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Latvian rail companies demand 82 million from Lithuania for dismantled rail track

  • 2018-09-05
  • LETA/TBT Staff

RIGA - Latvian national rail company Latvijas Dzelzcels (LDz, Latvian Railways) and its freight shipping subsidiary LDz Cargo are demanding EUR 82.32 million in total from Lithuanian rail company Lietuvos Gelezinkeliai (Lithuanian Railways) to compensate for the losses the Latvian companies have suffered due to dismantling of the Mazeikiai-Renge rail track a decade ago, LDz representatives told LETA.

Based on the European Commission’s decision, LDz and LDz Cargo have submitted their claim to Lietuvos Gelezinkeliai, demanding compensations for the rail track section that used to connect Lithuania with Latvia but was dismantled in 2019.

In its claim, LDz was the Lithuanian railway operator to compensate for the losses incurred from 2009 to 2017, which according to estimates drawn up by Ernst & Young Baltics auditors, are EUR 56.92 million.

LDz Cargo, meanwhile, demands EUR 25.4 million in compensation for unearned income as the company has not been able to transport oil products from the Orlen refinery in Mazeikai.

If the Lithuanian company refuses to pay the compensations, the Latvian companies will consider legal action.

As reported, Lietuvos Gelezinkeliai, which received the claims on Monday, considers them baseless.

Lithuanian Transport Minister Rokas Masiulis described the Latvian move as pre-election political games.

"We consider this step by Latvia as a sign of political games in the run-up to the October elections," Masiulis said in a statement.

"It is regrettable that Riga did not wait for the conclusion of the case with the European Commission. Lithuania has already begun to rebuild the Renge (track), and all efforts are being made to resolve the old conflict," he said.

According to the ministry's press release, Latvijas Dzelzcels asks to be informed when the Renge section would be reopened to traffic and demands compensation for lost profits during the period when the track was not used.

Lietuvos Gelezinkeliai CEO Mantas Bartuska said the company is keeping to a plan for restoring traffic on the line, which it intends to rebuild by the end of the year.

"Estimates as to the alleged loss of profits are not sufficiently grounded, as freight volumes shipped to Latvia remained unchanged before and after (the dismantling of) Renge," he was quoted as saying in the ministry's press release.

Latvia could still be reached by railway after the Renge track was removed, the CEO said.

The Lithuanian company says that the existing railway links to Latvia are not fully used and that there has been no train traffic on some routes for 15 years now.

The Latvian operator did not even try to ship oil products from Lithuania in other directions, it said.

The European Commission last year imposed a fine of 27.87 million euros on Lietuvos Gelezinkeliai for hindering competition in the rail freight market by dismantling in 2008 the track connecting the Mazeikiai crude refinery, in northern Lithuania, and Renge.

The Lithuanian company paid the fine in early January after filing an appeal to the EU's General Court in Luxembourg against the Commission in December.