State holds fast, signs ferry agreement it wanted

  • 2004-09-29
  • By TBT staff
TALLINN - Saaremaa Laevakompanii (Saaremaa Shipping Com-pany) and the Economic Affairs Ministry signed on Sept. 28 a long-awaited agreement that will provide for the continuation of ferry traffic between the mainland and the country's western islands, a hot-button issue that had led to the resignation of a minister.

"We have reached compromise on all the principal issues," Minister of Economic Affairs and Communications Andrus Ansip told reporters on Sept. 27 shortly after his meeting with Saaremaa Shipping Company's head Vjatseslav Leedo. "The contract is mostly the same compared to the previous one. We proceeded from the need to carry on [with the ferry connection] on the same conditions and with the same frequency."

Under the new agreement, SLK will continue to ply on routes between the mainland and the islands of Saaremaa and Hiiumaa 's using the current timetable and ticket prices 's after the contract ends on Oct. 1.

But there were, however, fresh additions to the new agreement.

"One of the main novelties is the reimbursement of possible extra expenses that may come from the increased fuel excise tax, given that the law [on fuel excise tax increase] will be approved. That may amount to extra 1.5 million kroons (95,800 euros) of state support per year," said Ansip.

What's more, the new contract will be for two years only.

"It is allowed by the law on public transport to sign two-year contracts without a public tender," the minister explained. "Saaremaa Shipping previously wanted a longer contract term, however, I believe that having a two-year contract is more favorable for Saaremaa Shipping than having no contract at all."

After the two-year period a new tender will be held and the winner contracted for 10 years, the minister added. "If the bridge between Saaremaa and the mainland will be ready by then, the state apparently will not need the ferry services in the present amount," said Ansip.

Leedo expressed satisfaction with the agreement.

"We have settled all the controversial matters. The contract satisfies us completely. I believe everyone will be able to get to and from Saaremaa and Hiiumaa anytime," he said.

The prices, he said, were set in the new contract. "Unless unexpected major expenses appear, I do not see any reason for the ticket price increase. I do not see such expenses now," said Leedo.

Regarding the costs pursuant to the contract, Economic Affairs Ministry Chancellor Marika Priske told the Baltic News Service, "We agreed that the sum of the subsidy would remain at the earlier level, the basic sum of the subsidy being 75 million kroons. Besides, the creation of a joint venture will not serve as a basis for the continuation of the contract."

Former Economic Affairs Minister Meelis Atonen, who resigned two weeks due to discord on the issue, said that the agreement was beneficial to the state.

"Considering the existing terms, I think that the agreement will be beneficial both to the state and Saaremaa Shipping," Atonen said, adding that in substance SLK had accepted the same terms offered by the ministry under his term.

"When the state took a clear and united position that was held up by several ministers, it also became clear to the shipping company that making demands under previous conditions was no longer possible," he said. "The significant aspect in reaching this agreement was that the state remained firm in its principles."

This year the state will provide ferry traffic with about 90 million kroons in subsidies, about 15 million kroons less than SLK initially demanded.

SLK, which belongs to local investors, has operated on the routes between the islands and the mainland for 10 years. Considering the company's long-term experience and infrastructure, officials said that SLK had good opportunities to make a competitive bid independently in two years' time rather than a joint venture with Tallinn Port in the public tender.

The agreement was finalized on Sept. 27 and was to be overviewed by the parties again and signed the next day. A few unsolved issues did remain.

"One subject that was left open is whether the state will compensate bringing the [Saaremaa Shipping Company's] ships into compliance with naval transportation safety requirements. That will be subject to further negotiations," said Ansip.