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Sunday 11.12.2016 | Name days: Valdis, Voldemārs, Valdemārs
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Transit industry: this is the golden moment to decide the future of Latvia’s national economy

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Baltic news, News from Latvia, BNN.LV, BNN-NEWS.COM, BNN-NEWS.RUAlthough Latvian Association of Ports CEO Karlis Leiskalns praises the work of Riga Freeport, where he works as well, advisor to Latvia’s Foreign Affairs Minister Sandra Sondore and president of Baltic Association – Transit and Logistics Inga Antane emphasize the importance of all three of Latvia’s biggest ports for the growth of Latvia’s national Economy.

In his interview to Krustpunktā programme of Latvijas Radio, Leiskalns emphasized that plans associated with Russia’s policy and its decision to redirect cargoes to its own ports, as well as the effect it may have on Latvia’s national economy, had been known at the end of the 90s. At the same time, however, he presented no proposals to help resolve the lasting problems in Latvia’s transit industry. He did mention multiple times during this interview that the situation at Riga Freeport is fine, and that the 10% decline in transshipped cargoes had been planned in advance.

When asked by journalist Arnis Krauze if the people in charge of Riga Freeport, who had predicted everything so well, had also predicted the major declines in their wages, Leiskalns replied that he is not the one making decisions and he is not interested in them.

A different opinion in regards to the importance of the three largest ports in Latvia and their significance for Latvia’s national economy was expressed by Sandra Sondore, advisor to Latvia’s Foreign Affairs Minister, and Inga Antane, president of Baltic Association – Transit and Logistics.

Antane emphasized that unlike Lithuania and Estonia, there are three large ports in Latvia, and all three of them cannot be ignored. This is because they have a direct influence on all sectors of Latvia’s national economy. She added that it is vital to establish a clear and unified tariff for all three ports to have an effect on Latvia’s competitiveness in the world, not continue mutual competition among those ports in Latvia.

Lithuania and Belarus have successfully achieved growth for their ports. Latvia, on the other hand, has difficulties with coming up with a single development strategy for its ports to enhance Latvia’s attractiveness on a global scale. Instead, Latvian ports merely compete with one another.

«Latvia does not have one port. Major investments have been put into Ventpils and Liepaja ports. Cargo volumes continue to decline. Even if everything is alright in Riga, it does not mean the national economy does not suffer,» – notes Inga Antane.

Sondore also notes that talks about a common strategy are especially important in the time when the 16+1 summit is drawing closer and closer. The summit is not only one of the biggest breakthroughs for Latvia’s economy, but also one of our country’s biggest hopes.

«And now when China and Russia both have to choose about investments in the New Silk Road and where these investments will go, which railway routes will carry cargoes and which transit corridors will be used for cargoes to and from Europe, you have to agree – it is a golden opportunity. The road could end in Klaipeda, Tallinn, Poland or Germany. There will be a big fight for the destination. […] I’m sorry, but everything will be decided by our ability to react to this situation,» – Sondore said.

Antane adds: «This is why an open letter has been written – representatives of the industry – us, the ones who handle cargoes and who should be prepared – are kept in the dark. And it is pathetic».

BNN had previously reported that the current situation in Latvia’s transit industry is dramatic, especially considering that this industry is the second largest in the country and earns the economy a billion euros. Officials claim something is being done, that tariffs are being prepared. But no one has told us that anyone intends to create a single offer for all and provide a more competitive tariff.

«We need a new LDz infrastructure development plan, but there is no document that would help us understand what is important and how we should develop further. We need a single offer to be compiled before the Chinese summit, which will be taking place from 4th to 7th November. During this summit, Latvia will be visited by the prime minister of the world’s largest economy. It is now the second half of September. I have yet to see any offers be put up for review. It is impossible to come up with such an offer without the involvement of businessmen and stevedores. Even if there is such an offer, we have yet to see and discuss it. November is the last chance we will have to present it,» – Antane said in an interview to Rīta panorama programme.

«It is hard for me to comment why we haven’t sat down with officials behind one table – I have personally petitioned to provide assistance on behalf of the association to write, study and put together a road from A to B. Up until now officials have likely considered it their responsibility. Nevertheless, their homework has a deadline, and it was yesterday. If the offer does not include a price list for stevedores, it means it is not the final offer, and we have no way of telling the Chinese how much their services will cost in Ventspils and Scandinavia. No one has asked us this so far and it is because of that there are serious concerns,» – added Antane.

