TALLINN - The Estonian government decided to begin negotiations on the repurchase of Eesti Raudtee (Estonian Railway) on Sept. 14, signaling a possible breakthrough in negotiations with private shareholders.
The government wants to acquire a majority stake in the company through mutual agreement and has earmarked 2.5 billion kroons (160 million euro) for the deal.
The government, however, is refraining from naming an exact price. "We've got calculations of how much the shares of Estonian Railway could cost, but we don't want to make them public," Economy Minister Edgar Savisaar said. "Specific sums can be talked about after we've reached an agreement."
Previous negotiations on a price earlier this year broke down, with Baltic Rail Services, which holds 66 percent of Estonian Railway, asking some 300 million kroons more than the state was willing to pay.
BRS made an undisclosed offer to the government last week. Savisaar described the offer, made by Suprema, the shareholder's representative, as "considerable."
The total figure for the repurchase could be around 2.5 billion kroons, which is what BRS asked during the first round of negotiations.
Last week, the business weekly Eesti Ekspress reported this sum was earmarked in the supplementary budget for the repurchase, suggesting the government was prepared to meet private shareholders' demands.
"If the negotiations bring a result, means need to be found in the supplementary budget to repurchase Estonian Railway," Prime Minister Andrus Ansip said at a news conference this week.
Earlier the government authorized Economy Ministry to "acquire all shares of the supplementary budget, in which funds will be set aside for compensating the termination of the agreement on the privatization of Estonian Railway majority shares to Baltic Rail Services."
Savisaar said the ministry was currently discussing this issue together with the Ministry of Finance and that tentative results were due to be discussed one month from now.
If the proposed plan goes through, the Estonian government will regain control of the railway company before the end of the year.