Government, international investors interested in rail stake

  • 2006-02-01
  • From wire reports
TALLINN - A private shareholder in Baltic Rail Services said there were several companies interested in the firm's 66 percent stake in Estonian Railway, while unofficial reports indicate that the government is willing to pay some 2.2 billion kroons (140 million euros) for the stake.
Juri Kao, a representative of Baltic Rail Services, told the Baltic News Service there were several well-known companies interested in acquiring the railway asset. He said officials from six potential bidders had been in Tallinn last week on a fact-finding mission.


"The bidders are reliable - companies known throughout the world. Two more potential buyers are coming soon," said Kao.

He added that there had also been progress in talks over the purchase of shares by the Estonian government in the past few months.

"A protocol of intent has been signed. So we have received approval from the state to go on with the talks. But the protocol of intent does not forbid us from meeting other buyers at the same time," Kao said.

An Economic Affairs Ministry committee was set to later discuss the issue of potentially re-nationalizing Estonian Railway. Members of the ruling coalition have expressed a willingness to buy back the 66 percent stake from private owners, though they said the 3 billion kroons mentioned by BRS officials was too high.

BRS paid 1 billion kroons for the stake in 2000.

The Postimees daily reported last week that negotiations between the state and BRS officials were continuing, but that a deal was likely to take place. Both sides have made considerable concessions, the paper added.

According to unofficial information, BRS lowered its asking price to 2.6 billion kroons, while the government is prepared to pay up to 2.2 billion.

Relations between BRS and the government broke down after the new coalition came to power last year. Center Party chief and Economy Minister Edgar Savisaar has long been an opponent of the rail privatization and appears set on reversing the decision. Meanwhile, BRS shareholders have expressed frustration at what they describe as a complete lack of cooperation on the government's part and said they wanted to dispose of their holding in the company.

Savisaar is claiming that BRS has failed to meet its investment commitments. He told the Postimees this week that the total amount of outstanding obligations pursuant to the privatization agreement is 32 million euros.

He also rejected criticism that the state was being heavyhanded.

"The state has not pinched anyone. The state has been consistent, demanding that Estonian Railway abide by the law and stick to the privatization contract," he said.

Savisaar said there was consensus between politicians concerning the re-nationalization, but he admitted being worried by the mood spread among the public that the railway has to be bought back by all means and without fail.

"Ratcheting up such moods is certainly in the sellers' interest, because it makes it possible to ask a much higher price," Savisaar said.

The minister said the government had also discussed what the state should do with a re-nationalized Estonian Railway. He did not, however, wish to elaborate whether there were plans to split the company into separate infrastructure and transport companies.

"I can only voice my personal opinion 's the state does not have to deal with operating (the railway), but entrusting it to private hands could be discussed," the minister said. "All the rest could operate as a state-owned shareholding company, showing that the state can be a good master here, such as it is in Tallinna Sadam (Port of Tallinn) or Eesti Energia (Estonian Energy)."