According to her, «one of the most serious cases and the harshest lesson for everyone and Latvia’s economy is the Kālija parks case. It is the large specialized terminal at Ventspils Freeport. It currently transships very little even though its capacity is 7.5 million tons a year. Because of destructive political processes and hesitation with decision-making processes, we are unable to prepare appropriate offers for cargo owners. Kālija parks lost cargoes in 1999, when it was actions of officials that resulted in our inability to offer Belarusians, who wanted to send cargoes through Kālija parks, any flexible and competitive tariffs. Those cargoes are now transshipped through Klaipeda, which had reacted appropriately and offered good options for Belarusians, who built a terminal there. Now Klaipeda handles ten million tons of mineral fertilizers a year. This means Latvia has lost hundreds of million euros that could have otherwise gone through Kālija parks. Even in relation to metallurgy cargoes Lithuania had reacted well and had offered a specific cargo owner lower tariffs. This resulted in metallurgy cargoes leaving Latvia in 2004. The problem at the time was that we failed to react to market demand with an appropriate tariff offer. This problem persists to this day. I believe there are multiple reasons for that, including lack of competence, hesitation with decision-making processes and continuing destructive processes. Kālija parks’ case clearly shows what we have come to and what we can expect in the future if we fail to react to change in demand again. 1999 marked a decrease in Belarusian cargoes transshipped through Kālija parks. This is something we cannot recover. We have lost Belarusian cargoes for good.»

«Cargo declines are noticed not only in Ventspils Freeport, but also at Riga Freeport and LDz. It is a complex problem that is characteristic for the whole of Latvia. The problem is that we have not been able to sit down, discuss the situation, set up deadlines for our homework and prepare for November, when Latvia will be visited by the prime minister of the world’s largest economy,» – Antane concluded.

«Attempts by [Chairman of Ventspils Freeport and Ventspils City Council] Aivars Lembergs and the management of Ventspils Freeport to terminate the land lease contract with Kālija parks and take over the terminal is nothing more than an illegal attempt to expropriate the company’s property. Public resources are being exploited to serve Lembergs’ private interests. Lembergs is one of the true beneficiaries from 50% of Kālija parks,» – the company explains.

According to Kālija parks, the rest of the 50% of shareholders are foreign investors. «The decision of Ventspils Freeport to claim Kālija parks’ assets is an attack on foreign investments, which are protected by international law. The Republic of Latvia is responsible for this, because representatives of Ventspils municipality and the ministry make up the majority of Ventspils Freeport’s management board,» – Kālija parks states.

Representatives of the company ask Prime Minister Maris Kucinskis to put an end to this unprecedented property expropriation. If these illegal attempts are not stopped, shareholders of Kālija parks are prepared to take legal action against the state of Latvia.

«These illegal attempts are a signal to all foreign investors that their investments in Latvia can be potentially arbitrarily taken away at any moment if it benefits Ventspils Freeport and/or Aivars Lembergs. There is not a single mention in the contract between Kālija parks and Ventspils Freeport that requires the company to reach a specific cargo turnover level. It would be impossible, considering railway tariffs in Latvia, mutual sanctions between Russia and the European Union and the situation on the world market. All of it has impacted the flow of cargoes carried through Latvia’s ports,» – the company explains.

At the same time, Kālija parks representatives say the management of Ventspils Freeport manages the port from a position of public power. «Kālija parks has already requested Ventspils Freeport management board to apply public rights to this dispute. This would provide more protection to Kālija parks, but Ventpils Freeport board wishes to resolve the case as a private case, as though it were a dispute between two private companies. It only demonstrates the lawlessness of Lembergs’ illegal attempts,» – the company continues.

It should be added that Lembergs announced this week that Ventspils Freeport board has decided to use legal action to terminate the land lease contract with Kālija parks and take over the structures of the terminal that are located on the freeport’s territory.

Throughout the years Kālija parks has been informing Transport Ministry about the non-competitiveness of the tariffs for the use of railway infrastructure in Ventspils’ direction. Unreasonably high tariffs hurt the company’s competitiveness. Latvia has to change its railway tariff policy to help existing terminals attract cargoes, not gradually destroy them, notes the company’s board member Aivars Gobins.

Kālija parks and its shareholders will defend their stance and will use all available legal options in Latvia and international institutions. It is clear to shareholders that as long as Aivars Lembergs has the deciding vote in Ventspils Freeport management and as long as its board members from ministries and Ventspils City Council go along with him, foreign investments in Ventspils Freeport will not be safe, Gobins says.

Ref: 102.109.109.6882


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