Estonian Railway sees profits on track

  • 2007-10-24
  • Staff and wire reports

TALLINN - State-owned railway Eesti Raudtee (Estonian Railway) says in an internal business plan memorandumit that it expects to earn a net profit of 204.4 million euros over the next 10 years , meaning that it would recoup, in less than a decade, the 150.1 million euros the government paid to renationalize this January.
The report, obtained by the Estonian Eesti Paevaleht daily, shows Eesti Raudtee planning on income growth through infrastructure fees for cargo and passenger transport, implementation of new freight categories, and cost savings through increased operating efficiencies.

 At present the volume of rail shipments has dropped to 60 percent of what it was prior to Russian sanctions, put in place in response to the Estonian government's late April decision to remove a Soviet-era bronze statue from the center of the capital Tallinn.
Expecting a slight increase in freight flows in the near term, Eesti Raudtee nevertheless forecasts that over the longer outlook freight turnover is expected to decline due to the development of Russia's own port facilities.
The rail company sees the shipment volume shrinking from 44 million tons in 2006 to 27.6 million tons by 2017. Transport of goods has so far consisted mainly of oil products, which last year accounted for 58 percent of all the freight carried on Eesti Raudtee's rails. According to the forecast, this share will fall to 39 percent by 2017.

Eesti Raudtee sees part of the solution in Russian imports, growing at an annual rate of 40 percent, and more so in the growth of Chinese container exports to Russia. In addition, there is growing potential to handle the flow of new cars going to the markets of Estonia's closest neighbors Latvia, Lithuania and Russia.