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Debts of Rīgas satiksme exceed EUR 200 million and continue growing

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Baltic news, News from Latvia, BNN.LV, BNN-NEWS.COM, BNN-NEWS.RUWith the approval of budget amendments in Riga City Council, SIA Rīgas satiksme has received grants worth EUR 132.8 million this year. The city council’s chief financier predicts grants of similar size next year. Meanwhile, the debts of RS exceed EUR 200 million and continue growing.

EUR 122.7 million was provided by Riga municipality. The rest of grants provided to RS came from the state.

On Wednesday, 7 November, members of the city council allocated an additional amount of EUR 24.4 million. EUR 22.5 million of this amount came from the municipality and EUR 1.9 million – from the state budget.

In debates, nearly all members of the opposition criticized provision of grants to the company, adding that «this was akin to tossing money in a black hole». None of the factions represented in the opposition supported amendments to the budget.

Mayor of Riga Nils Ušakovs thanked his colleagues for supporting decisions associated with RS in recent years. «Less than 20% of Riga residents use public transport services at full price. The rest use discounts or use public transport services free of charge entirely. The company provides a social function and mobility for residents. The company works well and cannot go bankrupt – similar to the Welfare Department,» said the mayor, adding that it is thanks to the municipality’s decisions the company is able to transport pensioners and other social groups free of charge.

The company plans to divert EUR 4.75 million to cover the costs of discounted tickets. The increase of costs in this programme is explained with the increase of social groups that are offered discounts, such as parents of large families.

The largest amount – EUR 17.75 million – is requested to cover fuel, insurance, damping and other technical costs. Riga City Council’s Finance Department director Ilga Tuknuse explained that this amount consists of the costs that exceed EUR 1.15, which is the set ticket price in RS. Tiknuse did not mention the self-cost of the trip.

Deputy Viesturs Zeps asked about RS’ losses in the first half-year of 2018. Tiknuse said losses are on a rise. She also said the company’s debts currently exceed EUR 200 million and that debts continue growing. According to estimates show that next year’s grants may reach EUR 130 million. The total amount will be clear only once RS has submitted calculations and requests for next year’s expenditures.

Unity faction’s representative  Vilnis Ķirsis proposed at the very beginning of the meeting excluding planned grants for the company from budget amendments until a financial audit has been performed. However, his proposal received no support.

Tiknuse was asked by Ķirsis if it is true RS transports 7% to 8% more passengers, because mathematical calculations do not suggest so. Additionally, Ķirsis mentioned the company had reported a drop in the number of passengers not long ago. Tiknuse said the number of people using discounts is on a rise. She did not say anything about the total number of passengers.

Ķirsis again pointed towards a decline in the number of passengers and even with the addition of social groups that receive discounts the number of passengers continues to decline. «This does not comply with information provided by the company,» said the deputy.

Tiknuse said again that «the table cannot be simply compared to previous years», and the number of passengers eligible for discounts has increased nonetheless. She also pointed towards this year’s Song and Dance Celebration, during which all participants were offered discounts. This answer did not satisfy Ķirsis.

Jurģis Klotiņš from the National Alliance asked in what order RS provides justifications for grant requests. «This year, RS approved its budget in Q1, which is why we lacked estimates. Last year’ money was provided on the basis of previous years,» explained the financier, adding that RS has promised to provide estimates on time this year.

Olafs Pulks from Unity wanted to know what would happen if the city council were to cease providing money to the company, to which the financier said that «banks will likely start following the municipality’s intentions in regards to RS».

Deputy Ģirts Lapiņš from the National Alliance wanted to know if it is adequate to allocate major amounts of money without any documents to justify the reasons. Tiknuse did not hide the fact that the process ‘requires certain improvements’. Additionally, Ģirts Lapiņš wanted to know why money is going to be allocated to the company regardless of the fact that estimates so far have been imprecise. «They only managed to approve their budget in Q1 2018, and we’ve not had previous similar precedents for budget amendments in the past,» said the official.

In debates, Ķirsis voiced the opinion that amendments came as a rescue measure for RS and that RS’s submitted requests are controversial. He also said it is not useful to insure such a large park of vehicles, because «who would consider hijacking a tram»? «EUR 500 is taken from every employed Riga region and diverted to RS. Billions of euros have been provided to RS over the past decade. We could have used this money to fix all of Riga’s roads, build several concert stages, finish all schools and accomplish a number of other projects,» said the deputy.

Deputy Jānis Ozols from New Conservative Party reminded that voters have entrusted to deputies to represent their interests and ensure proper use of finances. «Today we approved allocation of finances no one will be able to spend this year. We provide money for activities that have already taken place – this is not proper budget planning. RS is a horror story that has been continuing for years. We will never plug this hole with money,» said Ozols.

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