bnn.lv Latviski   bnn-news.com English   bnn-news.ru По-русски
Monday 22.01.2018 | Name days: Austris
LatviaLatvia

Bremze: does Latvia need railway as a mode of transport?

FaceBook
Twitter
Draugiem
print
(No Ratings Yet)

Baltic news, News from Latvia, BNN.LV, BNN-NEWS.COM, BNN-NEWS.RU«I have always agreed with the medieval belief that it is not possible to escape from taxes and the plague. This is why Finance Ministry’s tax reform or ‘game rules’ should be accepted. It is not worth questioning. Instead, we should search for ways to work in the business environment more efficiently,» said Baltic Express Chairman Maris Bremze in a conversation with BNN about decisions made in the transit industry.

LatRailNet’s decisions to raise railway infrastructure costs

Industry expert Bremze notes that one of the most topical problems in the industry is LatRailNet’s decision to raise the cost of using railway infrastructure by 7% in 2018.

«This decision is proof than our country’s railway system is not friends with the term ‘cost effectiveness’. That’s the problem. The country’s railway system has become three times larger in the past decade. This is because the fixed assets volume has tripled, whereas supply volumes, the number of workers and the amount of work performed using Latvia’s railway system have not changed much. With that, it can be safely said that transit volumes have declined,» says Bremze.

He explains that to balance railway system’s finances, the only solution proposed by infrastructure manager and LatRailNet is raising prices.

He believes one of the causes for the established situation lies in history – the investment decisions made in the recent past. «As a result of those decisions, Latvia’s railway system has become much larger, and the mass of fixed assets has become enormous. In addition, it is also necessary to keep all assets in working condition. However, they are also not used to their full capacity. Cargo volumes transported using Latvia’s railway system are small in comparison with its processing power,» Bremze adds.

«Generally speaking, our country’s railway infrastructure is in pretty good shape. However, at the moment, it is being used to no more than 25-30% of its capacity. 70% of the railway system’s network remains idle,» industry expert says.

As for the reasons why the country’s railway system is not being used, Bremze mentioned another problem: «You see, fixed assets of the railway system are owned by the Latvian state, which has formed specific commercial associations to manage it all and provide services. Most work under supervision by LDz. Passenger transport services, on the other hand, are provided by Pasažieru vilciens, which separated from LDz some time ago. Other than that, it is state-run monopoly that is unable to offer competitive products to passengers and cargo owners. Because of that, the railway stands mostly idle.»

Does Latvia even need a railway system as a form of transportation?

Bremze voiced concerns over criteria as to why Latvia needs a railway system. He said: «To maintain and build railway lines, traffic lights, stations, as well as to electrify the entire system to carry passengers and cargoes. I think the answer should be: to carry passengers and cargoes. If passengers do not want to travel by train, they look for alternatives. The same applies to cargo owners. This is where the big question appears – who does need the railway as a form of transportation if there are no buyers for railway transport services?» the expert rhetorically asks.

In an attempt to explain when impedes railway popularity, Bremze mentions: «One of the reasons is that transports are currently organized by state-owned businessmen, even though most of the EU railway systems have been open to be used by businessmen for some time now. Basically any businessman can organize transports and compete with others. And because of that, attractive services appear for passengers and cargo owners.»

The expert adds that formally Latvia’s legislation uses EU regulations in relation to liberalization of the railway system and free competition. However, as it is often the case, it is one thing to approve laws and a completely different thing to realize everything in real life. «Latvia’s railway system, unfortunately, is not open for free competition and that our country’s railway transport system remains different from other EU member states, which had performed important political decision in the ‘90s to open up their systems for competition,» Bremze says.

He continues: «Unfortunately, state-owned companies still dominate the transport sector. I believe no one would agree that, considering the current state of the economy, the state is the best businessman capable of making attractive offers.»

The expert also mentioned certain risks: «If state-owned companies are unable to create an attractive railway product, it would be a good idea to let private businessmen have a go at it. Otherwise all maintenance costs will inevitably crash on the shoulders of taxpayers.»

He says it is not the state of Latvia’s economy that should be blamed for why the country’s railway system keeps stagnating, but rather political unwillingness to open up the system for competition.

He mentions an example: «Imagine a situation in which Riga would have only one restaurant network owned by the same people. The situation with Latvia’s railway system is currently exactly that. There is one state-owned service provider. There is a legal way to form another 100 railway carriers, but no real way to do that because there are so many obstacles and opposition to any private initiatives in the industry.»

The fact that Baltic Express and Baltic Transit Service appear in railway cargo statistics does not mean these carriers are free to present their offers on the market, Bremze notes. «In reality, both carriers depend heavily on LDz Concern. State-owned businessmen continue believing that they alone have the freedom to offer services on the market using Latvia’s railway transport system. That’s the problem.»

How to resolve the problems present in the transit industry?

