The Land Transport Authority (LTA) will impose the maximum fine of S$2 million on transport operator SMRT for the two train disruptions along the North-South Line on December 15 and 17 last year.
Over 200,000 commuters were affected during the disruptions.
LTA said its investigations have found that SMRT had failed to meet its licensing obligations for the North-South and East-West Lines.
It has 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.
In both incidents, SMRT was also found to be in breach of the Operating Performance Standards for the North-South and East-West lines.
Under Section 19 of the Rapid Transit Systems Act, a public transport operator can be fined up to S$1 million per incident if it fails to comply with the Operating Performance Standards and other regulatory requirements.
In assessing the penalty amount, LTA said it considers the facts of the case, severity of the incident and any relevant mitigating factors that may apply. It will also consider any representations which the operator may make.
A statement from LTA said the S$2 million will be donated to the Public Transport Fund to help needy families with transport fares.
The penalty comes on the back of the Committee of Inquiry's report, which was submitted to the Transport Minister on July 3.
Chairman of the Government Parliamentary Committee for Transport, Cedric Foo, felt LTA is imposing the maximum fine as the disruptions had massive impact on commuters and occurred in quick succession.
He said "The disruptions in December has massive impact on commuters. They occurred in quick succession and the COI found they were preventable. That, I felt was why LTA meted out the maximum fines under the framework."
Others felt the fine will send a clear signal to operators.
Associate Professor Lee Der-Horng of the National University of Singapore said: "Imposing the penalty is definitely the last option. I'm sure SMRT will receive a very strong signal that they would definitely have to improve -- right from the fundamentals to improve their service to ensure that in the future, a similar incident will not happen again."
LTA is now reviewing the current maximum penalty amount following the disruptions, to strengthen its regulatory regime.
Dr Park Byung Joon, Head of Urban Transport Management at UniSIM's School of Business, said: "What I want to see from the LTA now is whether they are going to introduce another fine for less major disruptions. Is LTA going on a case-by-case basis like now? Or are they going to introduce a more structured fine scheme?"
In a separate statement, SMRT said it has been informed of the fine, and added that the investigations into the incidents have provided the company with valuable insights into enhancements needed in its previous maintenance regime, which was regularly validated by LTA.
SMRT said since the two incidents, it has been implementing various initiatives to prevent a recurrence, and improve service reliability and incident response in collaboration with LTA.
The operator said it will implement further improvements and work closely with the LTA to enhance its reliability and service levels for the benefit of commuters.
An analyst said that the penalty will send a message to operators that such incidents should not be repeated.
The disruptions have already cost the private operator some S$4.4 million in additional costs for financial year 2012. Part of this money went towards legal and professional fees.
The company also reported a lower full-year net profit of S$119.9 million for its fiscal year ending March 30, 2012, which is 25.6 per cent lower than the previous year.
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