prefer not to install the device, a daily flat fee option will be available. However, Mr Siow said, “Malaysian taxis, however, will be required to install the OBU, as this is necessary for us to track and enforce against such vehicles, if needed, within Singapore.” LTA also said certain vehicles, including vintage and classic vehicles, will be exempted from installing the OBU.
From Jan 1, 2027, vehicles without an OBU will pay flat fees for each ERP operational day they use the roads. Motorcycles will be charged S$3, while all other vehicles will pay S$10. The proposed law also makes it an offence to tamper with or modify OBUs without approval, or to provide or advertise unauthorised services on the device. For serious cases of misuse or deliberate non-compliance, penalties can reach up to S$20,000, up to two years in jail, or both.
During the debate, Members of Parliament from both sides raised various concerns. Transport Government Parliamentary Committee chair Tin Pei Ling asked what steps would be taken to prevent the OBU technology from becoming outdated. Dennis Tan raised questions about the privacy of vehicle movement data collected through the system. Choo Pei Ling highlighted worries about “disproportionate burdens” on lower-income families who rely on private-hire vehicles, while Ms Tin also questioned whether private-hire drivers and delivery riders could manage higher costs.
Explaining the reason for the change, Mr Siow said ERP2 will be “more precise and finer in targeting road congestion” compared to ERP1. It also removes the need for large and costly gantries. “We can also spread out ERP charges in smaller amounts across several locations as opposed to just one location. This will be fairer,” he said. He added that the government would be “judicious” when adding new charging points, only doing so at persistent congestion areas.
About 93 per cent of vehicle owners have already installed the OBU. Mr Siow said, “My intent is to ensure a smooth transition, so that the ERP2 experience will be similar, as similar as possible to the ERP1 experience as we switch over.” He also noted that distance-based charging will not be introduced in the immediate term, as it will continue to be studied later.
The current ERP system has been in use for almost 30 years. Mr Siow said replacing its old components had become “unsustainably challenging and expensive.” Although the move to ERP2 was first decided in 2013, its implementation took longer than expected. Feedback received since OBU installations began in 2024 has helped improve the system, including allowing vehicle owners to choose not to have a display screen. The Bill also proposes simplifying payment processes and decriminalising missed ERP charges under the Road Traffic Act.
