Estonian Railway not to make radical changes

  • 2007-03-14
  • By TBT staff
TALLINN - Eesti Raudtee (Estonian Railway) announced last week that profits fell 28 percent last year and that a new, post-nationalization business plan did not entail a radical departure from the company's previous strategy put together by private owners.

Estonian Railway, which was renationalized in the beginning of this year, will not finance the Koidula border checkpoint, nor will it alter investment in infrastructure or build a bypass around Tallinn for hazardous cargo, the Arileht paper reported last week.
Arvo Smiltins, director of infrastructure, told the paper that despite complaints of previous management's lack of investment into rails and other infrastructure the company did not intend to boost funding in this sphere.
Likewise, the company would continue to use the U.S.-made locomotives that the company's previous American managers installed, since they have a higher capacity and lower maintenance costs.

However, the two aspects of Estonian Railway's operations that the state would likely change concern increasing the frequency of passenger trains and separating the transport company from the infrastructure, the paper wrote.
As far as the Koidula border point on the Tapa-Pskov line, previously the company had hoped to attract EU funds to the project, but given the slow pace of paperwork the government last month decided to invest nearly 1 billion kroons (64 million euros) in the project.

The border point project, which is due to be completed in 2010, will include buildings for border guards, customs officials and veterinary services.
In terms of financials, the company announced last week that it posted earnings of 249.3 million kroons last year, down 28.4 percent year-on-year.

The government approved the report 's which it did not do in previous years since the private owners/managers had insisted on a re-evaluation of the railway's fixed assets 's but failed to reach an agreement on dividends. Outgoing Economy Minister Minister Edgar Savisaar wants to forego dividends, while Finance Minister Aivar Soerd wants to boost the state's coffers.
After the re-nationalization in January, former owner and CEO Edmund Burkhardt said that state ownership of Estonian Railway would not solve the company's problems and that low tariffs for rail use would continue to prevent the firm from making necessary infrastructure improvements.

Upon taking over the rail company, the Economy Ministry said it would not raise rail usage fees during 2007.
The company also announced that freight handling in February amounted to 4 million tons, up 27 percent year-on-year.