Muuga port expansion scaled back

  • 2007-08-01
  • From wire reports
TALLINN - The supervisory board of the state-owned Port of Tallinn decided on Thursday to reject both offers submitted in a tender to claim new land and build new quays in the eastern part of the Muuga Port, as the price was excessive.
Work to expand the port and set up new capacities will, however, move forward in stages and on a reduced scale, the port company said. These decisions come within a changing landscape in which the number of passengers so far this year has been smaller than in 2006, with a possible additional reduction in freight volumes that will have an impact on revenues, said the state-owned company's supervisory board chairman, Neinar Seli.

One of the job quotes was a joint offer by Eesti Ehitus and Merko Ehitus priced at 2.75 billion kroons (175.7 million euros), while the second was by a well-known international dredging works company at 3.29 billion kroons.
The port wanted to spend 1.95 billion kroons to reclaim 66 hectares of new territory from the sea and build 1,200 meters of new quayline. Plans are to build terminals for dry bulk cargoes and metals on the site. Phase one will now include dredging of the sea and claiming the new territory, and the start of construction of quays and the dry bulk terminal.

While in the first six months of 2007 the volume of freight handled by the ports of Port of Tallinn was higher than a year ago, the figure for June was 18 percent lower than for June 2006. This is being attributed to the massive street riots involving mostly Russian-speaking youth which broke out in late April after the authorities started preparations to remove a controversial Soviet war monument from the city center, moving it to a military cemetery in Tallinn, and the simultaneous decision to rebury the remains of Soviet soldiers interred at the monument's former site.

The Port of Tallinn may have to cut its profit estimate for the year due to these events, said Seli. The port company earlier had predicted a profit of approximately 400 million kroons for 2007, versus profit of 600 million kroons for the year earlier. Despite the sharp slowdown in traffic, the company expects to make its projected dividend payment of 300 million kroons to the state along with income tax, said Seli.
The port is bracing for the expected impact on operations, but says more immediately that the reduction in freight volumes is going to first hit the businesses whose operations require heavy use of manpower, as these companies will have to begin laying off personnel.

In further repercussions from April's riots, the Port of Tallinn will likely submit a proposal to the ministries of economy and finance advising them not to plan for future dividends coming into the state budget, and to tie money received or disbursed to the company's actual performance, said Seli.