Cabinet rejects Atonen's ferry proposal

  • 2004-09-09
  • By TBT staff
TALLINN - The fate of Economy Minister Meelis Atonen hung in the balance this week after the government failed to back his plan for the island ferry lines on Sept. 2. Instead of backing Atonen's proposal to force Saaremaa Laevakompanii (Saaremaa Shipping) to continue servicing ferry routes to the country's western islands, the government instead proposed to set up a joint venture between the shipping company and the state-owned Tallinn Port.

"My proposal that SLK must continue operating the ferry lines in accordance with provisions of the competition law did not find support," Atonen said.
According to the minister, whether or not he would maintain his position would depend on the shipping company's conditions for continuing ferry traffic. "If the terms for setting up a joint venture are the same as discussed before, then I won't stay on as minister," he said.
Under existing accords, the joint venture would require 105 million kroons (6.7 million euros) in annual subsidies from the state budget compared with the present 90 million kroons.
Atonen, a member of the People's Union, had been hoping to develop a plan for the ferry routes that would have nullified the need for state subsidies, though no such plan materialized.
Pursuant to the joint venture business plan, Tallinn Port would invest 200 million kroons in the new company's stock capital, for which the venture would acquire four of Saaremaa Shipping's newer vessels. The rest of SLK's fleet and assets would become property of the company, as a non-monetary contribution also in the sum of 200 million kroons.
The state, through subsidies, would guarantee partners in the joint venture a profitability ratio of 10 percent, or 20 million kroons, per year.
According to Atonen, a joint venture on these terms would damage the state's interests.
Still, others in the Economy and Communications Ministry saw the joint venture as the only way to ensure uninterrupted ferry traffic to the large western islands after Oct. 1, when the current 10-year agreement with Saaremaa Shipping expires.
"A joint venture would be an alternative," the ministry's chancellor, Marika Priske, said after talks with SLK on Aug. 31. "There is no such thing that is good or bad in itself, it's all about terms and conditions."
Priske also hinted that there could be a role in the port negotiations, which Atonen had accused of concluding an agreement harmful to the state.
Saaremaa Shipping and Tallinn Port have been holding negotiations about a joint venture for three months, yet no concrete agreement has emerged. Tallinn Port CEO Mart Tooming, who said he was satisfied with the negotiations, recently claimed that any such deal would normally require up to two years to carry out.