Bribery-accused Estonian businessmen Oleg Osinovkis hopes for long-term state orders and victories at tram procurements in order to save Daugavpils Locomotive Repair Plant from bankruptcy, as the businessman told De Facto programme.
This week, the management of the company requested state guarantee to cover its bank debt. A sharp decline of orders in Latvia and Russia could leave more than 500 people without jobs.
DLRR celebrated its 150th birthday in summer. Three months ago, Economy Minister Arvils Aseradens called it ‘one of the region’s success stories’. Now this story is on the brink of becoming drama.
«The actual situation is very complicated, even dramatic. I hope we will find a solution with the government,» – said DLRR intermediate owner and council chairman Osinovskis. «Our biggest loss is the loss of locomotives from Russian Railways. This company was a source of work for us in the past. They stopped sending trains for repairs two years ago. And this is because KNAB functions similar to an elephant in a China shop. This is also because of Sanctions and the worsened political situation,» – Osinovskis explained. He also added in his interview to De Facto that one of the reasons behind the lack of orders is the management change in Russian Railways.
Osinovskis and the now former head of Russian Railways Vladimir Yakunin met at Ugis Magonis’ 50th birthday party in Rundale Castle last year. Shortly after, both Yakunin and Magonis lost their posts. It is possible that Osinovskis’ business was impacted as well.
Income from orders in Latvia has been rather stable. Four years ago, income earned in Russia reached EUR 21.2 million (EUR 4.7 million in 2015). Income in Latvia reached EUR 15 million four years ago and one year ago. It is possible that the situation has already worsened. One of the largest procurements in Latvia – modernization of diesel trains – has concluded. But no new victories have been earned in other multi-million procurements.
Osinovskis avoided commenting on reasons behind Magonis’ losing his post in LDz. Osinovskis and Magonis are both accused in a criminal case involving bribery. «We manufacture three thousand different spare parts, including those intended for railway use. We repair machineries others cannot within a thousand kilometer radius. This is why we would receive repair orders from LDz Rolling Stock Service that they could not complete on their own,» – Osinovskis said.
DLRR asks for state guarantee to receive a bank loan of EUR 10 million with a term of 15 years. It is necessary to ensure the company is able to invest in development and creation of new products. «The state does not take its guarantees lightly. This is something everyone should keep in mind. The state can assist with some programme to those who are left socially unprotected. We can discuss some programmes for the employed. But there is no practice in the European Union that would simply provide state guarantees just like that. Such an option is not possible,» – Prime Minister Maris Kucinskis said.
DLRR currently employs 540 people. The number of employees has declined two times. In addition, the most difficult changes were experienced by the company in 2016. «We officially have a three-day work week,» – said chairman of DLRR Aivars Keskula.
Lack of new orders can put at risk the company’s future. On top of that, it is unknown if the company’s employees would even find new jobs if their employer is liquidated. Even now Daugavpils’ unemployment level exceeds the average level in the country. Every tenth resident there is unemployed. The region’s overall unemployment level is 17.4%.
Aside from state guarantees, Osinovskis has another solution: to not have state and municipal companies request ‘prior experience’ in procurements. It is possible that such an idea came up because DLRR has no required experience to win in tram procurements in Riga and Daugavpils. «We have great experience with diesel trains. We want to acquire experience with trams and electrical trains, so that we can enter Europe. Of course, we would only go to countries that do not have their own manufacturers. You can’t go to Czech Republic and sell trams there. But they can come to us, even though we could manufacture trams that are even better than theirs,» – Osinovskis noted.