Bremze says: «First of all, we should discuss the fact that there is no free competition on the market. This goes against Latvian and European legislation. Secondly, we should discuss cost-efficiency in the transport system.»

Transport costs continue growing. «We know that infrastructure costs will grow from EUR 10.35 to EUR 11.08 in 2018. This means the self-cost per ton of cargo will grow by 20 to 30 cents depending on length of the route and type of train. To make it easier to understand, cargo owners will have to pay 12 to 15 million euros more for using Latvia’s railway network a year. Will they want to do it? Perhaps they will search for alternative offers.»

«Looking at the general picture, we have ended up in a situation when we function without profitability reserves. I think revenue we receive from those services is not enough to restore our assets, even the old trains we use for cargo transports. Realistically speaking, we are below our self-cost,» says Baltic Express chairman.

Competition with other countries

When asked if this decision – increasing infrastructure cost – may have an effect on competition with other countries, Bremze says: «The cost of carrying a single ton through Latvia’s corridor is important to us. If it grows, the self-cost will increase as well. It is a major risk for low-cost category cargoes.»

Ref: 225.109.109.2595


Leave a reply

  1. Riga says:

    There is absolutely no focus on passengers and the wants of passengers: a quality, timely and comfortable journey.

    How old is the railway stock? How utilised is it? Does it offer a competitive journey experience? How far is Cesis from Riga? Do we have a 30 minute connection? Is Jelgava 15 minutes away? after the 07:56 to Zemitani, when is the next service? And yet, it is proposed to build a nigh on 97m Euro tramway in the same area as a heavy rail is already laid. Can you make this up?

    How do the SM and LDZ feel about connectivity? The refrain is often: Not enough people. And yet, how many live within an 80km circle of Riga – potentially a 30 minute journey time? Over a million?

    Now cast your eyes over the track – and its utilization – or not. Massive amounts of pointwork – which all needs power control, heating, signalling and maintenance.

    The network does not need cutting however, it does need infrastructure pruning and rationalisation with a realistic view as to what about of freight is going to be carried in the future, the value of that transit against infrastructure cost and a focus on improving connectivity of passengers.

    Thumb up 0 Thumb down 0

Latvenergo: Latvia is the largest energy exporter in Baltic States

Latvia continues exporting electrical energy produced in the country – as of Monday, 22 January, it was 832 MW. Especially intensive energy production is recorded for Daugava’s hydro-electric power plants and Riga’s CHP plants. The largest import volume is registered for Lithuania, to which the amount of exported energy equals the amount consumed in Latvia, Latvenergo explains.

LALRG secretary general: we have to reduce gap in quality of life for EU citizens

Ever since Latvia joined the European Union, its population has declined 14%. The most significant decline was caused by the departure of residents of working age to other EU member states. Because of that, the population in eastern regions of Latvia has declined 23%.

Czechs up for close race in this week's presidential run-off

As the Czech Republic nears the second round of its presidential election this weekend, sociologists estimate that the pro-Western academic Jiří Drahoš enjoys a somewhat larger support than the incumbent Miloš Zeman, who easily won the first round.

Producer price level in Latvia’s industry up 3.1%

Compared to December 2016, the level of producer prices in Latvian industry rose by 3.1 % in December 2017. Prices of products sold on the domestic market rose by 3.0 %, while prices of exported products went up by 3.3 %. Prices of products exported to euro area countries grew by 3.8 %, whereas prices of products exported to non-euro area countries rose by 2.9 %.

MEP: an even greater UGF dominance would slow down Latvia’s development

If the Union of Greens and Farmers (UGF) gains an even greater presence in the upcoming Saeima elections, Latvia’s continued development would suffer, said member of the European Parliament Artis Pabriks in an interview to 900 seconds programme of LNT.

Tax reform challenge in January: labour tax recalculation

2018 commenced for Latvia with a historical tax reform and conceptual changes, significantly affecting everyday work performed by businessmen, employers and accountants. One of the changes financial specialists have to remember when calculating wages for January is the one for personal income tax, which also includes changes for state social insurance fees and solidarity tax, BNN was told by accounting experts.

Total tax debts in Latvia reach 1.217 billion euros at beginning of 2018

At the beginning of the year, total tax debts in Latvia, including existing debts, halted debts and debts with extended repayment debts, reached EUR 1.217 billion, which is 3% less when compared with the previous month, as reported by the State Revenue Service.

Estonia emphasises animal welfare as demand for animal food products grows

Although the demand for food products from animals is increasing, attention should be paid both animal welfare and sustainability in agriculture, Estonia's Minister for Rural Affairs Tarmo Tamm has stated.

Latvia hopes to recover its status as a country free of swine fever

There is hope that Latvia may yet recover its status of a country free of swine fever, says Food and Veterinary Service’s (FVS) Animal Infections Monitoring Department lead expert Mārtiņš Seržants.

