RIGA - Transport Minister Ainars Slesers has announced that he wants to split the state-owned Latvijas Dzelzcels (Latvian Railway) into three independent companies and that he has ordered company management to draft a restructuring plan within a month.
Speaking to journalists on Feb. 1., Slesers said that three independent companies were envisioned after the split-up 's one will handle infrastructure, the other cargo transportation, and the third passenger transportation. Each company would have its core function and would remain in state hands, the minister said.
Slesers explained that this was the best solution to avoid the continuing cross-subsidization of passenger transportation at the expense of cargo. It would also sever infrastructure maintenance, as required by European Union directives, as well as raise subsidies from state and local authorities, investment from EU funds and credit resources for the development of passenger traffic.
He said that the government would consider the restructuring plan in April and that restructuring itself could be completed before the end of the year.
Andris Zorgevics, Latvian Railway's board chairman, saluted the decision, saying he had been waiting for such a moment when the railway problem was tackled "professionally and with state responsibility" since passenger transportation had remained "the only throwback from the Bolshevik economy."
"It is hard to plan things if there is no clarity in business," he said. With the split, he predicted that the rail business had better perspective and passenger handling would become more efficient.
Slesers did not rule out that the cargo and infrastructure companies could retain the Latvijas Dzelzcels brand.
The transport minister, who took over the ministry in March last year, is a member of the Latvia's First Party, is largely credited with attracting discount airlines to Riga International Airport last year and thereby changing the face of Baltic air travel.
All the three companies are expected to be headed by the current management of the railway company.
Latvian Railway posted sales of 131 million lats (186.4 million euros) in 2003, up 16.9 percent on 2002, with earnings of 5.6 million lats, down 33 percent.
Last year the company carried 51 million tons of cargo, up 5.6 percent on 2003.
