TALLINN - Minister of Economic Affairs and Communications Edgar Savisaar has signed an agreement with Baltic Rail Services on the termination of the Eesti Raudtee (Estonian Railway) privatization contract, with a majority of the company to be repurchased by its American-based owner Baltic Rail Services.
Parliament is scheduled to consider the controversial re-nationalization of the railway on Nov. 22.
Under the current bill, the state will finance the deal with resources from the 2007 budget.
"The repurchase of Estonian Railway shares will be a cash-for-stocks transaction, which will be financed with assets of the treasury," chairman of Parliament's economics committee, Mart Opmann, told the Baltic News Service.
The repurchase will not be financed with money from this year's supplementary budget, as had been planned earlier.
The bill was in the middle of its first reading by Parliament as The Baltic Times went to press.
A legal analysis released by Parliament's legal department on Nov. 21 has questioned the constitutionality of the legislation.
The analysis claims that Parliament is acting on the basis of a Constitutional article, which says that Parliament must decide on government proposals when borrowing from or assuming financial obligations by the state.
"In this case we have neither," the head of Parliament's legal department, Marek Sepp, said in the conclusions of the legal analysis.
If the bill isn't backed in the final vote, legal confusion may arise, Sepp explained.
"It has to be clear from the activity of Parliament whether there is will to acquire a majority of Estonian Railway's shares no matter what, or if there is a wish to acquire the shares only if the amount approved by the government is enough," he said.
Opposition parties Pro Patria Union and Res Publica proposed on Nov. 20 to have the bill removed from Parliament's agenda this week. However, since the plan had the backing of deputies from the Center Party, the draft was left on the agenda.
The government originally approved the agreement to repurchase the privately-held 66 percent of shares during an extraordinary meeting of Parliament on Nov. 10.
The repurchase of the railway will cost the government 2.4 billion kroons (150.2 million euros) and will pay off in 10-15 years, according to the Minister of Economy Edgar Savisaar.
"Today's step will justify itself. I believe the acquisition of the railway will pay off in 10-15 years," Edgar Savisaar told reporters on Nov. 17.
