Latvian ports make up for oil decline

Despite the dramatic decline in oil deliveries to Ventspils, which has led some to speculate on the possible bankruptcy of the Ventspils free port, Latvia's ports are making impressive strides in making up the difference by handling more bulk cargoes.

The port of Liepaja in western Latvia, the third largest in the country, in the 11 months of this year handled a total of 3.91 million tons of cargo, a 31.3 percent rise year-on-year. Ferrous metals and timber were leading cargoes, at 892,000 tons and 701,000 tons, respectively. The increase in ferrous metals alone amounted to 63.9 percent, while the rise in timber was 7.7 percent.

More oil products have also been flowing to Liepaja. Liquid cargoes reloaded at the port were up 52 percent year-on-year to 814,200 tons (including 674,000 tons of oil products) from January to November, and now make up 21 percent of total turnover at the port.

Liepaja's port administrator Aivars Boja said the cargo handling had exceeded planned targets of 3.5 million tons for the year, and that next year they hoped to raise the cargo handling next year by another 5 percent to 4.2 million tons.

Last year annual cargo turnover at Liepaja port was 3.26 million lats (5.4 million euros), up 10 percent from 2000.

"This is a result of the joint active work by Liepaja stevedore companies and the port administration. This year we have successfully attracted to Liepaja port also those small cargoes that previously were not interesting for Ventspils port," Boja told the Baltic News Service.

As a result of these successes, Latvia has been able to counterbalance the negative influence of the fall in oil deliveries. The Bank of Latvia reported that overall cargo turnover has declined by 6.5 percent up through the end of October.

Handling volume at Latvia's three largest ports - Ventspils, Riga, and Liepaja - fell 9.3 percent to 47 million tons over the 11 months of 2002.

Meanwhile, oil deliveries continue to decline at Ventspils Nafta, forcing Mayor Aivars Lembergs to respond to criticism.

If the trend continues through December, the city budget should only fall by 2 percent, or 270,000 lats (447,000 euros) because of lower oil throughput, said Lembergs.

The city of Ventspils has made some 5 million lats in investments, so the projected decline in revenues "is insignificant," said the mayor, saying the loss amounts to the equivalent of 300 meters of reconstructed street.

"Rumors that Ventspils will now go bankrupt are not true," said Lembergs, emphasizing that Ventspils Nafta's low turnover has a very small effect on the municipal budget because corporate income taxes go to the federal, and not to the local, budget.

"The local authority will only feel that company employees get lower additional pay," he said.

Lembergs added that the municipal authority at present has "free money" left over from previous years to the tune of 6 million lats.

The Ventspils city budget amounts to some 20 million lats.

Handling volumes at the Ventspils Nafta oil terminal have fallen due to operations of the newly built Primorsk terminal in Leningrad Oblast. Analysts have speculated that throughput at Ventspils will increase only after a strategic Russian investor has been invited to participate in the company's operations.