TALLINN - Tensions around Eesti Raudtee (Estonian Railway) heated up again over the past week, with a government minister saying the state would consider buying back the rail infrastructure from the privately controlled company, while the CEO has accused the same minister of trying to renationalize the enterprise.
Economy Minister Edgar Savisaar, in answer to a question raised during an Internet discussion, said that the state would consider buying back the company's infrastructure if the price is reasonable. The use of the rail infrastructure is still heavily regulated by the state and has become the source of a major dispute with the private investor.
For that to happen the rail company must bring its activity into line with the railway law and European Union legislation, secure transparency of operations and draw a clear line between infrastructure administration and freight operation activities, the minister said.
"Once the aforementioned transparency has been achieved and the owners of AS Eesti Raudtee want to sell AS Eesti Raudtee 's that is, the rail infrastructure 's to the state at a reasonable price, we'll consider this proposal very seriously," Savisaar said.
The minister was essentially responding to an idea floated by Edward Burkhardt, chairman of the supervisory council of the rail company, who said that the private investors, Baltic Rail Service, did not rule out selling the infrastructure back to the state.
However, in a letter to Prime Minister Andrus Ansip dated June 21, Burkhardt lashed out at Savisaar, saying the minister wanted to reverse one of the region's high profile privatizations.
"Contrary to the public policy of the government you are heading, the minister for economic affairs and communications has clearly expressed his hostile attitude to private investments into [Estonian Railway] and wishes to renationalize the railway," Burkhardt wrote.
"The general aim of your government seems to be crystal clear. It is unique among new member countries of the European Union 's the government is applying a brutal stealthy renationalization tactic in order to take over assets of private investors from the European Union and other countries," the letter continued. "The minister's, the Railway Inspectorate's and the Competition Board's manipulative behavior and misuse of power damages the reputation and position, not just of government institutions, but of the whole Republic of Estonia government."
Burkhardt said that relations between the company and the ministry had deteriorated once Savisaar became minister. The main sticking point, he said, has been the track access charges confirmed by the Railway Inspectorate in April; they have cut the company's profitability and return on investments.
Still, even if the government were to agree to the idea of buying back the infrastructure, at least in theory, then it is unlikely the two sides would ever agree on a price. Estonian Railway recently revalued its infrastructure to 4 billion kroons (255.6 million euros), up from 1.2 billion kroons. The state has demanded that the company have an independent auditor check the appraisal.
Savisaar, a member of the Center Party, has not hid his disappointment with the Estonian Railway privatization, saying it was ill-conceived from an economic standpoint.