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Wednesday 22.01.2020 | Name days: Austris

To take over Riga and Ventspils port government to form a separate company

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Ventspils Freeport, Riga Freeport, OFAC, Transport Ministry, LatviaOn Wednesday, 11 December, the Cabinet of Ministers decided at an extraordinary meeting to invite the Saeima to add amendments to the Law on Ports to accommodate the plan for the government to take control over Riga and Ventspils freeports.

The government proposed setting that from now on Riga port and Ventspils port management will be performed by a newly-founded company. The government also proposed making it so that Riga and Ventspils council nominated board members lose their posts and instead be replaced by members appointed by the state.

It is expected the new company’s minimal capital will be EUR 35 000. This amount will be covered by Transport Ministry’s 2019 base budget programme ‘Industry Management and Policy Planning’.

It is planned the board will consist of members delegated by ministers and approved by the Cabinet of Ministers, excluding four municipal representatives from Riga Freeport and Ventspils Freeport boards. Once the legislative draft has been approved, Riga Freeport and Ventpils Freeport boards will retain four state representatives – members picked by Economy Ministry, Finance Ministry, Transport Ministry and Environment Protection Ministry.

Transport Ministry explains that such a model will help create independent Riga Freeport and Ventspils Freeport administrations, which will answer directly to the Cabinet of Ministers. This way the government will be able to control port management.

Government representatives said the hope the Saeima will be able to view amendments on Thursday, 12 December.

The government has concluded that Ventspils Freeport and Riga Freeport are subjected to a high corruption risk. This is why it is necessary to perform immediate reforms in management of these ports in order to implement the priority outlined in the government declaration to fight corruption and improve management of these ports.

The decision to take control over Ventspils and Riga freeport was made by the government on Tuesday, 10 December, thereby conceptually supporting Transport Minister Tālis Linkaits’ proposal prepared after US Department of Treasury Office for Foreign Asset Control announced sanctions against the suspended Mayor of Ventspils Aivars Lembergs and for legal persons, including Ventspils Freeport authority.

Transport Ministry explains that OFAC decision could potentially disrupt payments for services provided by Ventspils Freeport. At the same time, to ensure equal management principles in both of Latvia’s largest ports in Latvia, management changes have been proposed for Riga Freeport’s management.

The ministry also notes that in accordance with the Law on Ports, Ventspils and Riga ports have the same management principle, whereas Liepaja Special Economic Zone’s management is regulated by a different law – Law on the Liepāja Special Economic Zone. This is why Transport Ministry believes a different approach should be used for Liepaja Special Economic Zone.

The ministry also notes law amendments will not change administrative procedures and processes in relation to businesses active at Ventspils and Riga ports. No negative effect is expected for services or budgets. Considering the number of port board members will be reduced from eight to four, this also means a reduction of finances needed to pay wages. This will help save budget funds.

Additionally, the ministry notes law amendments will not change property rights for port territory or buildings there.

Read also: U.S. bans Lembergs and family from entry in U.S. over «significant corruption»

Prime Minister Krišjānis Kariņš had previously explained to media representatives that law amendments are needed in order to separate Ventspils Freeport from the person applied with US sanctions. ‘With the state taking over the port, any ties to the sanctioned person will be cut,’ he said, adding that the state has decided to act like this in order to reduce negative consequences from US sanctions on Latvia’s economy and residents.

Explaining the need to take over management over Riga port, the minister mentioned that Riga and Ventspils ports are two of Latvia’s largest ports. On top of that, ‘in Riga there is a great deal of influence in the hands of private and legal persons’ under US sanctions. «To prevent sanctions or limitations acting against Riga port, our proactive step is resolving the management issue for both ports,» says Linkaits.

When asked if USA could be asked to exclude Ventsils Freeport from the list of sanctions once law amendments have been adopted, Linkaits said first it is necessary to ensure none of the people currently on US black list is able to influence Ventspils Freeport.

Transport Ministry had previously explained that in accordance with the Law on Ports, the territory of ports can be owned by the state, municipality or other legal and private person. However, a port’s internal waters portion is state property. The state land and water area can be delegated by the transport minister to port authorities. Municipal land is leased in accordance with decisions of a local city or county council.

At the same time, Latvia’s transport ministry stresses that delegating management to the state does not mean taking away the municipality’s rights for those properties.

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