SMRT could face hefty fines after MRT service disruption: analyst

It could be as high as $50m.

Public transport operator SMRT is at risk of facing hefty fines after the widespread MRT service disruption that occurred on July 7, Tuesday.

Maybank Kim Eng analyst Derrick Heng said that SMRT could face a fine of up to $50m, after Parliament passed a bill in 2014 which increased the maximum fine for every rail disruption to 10% of an operator’s annual fare revenue for the relevant rail line.

The possibility of a fine poses a risk to SMRT’s rail revenue.

“While the actual fine may be much lower than the maximum possible, it nonetheless poses risks to our forecasts. In history, the highest fine imposed was SGD1m each for two major disruptions in Dec 2011. Another four incidents between Oct 2013 and May 2014 led to a total fine of SGD1.6m for SMRT,” Heng noted.

“While there could be a knee-jerk reaction to this latest episode, we doubt that the downside will be significant,” he added.

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