TALLINN - The Estonian government has in recent days expressed concern about rumors of a possible sale of the majority stake in Estonian Railways, the country's rail system, to a major Russian operator company, the Postimees daily reported.
Edward Burkhardt, chief executive officer of Baltic Railway System, owner of 66 percent of Estonian Railways, denied the rumors, which alleged that he and other shareholders of Baltic Railway System were in talks with Russia's Severstal on a possible deal.
Burkhardt said that neither Baltic Railway System was in talks with the Severstal group nor the Russian company had offered to buy an interest in Estonian Railways.
Baltic Rail Service purchased its stake in the Estonian railroad system through a privatization tender in 2001. The remaining 34 percent remains in state hands.
Rumors of a possible sale have been circulating for months, but the first person to go on record was Minister of Economic Affairs and Communications Meelis Atonen, who told the Postimees that he had information about negotiations.
"If the talks are actually being held, we're dealing with a very regrettable behavior," he said.
The minister added that theoretically there was a possibility of selling part of the shares to Russians, but the state would have privilege purchase rights.
"As far as infrastructure is concerned, the state maintains its interest and would seriously consider buying the shares back. In the EU private railway infrastructure ownership is not recognized," said Atonen.
Estonian Railways recently sold five locomotives to Severstaltrans, a Severstal group company, as a part of its rolling stock renewal. Talks on the sale of 10 more engines to the same company are underway.
Severstal is Russia's largest producer of ferrous metals, and Severstaltrans is one of the largest private freight companies in Russia, handling about 50 million tons of goods annually.
In October 2003 the transportation volume of Estonian Railways dropped by 600,000 tons to 3.1 million tons, mostly because of fewer oil and wheat loads.
In his editorial published in the Postimees Nov. 10, Burkhardt called for a more sustainable transit policy in Estonia. The U.S. billionaire criticized the government's failing to keep the ports ice-free last winter, a situation that caused transit jams on the railway and losses to rail operators.
Burkhardt also claimed the law on railway being prepared in the Parliament would work against the interests of Estonia.