RIGA - The board of Latvijas Dzelzcels (Latvian Railway) has approved a proposal to raise cargo tariffs by an average 17.5 percent next year. The company said the new tariffs would be based on type of cargo, transportation distance and direction, as well as the world price of diesel.
Council chairman Guntis Macs said that the decision was final, as it did not need approval from the council. The council will only inform the Transport Ministry, which controls the company, of the decision, Macs said, concluding that raising tariffs was the "competence of the board."
Board chairman Ugis Magonis was unavailable for comment. Previously he had argued that the hike would allow the company to increase employees' salaries. "We have no other alternatives. They [the employees] are going to Ireland to work, but we need them here," he said, adding that higher tariffs were also needed to improve infrastructure and upgrade the rolling stock.
The inflation charge will increase from 1.047 to 1.075 euro per ton, the variable part of the tariffs will grow from 0.32 to 0.472 euro per ton, and excise duties will rise from 0.175 to 0.274 euro per ton. Transit companies will also have to pay 0.173 euro per ton for employees' salaries.
As a result, Latvian Railway's revenues for cargo shipments will grow by nearly 0.5 euro per ton next year.
Last year, Latvian Railway carried 51 million tons of cargo by rail, which is a 5.6 percent increase from 2003. The company's net turnover was 137 million lats (194.9 million euros), up 4.5 percent year-on-year. The company is wholly owned by the state.
The board also approved plans to establish three subsidiaries 's LDz Infrastruktura (LDz Infrastructure), LDz Kravu Parvadajumi (LDz Cargo Shipments) and LDz Ritosa Sastava Serviss (LDz Rolling Stock Service), the company said.
Transport Minister Ainars Slesers came up with the initiative to restructure the company earlier this year as a way to prevent cross-subsidization of passenger transportation and to separate infrastructure maintenance in accordance with EU directives