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Transit association considers halting expensive railway electrification project

nga Antāne/publicity photo.
After the government’s decision to go through with railway electrification, which is one of the most expensive projects in Latvia’s history, President of Baltic Association – Transport and Logistics Inga Antāne considers turning to the Central Finance and Contracting Agency to halt this half a billion euros worth project at least until the government can secure full transparency and provide strategic solutions to halt cargo decline.


«Otherwise this project will be as though using a powerful snow-clearing machine in summer – there will not be any use for it,» the association notes.
 

BATL emphasizes that Latvia is a railway superpower. The country is a leader in Europe in terms of rail length per capita. «To maintain such an infrastructure in Latvia, it is necessary to carry 60 million tonnes of cargoes annually. According to the association’s estimates, Latvia already lacks one-third for this plan’s completion. Losses will only increase in the coming years, considering Russia’s decision to divert its cargoes away from Latvia in favour of its own ports. Experience of companies part of BATL shows that oil and coal cargoes from Russia are coordinated at a mere 5%, whereas the volume of such cargoes was coordinated at 90% at the beginning of the year,» explains the association.
 

For years experts have warned that the situation in the industry is critical and on the brink of a crisis. «Realization of such a project now smells a lot like a waste of resources, and will only increase financial burden for cargo carriers. Unfortunately, the government continues ignoring signals warning of the crisis in the industry and pushing the electrification project at any cost. The only excuse is that the bulk of the funding (EUR 347 million) will come from the EU. The remaining EUR 100 million will be provided by Latvijas dzelzceļš by borrowing the money from a bank,» BATL explains.
 

Antāne emphasizes that she does not understand why this project is being pushed with such dedication knowing that the situation in the transit industry continues getting worse. «The ministry responsible for the project has yet to provide transparency for the project and make it clear who will pay for this project. Will it be the carriers for whom infrastructure fees are set to increase next year? Fees are already the highest among EU member states. This only serves to reduce Latvia’s competitiveness in the region! There are also many technical questions that remain unanswered,» she admits.
 

BATL president invites the responsible ministry and government to start making decisions with equal dedication to increase Latvia’s competitiveness and come up with a strategic vision, which the ministry only started doing once Saeima’s National Economy Committee ordered it.
 

On top of that, the association does not understand Transport Ministry’s argument on the need to go through with the electrification project in order to secure a positive effect on climate change – even though 28% of SEG emissions in Latvia come from transports. According to data from Environment Protection and Regional Development Ministry, 92% of those emissions come from road transports (light and heavy vehicles and buses) and only 7% come from the railway.
 

«Transport Ministry’s and LDz’s act that everything is fine in the transit industry has already become a dangerous factor for Latvia’s national economy. Analysing statistical indexes for the past three years, we can conclude that cargo volumes handled by Latvian ports continue rapidly declining, and there are no expectations that the situation could improve in the near future. To avoid a crisis in the industry, Transport Ministry and the government in total have to act now and make important decisions to improve competition. Otherwise consequences may leave a negative impact on the entire national economy, budget income and residents’ welfare,» said the association.
 

BATL invites officials to take the situation more seriously.
 

An action plan was submitted in September to the prime minister, transport minister, economy minister, finance minister and the council of LDz, asking them to act, because talks with Transport Ministry have reached a dead end.

BNN

06-12-2017
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