SMRT to Be Fined S$2 Million for December Train Breakdowns
SMRT Corp. (MRT), Singapore’s biggest subway operator, will be fined the maximum S$2 million ($1.6 million) penalty for two service disruptions in December, the Land Transport Authority said.
SMRT failed to meet licensing obligations and the probe by LTA, as the transport regulator is known, showed that the subway disruptions on Dec. 15 and Dec. 17 were “preventable,” it said in a statement on its website yesterday.
The metro operator, “failed, among other things, to exercise due diligence and vigilance expected of a public transport operator, and to maintain its network in good and efficient working condition,” according to the LTA.
The December breakdowns, the most disruptive in SMRT’s 25- year history, prompted protests and forced the company to boost spending on upgrades amid the government’s biggest transport- related inquiry since 2004. The breakdowns also led the LTA to consider raising the maximum penalty from S$1 million for each service disruption.
The stock rose 0.6 percent to $1.705 at the close in Singapore yesterday, before the announcement was released. SMRT shares lost 3.7 percent since the start of the year, compared with the 13 percent gain in the Singapore benchmark Straits Times Index. (FSSTI)
“The maximum penalty did not come as a surprise given the severity of the train disruptions and the subsequent public dissent,” UOB Kay Hian analysts including Toh Yongrui and Andrew Chow, who rate the stock a sell, said in a report yesterday.
“Though the fine of S$2 million accounts for just 1.5 percent of our fiscal 2013 net profit estimate, we view this as a signal that the government will be harsher on future transgressions,” they said.
A total of S$900 million will be spent over eight years for major upgrades to the subway network, including its signaling system, SMRT has said, adding that it’s asking the LTA to share that cost. The two disruptions over a 36-hour period left more than 200,000 commuters stranded along the rail line for the Orchard Road retail strip during the year-end holiday shopping season, with some trapped in the tunnel.
About 2.7 million passenger trips are made on Singapore’s subway every day, the city-state’s Transport Minister Lui Tuck Yew said April 9 in Parliament.
The fine will be donated to help needy families with transport fares, LTA said.
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