RIGA - The sorry saga of the Baltic Kristina appeared to have finally come to a close after a German firm bought the aging passenger ship from Riga Port authorities for a paltry 780,000 lats (1.1 million euros).
Riga Free Port announced on Feb. 2 that it had sold the Baltic Kristina to a German firm, Euro 7 Fernseh & Marketing, for 1.1 million euros, far less than the 3.6 million euros the port paid for the vessel in December 2005 at an auction. The starting price at the auction was 500,000 lats, which is what one port official described as the price the port would expect if it had sold the ship for scrap.
The port's board later approved the deal on Feb. 2.
After acquiring the Baltic Kristina, which was assembled in 1973 in Finland, port authorities had been hoping to salvage an otherwise sour deal by either reselling the boat or leasing it on a temporary basis and then reselling.
However, the old vessel "rustbucket" failed to entice investors, and two concerted efforts to sell failed. Finally, port managers were forced to drop the asking price significantly.
Understandably, not everyone is satisfied. The painful, five-year drama around the Baltic Kristina has left some city officials a bit indignant, and there are plans to turn to law enforcement to seek redress of possible fraud and negligent management.
Andris Argalis, deputy mayor of Riga and executive chairman of Riga Free Port, has announced that he would send a letter to Latvia's anti-corruption bureau asking for a probe into the significant financial losses that the port incurred as a result of the Baltic Kristina fiasco.
According to reports, Argalis intends to show that Riga Port's losses eventually amounted to a staggering 9 million lats.
Riga Port has traditionally been a kind of political weather vane in Latvia, and the political confrontations in Parliament and government have been known to spill over into the state-owned terminal.
It is unclear what the new owner will do with the Baltic Kristina, though port spokeswoman Anita Leiskalne said the buyer had plans to use the ship for developing a passenger route between Greece and Turkey.
The Baltic Kristina had once plied the lucrative route between Riga and Stockholm. It was owned by Rigas Juras Linijas (Riga Sea Lines), a public-private firm controlled by Riga Free Port.
However, the firm's success never materialized, and its lifeline was artificially propped up thanks to deep discounts 's up to some 95 percent 's for using the passenger port. Potential competitors, most notably DFDS Tor Line, complained about the practice to the European Commission.
Latvia's Transport Ministry was eventually forced to defend itself against the charges, and it was Minister Ainars Slesers who eventually sunk the Baltic Kristina by opening up competition at the port.
Slesers, who was instrumental in luring discount airlines such as Ryanair and EasyJet to Riga International Airport, announced in 2005 plans to attract Scandinavian and Estonian passenger ferries to Riga and increase passenger turnover.
Administrations of both the city and the port reacted bitterly to the idea, but in the end Slesers won the day, and Tallink now drops its anchor at Riga Passenger Port.
Seeing that the Baltic Kristina, which had a virtual monopoly on the Riga-Stockholm route, was about to be flooded by competitors, Riga Port and private owners of Riga Sea Lines decided not to invest further in the company.
A swathe of debt, including a $7 million loan from Parex Bank, was about to come due, and instead of recapitalizing, Riga Sea Lines shareholders stood to the side and watched as creditors took over the ship. The rest, as the saying goes, was academic. A court declared Riga Sea Lines bankrupt, the company went into receivership, and finally assets had to be liquidated.
Otherwise, the future of the passenger port is looking brighter. Last year some 247,000 passengers shuffled through the terminal, up 26.5 percent year-on-year.
Argalis, speaking in an interview with the daily Telegraf this week, was sanguine about the passenger port's outlook. He announced that in May 2008 a Japanese liner on which the average ticket price is $120,000 will visit the port.
"Traditionally, if these passengers like a place where they were, investors begin paying close attention to that region," he said. "So we're preparing for this event very carefully."
