SMRT to face massive fines on service disruption

$1 million could be levied if the trains break down again..

According to OCBC, the list of recommendations included in the full report of the Committee of Inquiry (COI) findings did not yield any surprises and this development is deemed a positive for SMRT. Most of the COI's 14 recommendations on engineering and maintenance issues have been proactively addressed by SMRT in its S$900m upgrading and renewal plan announced two months ago.

Here's more from OCBC:

While the cost burden issue between the company and the Land Transport Authority (LTA) has yet to be finalized, we have already made conservative provisions in our estimates. With the conclusion of the COI, what remains is the Government's response to the report on 9 Jul's Parliament sitting, and the implementation of a fine on SMRT for the service disruptions.

In our view, the latter will come into play after the Ministerial Statement, and we could expect to see a maximum fine of S$1m per incident levied onto SMRT for a resulting S$2m impact on its books in the following quarter (2QFY12).

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