TALLINN - The supervisory board of Tallinna Sadam (Port of Tallinn) agreed on July 16 to change the port's system of fees, which will ultimately lead to an increase in the cost of some services, sparking a sharp reaction from many of the port's operators.
Eero Tohver, chairman of the board, said the higher fees were economically logical considering the investments the port had made. In the first half of this year the company invested 760 million kroons (48.6 million euros), or 550 million kroons more than the same period last year.
"It is clear that if we invest, we hope to earn back on it," Tohver said. "I wouldn't say the operators should be firmly against it."
The chairman expressed hope that the need for a new fee system could be explained to the operators, adding that the board would start negotiating the new structure of fees with the operators this week.
The board has been haggling over fee reform for three months, yet Tohver said that port management believed the changes would cause no competitive setback.
He stressed that the quality of service and port development were extremely important to the Port of Tallinn.
Operators, meanwhile, reacted vociferously to the news.
Andres Hunt, CFO of the Tallink Group, said the price hike was tantamount to a demonstration of power.
"We do not know yet what exactly will happen with passenger ships, but we do know that such important decisions are not made with a short advance notice," Hunt said.
"It is a matter of the state's administrative capacity whether the activity of monopolies is or is not brought under control. All the major clients of the Port of Tallinn are working in very close international competition, the port without its clients does not cost anything," he continued. "Let us recall that maritime traffic between Tallinn and Helsinki is falling. What's more, the state backed out of its promise to compensate shipping companies for the income they lose as a result of scrapping tax-free trade."
At the same time, Hunt said, a major state-owned company dealing with everything was being created, and there was a danger that other spheres of operation were financed at the expense of port fee proceeds.
"We expect the Port of Tallinn to inform also the operators of its price rise plans and not communicate with them only via the press," Hunt said. "After we have received the new prices we will decide whether we protest them or not."
The port operators' association agreed, saying that port management was not acting like a reliable business partner.
"We are worried by the need to raise prices but are angered by the way prices are raised," Ago Tiiman, managing director of the port operators' association, told the Baltic News Service, adding that operators had no idea what fees would be increased.
"We do not know whether it will be ship fees, wharf fees, entry fees, building right fees, goods fees or rental fess that will rise," he said. "The port management has not given any adequate answers so far."
Tiiman added, "Conducting serious business, we would expect also from the port adequate answers and behavior of a business partner that can be taken seriously. In the transit business the important thing is certainty about the future and as big investments are made in that sphere, no one wants to make them relying on rumors alone."
Port management also announced that it would overhaul its management structure and cut the number of managers.
Though he refused to give names, Tohver said the port hoped the structural changes would save as much as 6 million kroons per year.
Mart Tooming, board chairman of the port, said the new structure and the resulting lay-offs would be decided on in the next few weeks.
Also on July 16, the supervisory board endorsed the construction of another deep-water oil wharf at the cost of 259 million kroons (16.5 million euros).
Tooming said that the new wharf, which is located in territory now used by Pakterminal, could be used by operators other than Pakterminal, including new ones.
The wharf will be 395 meters long and capable of receiving ships on both sides. The depth beside the wharf will be 18 meters.
Construction of the wharf should begin next spring and be completed in the fall of 2006.
An oil wharf suitable for the reception of large tankers and currently used by Eurodek was completed as an extension of the grain wharf this spring.
