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Riga Freeport plans enormous expenses; Christmas tree for EUR 41,000

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Baltic news, News from Latvia, BNN.LV, BNN-NEWS.COM, BNN-NEWS.RUIn spite of the tension in relations with Russia and sanctions that have been introduced against it, the management board of Riga Freeport has compiled a budget for 2015 that provides for an increase of cargoes and exceptionally increased expenses for their own needs – new cars and Christmas shows for employees, as well as an advertisement programme for EUR 1.5 million.

Representatives of Riga City Council support this budget project because they trust Leonid Loginov’s calculations, as reported by Nekā personīga programme of TV3.

A few years ago, State Audit had pointed to Riga Freeport’s unreasonable expenses. It has been calculated that the management board of Riga Freeport had misappropriated a total of EUR 41 million over the course of 2009-2011. A lot of money was given away for bonuses, gifts and life insurance. The management board promised to fix everything and take into account all recommendations. However, taking into account this budget plan, it seems nothing has changed. Expenses continue to grow, as do employees’ requirements for comfort.

Riga Freeport’s budget for next year provides for the allocation of EUR 50,000 for different health services, EUR 41,000 for a Christmas tree and EUR 25,000 for the procurement of sports equipment. The Freeport also plans enormous expenses on procurement of different types of equipment: EUR 18,000 for tablets; EUR 33,000 for notebooks; EUR 31,000 for PCs and EUR 16,000 for servers. Car park expansion is set to cost EUR 500,000. The port also plans to spend EUR 1.2 million on the construction of a new Port Police building.

The port also plans large expenses for the needs of Riga: sports activities and reinforcement of Kipsala’s beaches. This year, the port spent EUR 1.2 million on this initiative. Next year’s expenses are planned at EUR 1 million.

It is also planned to invest in Kundzinsala port’s railway line. A new railway line is planned to be constructed for EUR 1.8 million. More than EUR 2 million will be spent on repairs of existing tracks and nearly EUR 1 million will be spent on the construction of access roads toward existing stevedore terminals.

The management board of the port explains the need to invest in port railway with the necessity to attract new cargoes. Renovations of Kipsala are justified with the port’s responsibility before Riga. Another reason for expenses is a line on the map.

«This is the border of the Freeport, these rotted beams will be restored, which means we will be able to sort out Daugava’s riverbank. Ten metres off Daugava River is the port – the line we see within the port’s border, the rest is city territory and the red line is in the port’s competency,» – said Chairman of Riga Freeport board Andris Ameriks.

Four representatives of Riga City Council support the budget proposed by the freeport’s management. In order to approve it, there has to be support from one more state representative. Finance Ministry’s representative Baiba Bane criticizes this budget as inflated, Economy Ministry’s representative Artis Stucka will not take part in the next week’s meeting, because he is away on a long foreign trip and Transport Ministry’s State Secretary Kaspars Ozolins needs time to properly assess the budget. Baiba Broka from the Environmental Protection and Regional Development Ministry is likely to agree on certain parts of the budget plan. She does, however, have certain doubts about Krievu Island project.

«The construction of Kundzinsala’s railway was one of the matters that have been discussed extensively. It is part of the objectives we must reach. If it ends up increasing volumes for the existing terminal, then the economic justification behind it is reasonable,» – said Broka. She adds that the reinforcement of Kipsala is a matter of the highest priority for Environment Protection and Regional Development Ministry.

When asked if it is absolutely necessary to buy a Christmas tree for EUR 41,000, Broka said there should be measures to unite people. «And we should look at how adequate expenses really are, so that there is no exceptional misappropriation,» – said the politician.

Broka would nonetheless like to hear from the port if the heads have a Plan B in case Russia decides not to export its goods using Riga Freeport. Transport Minister Anrijs Matiss believe this is possible. Latvijas dzelzceļš has reduced its cargo turnover outlook by 20% for next year.

It would seem that Ameriks is entirely sure and throws all pretense of cautiousness out the window. Contracts have been signed, volume of cargoes on a rise and Russia needs dollars – everything will be fine. The port has increased handling fees (+6% starting with January 1st, 2015).

«In regard to Tallinn and Klaipeda, the latter’s increase will be much smaller than that of Riga; 7 % -7.5% there and 15% in Riga. […] The port has increase specific tariffs by 6%,» – said Ameriks. When asked if such measures could make Riga the most expensive port in Baltic States, he said: «St Petersburg is the most expensive, Tallinn and Klaipeda are cheaper.»

Concerns regarding the danger for Russia’s economy are voiced more and more often. Russian rouble’s decline would mean bankruptcies in all areas of the national economy, including exports. Economic activities may come to a halt. Russian coal makes up nearly two-thirds of the freeport’s cargo turnover.

During this week’s Russian business forum «Russia. New strategy» former worker of the president’s administration, Mikhail Hazin, estimated that the decline is expected to come next February or March.

«We are experiencing a rapid decline of workload in regional business centres. Rapid. People are leaving. They no longer have money to sustain their businesses. This is the first sign. The second sign is the closure of networks. It appears that the number of customers at supermarket networks in insufficient. Specific networks will be the first to close. They will be followed by networks that sell products that are not very specific. But something like lingerie is something women cannot live without. The third sign is the increase of budget deficit. This is exactly what we see right now. The fourth reason is that we clearly see the decline of economic activity in regions,» – says Russian economist Mikhail Hazin.

Even if Russia continues using Riga Freeport to export goods and even if stevedores agree to pay large port fees, Krievu Island project is a major concern for the port. The management of Riga Port has yet to reach an agreement with Riga Central Terminal regarding the relocation of business activities to Krievu Island. If this matter is not resolved by next week, there is a possibility that Europe may reduce its co-financing of this project.


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