Estonia prepares to inform population of actions in case of emergency or war

Estonia is preparing a brochure on how its population should act in case of major crisis or war.

De Facto: international lawsuit against Latvia is associated with infamous Winergy case

Norvik Bank’s lawsuit against Latvian state in the international court of arbitration in Washington is associated with Winergy wind park business, as reported by De Facto programme of LTV. The bank has yet to announce the amount of money it wishes to enforce from the state

German Social Democrats vote to U-turn on coalition talks with Merkel's conservatives

In Germany, where four months after its federal parliamentary elections there is still no government, the Social Democrats have voted to enter coalition talks with the conservatives led by German Chancellor Angela Merkel.

Weather in Latvia to become warmer this week; thaw to settle in

Weather in Latvia will be dictated by an anticyclone at the beginning of the week. Precipitation is only expected in some areas, mostly in the north. The sky will be cloudy for the most part. Still some sun is expected every now and then, as reported by State Environment, Geology and Meteorology Centre.

Turkey crosses into Syria to attack Kurdish militia

Turkey's ground forces have entered the territory of neighbouring Syria strengthening Ankara's offensive to push Kurdish militia, considered to be terrorists by Turkey, away from the border.

Week in Lithuania. Fake news on Lithuanian Defence Minister planted on news portal

The Tv3. lt news website was hacked on Thursday, January 18 - a fake news story about Lithuanian Defence Minister Raimundas Karoblis was posted claiming that Karoblis allegedly harassed Ridas Jasiulionis, a journalist at the Žinių Radijas radio station, and admitted being gay.

BNN summary of the week: final report on Oligarchs case and ordered attacks on e-health

BNN offers a summary of this week’s topical news in a variety of categories: Change; Fight; Attack; Growth; Decline; Opinion; and Study.

Economist: the most important reform has to happen in people’s heads

«Of all the clever things taught to us in school about psychology, one thing that has stuck with me over the years is the idea of internal/external control point. There are people who believe they make their own fate. There are also people who believe our fate depends on external powers. I suspect people in Latvia explain successes and failures with external factors much more than people in Switzerland or any other country that has enjoyed its freedom longer than Latvia,» comments Luminor Bank’s economist Pēteris Strautiņš.

Minister promises bigger wages for working people and support for country’s industry

«Latvian Economy Ministry’s priorities for 2018 include increasing wages for working people and providing support to the country’s industry. For Latvia’s centenary year, every resident should have the right to experience the increase of the personal and state welfare,» promises Economy Minister Arvils Ašeradens.

Latvenergo: electricity price has declined 30% in the past three years

Average electricity price in Latvia has declined in recent years. The average price of electricity has declined by 30% at Nord Pool exchange between 2014 and 2017, allowing end user costs to decline, says Latvenergo.

Alcohol sellers in Estonia to be checked by little «police»

To find shop assistants illegally selling alcohol or tobacco to minors, Estonian police introduces the method of sending minors as police aides to retail shops to try to purchase the products banned to them.

EY study: cyber security has become a priority to banks this year

Over the course of the year, priorities of banks around the world have switched from reputation and risk management to data security matters, as concluded in the latest EY Global Banking Outlook 2018.

Political association: UGF and Harmony are covering up state capture

«Parliamentary investigation of Oligarchs case has shown what is what in the Saeima of the Republic of Latvia. Green farmers are in full harmony, covering up Aivars Lembergs and the fact of state capture. They and Inguna Sudraba have made the parliamentary investigation into a farce. Unfortunately, the power in those people’s hands is no farce – rather misfortune for all of Latvia. I hope citizens will take all that into account when they go voting,» says leader of Kustība Par! Daniels Pavļuts.

Tallinn-Helsinki tunnel plan lacks ambition, says «Angry Birds» game maker

While Finland and Estonia work on plans of an under-sea tunnel from Tallinn to Helsinki, the construction of which could start in the 2030s, a Finnish businessman, previously involved in development of Angy Birds video game, has presented plans to finish the massive construction project in 2024 already.

Experts: healthcare financing law will deny healthcare to the least protected

In a discussion regarding healthcare, experts said that Latvian President Raimonds Vējoņis’ proposed Healthcare Financing Law is economically unjustified and ineffective. The document lacks principles of a socially responsible state, because healthcare is becoming less accessible, which will likely worsen public health indexes, says Kustība Par! political party.

Branded «aggressor state», Russia says Ukraine buries Minsk peace agreements

As the Donbas War continues, the parliament of Ukraine has passed the so-called Donbas reintegration bill after three days of debates defining territories controlled by pro-Russian separatists in the east of the country as temporarily occupied by Russia.

Newest comments

Would you be ready to boycott something in your life?

View Results

Loading ... Loading ...

Polls Archive



Category feed: Feed: