RIGA - Rethinking an earlier solution to revamping Latvia's troubled railroad company, Transport Minister Ainars Slesers said last week it would be better to reorganize the state-owned Latvijas Dzelzcels (Latvian Railway) into a concern.
Slesers told a congress of Latvian railroad workers April 29 that creating three independent companies, even if they remained state-owned, posed too many difficulties and that a concern was a more efficient alternative.
"Having reviewed options for railway restructuring, I concluded that [splitting into independent companies] would be very difficult to do, as Latvian Railway has evolved for a very long time" as a single entity, he said.
Previously the minister had proposed creating three independent subsidiaries that would continue to operate under state control and ownership. He said that the move would help avoid cross-subsidizing passenger transportation from cargo transportation revenues and separate infrastructure maintenance from other operations as required by the EU directives, as well as to get state and municipal subsidies, EU funds and loans for development of passenger service.
The idea, however, met resistance among other Cabinet ministers, particularly Economy Minister Krisjanis Karins.
A task force was created to sift over proposals for restructuring Latvian Railway came up with two options 's either split the company into three separate companies (one for passengers, one for cargoes and one for infrastructure maintenance) or to reorganize it into a holding company.
Slesers, a member of Latvia's First Party, said that in a concern the flow of cash and investment would be more transparent.
"Those won't be three separate companies, but a single system," he said.
The minister promised the railway trade union congress that not a single worker would be laid off due to the restructuring of Latvian Railway. On the contrary, the company would need more staff as railway cargo turnover could reach 100 million tons in the next five 's seven years.
The government is still to decide on the Transport Ministry proposals for revamping Latvian Railway.
Last year Latvian Railway handled 51 million tons of cargo, up 5.6 percent year-on-year. The railway company's results in 2004 are not known yet but it closed 2003 with a profit of 5.6 million lats (8.6 million euros) on a turnover of 131 million lats.