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Friday 24.11.2017 | Name days: Velta, Velda

Haze: in ten years, only costs have increased for LDz, not efficiency

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Baltic news, News from Latvia, BNN.LV, BNN-NEWS.COM, BNN-NEWS.RUTen years have passed since LDz was reformed as a concern and reorganized so that it would be able to work on the open market. Transports were separated from infrastructure and officials discussed how the company would function more efficiently on its own in the future, Ventspils Commercial Port’s board member Janis Haze told Delfi.

Today’s reality is that neither the number of employees nor the volume of cargoes has changed. The only thing that has changed is the company’s costs – they have increased, and there are plans to increase them even more, the expert said.

Capacity increases, but results do not

«In 2007, before reorganization, LDz’s base assets formed EUR 300 million. Now the concern’s asset value is EUR 900 million. Let’s not forget that projects of EU structural funds were realized, second parallel railway lines and a modern cargo-sorting station were built in this period of time,» said Haze.

In 2007, LDz’s long-term loans reached EUR 48.6 million. By the end of 2016, the total amount reached EUR 177 million. ‘This means debts have quadrupled,’ said Haze.

The expert also added that the number of LDz employees has not changed in the past ten years. In 2007, LDz had 11,850 employees. Now the concern has 11,782 employees.

Unfortunately, the volume of transported cargoes has no changed much. It can be said that it has declined. 52 million tonnes were transported in 2007. Now the volume of cargoes is 47.8 million tonnes.

«The only thing that has changed considerably is the price,» said Haze.

«While the fee for the use of railway infrastructure was 6.14 EUR/km in 2007, the current price is 10.35 EUR/km. Next year, it is planned to increase the price to 11.08 EUR/km.»

Haze also mentions different statistical indexes to explain how inefficiently LDz functions after reorganization. «Railway efficiency around the world is measured by the number of train kilometers per worker. In Latvia, this coefficient was 1.5 in 2007. Now it is 1.4. For example, this coefficient is 5.1 in Finland, 3.8 in Sweden and 6.7 in Denmark. Railway track length has also declined in the past ten years. While it was 2,567 km in 2007, now it is only 2,217 km. In 2007, a total distance of 17,788 km was covered by rail (16,516 km last year).»

The expert says numbers look even more dramatic when looking further in the past. «In 1985, before restoration of Latvia’s independence, a total of 29,000 km were covered by rail. In 1990, the total distance was 30,000 – twice as much as last year. Let’s not forget that Latvia’s railway infrastructure managed to secure such results without any parallel rail lines.»

Analysing LDz infrastructure projects, Haze concluded that most investments came from EU. This means it was not LDz’s money. It is no surprise, he says, that suppliers, builders and other participants of those projects benefited from them.

«Of course, all that warmed Latvia’s economy, but did it benefit LDz at all? Was that the reason LDz started to earn more? Was that the reason why LDz could afford to reduce its tariff? Did LDz start working more efficiently? Does Latvia’s railway accommodate longer trains, at least as long as trains in Lithuania and Estonia?»

«The general answer to all those questions is no. Now the question – who was the one behind those decisions? Where will it lead Latvia in the end?» the expert said.

He is confident that increasing tariffs will make railway transport services more expensive, forcing cargo owners to look for alternative routes through Russian and Lithuanian ports.


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