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Tuesday 25.09.2018 | Name days: Rauls, Rodrigo

VNT director: I’m not desperate, managing such challenges is why we are here

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Baltic news, News from Latvia, BNN.LV, BNN-NEWS.COM, BNN-NEWS.RUIncrease of infrastructure tariffs means cargo transports in Latvia’s direction will also become more expensive. In spite of that, Ventspils nafta terminals (VNT) as a competitive commercial company that is interested in carrying cargoes from Belarus and Russia will definitely pay attention to tariff prices. «And in this case we are not the most competitive,» VNT Managing Director Lars Pantzlaff comments the situation over the plans of Latvijas Dzelzceļš to raise railway tariff plans.

There is no way anyone would work up an ‘appetite’ over price increase when looking at the current general situation in the logistics industry [cargo decline, sanctions, Russia’s position and plans], because Latvia is not in an advantageous position on the business market, Pantzlaff notes. In spite of that, however, he has noticed that even this argument could not convince railway industry representatives to change their position and oppose the plan to raise tariff plans.

When asked how LDz’s plan to increase tariffs will affect VNT, Pantzlaff emphasized that the general cargo volume has already declined a great deal and a look at other Baltic States reveals that Latvia is at a disadvantage the most.

He adds that over the years Russia has invested a lot of effort and resources into developing its own ports and infrastructure. Now, it seems, Russia wants to see those investments pay off. «It will be very hard for Latvia to compete with Russia’s ports, and as soon as there is more involvement on a political level in the form of new sanctions, for example, the situation will only get worse.» Pantzlaff notes that the decline in transports has partly appeared as a result of different sanctions, which present a challenge for Latvian-Russian cooperation and further development of business relations.

According to the managing director of VNT, one of the problems that hold back Latvia’s transit industry and its development is that there is a serious lack of all-encompassing and detailed discussions between Latvian government and industry representatives, specifically discussions about mutual cooperation, not optimization of businesses. «It is not good when entities that form the logistics chain function separately. To create a competitive and attractive market in the future, it is necessary to have a broader perspective. By working together and aligning activities, it will be possible to find solutions for transit industry’s development. And this is where we are behind our neighbours,» adds Pantzlaff.

When asked if VNT may consider selling the company if oil volumes continue to decline, Pantzlaff said the company’s sale has never been considered and shareholders are here to stay. He does say that the company’s main goal is preserving stability and making sure the volume of transhipped oil and oil products does not drop further but again increase. Last year, the volume of oil and oil products declined to seven million tonnes. If this persists, the situation will become very hard for VNT, admits Pantzlaff.

At the same time, he adds: «I definitely do not think Latvia could end up with no business at all. I am here to manage a business not just now, but in the future as well. I’m not desperate, managing such challenges is why we are here.» Pantzlaff notes that the situation is already challenging, but he is adamant in the belief that there is not a single reason to sell VNT.

«If you’re clever enough and you understand how transit business and commercial business works, then you know there are alternatives to find in this region. This means finding more products with a higher commercial price and not relying solely on Russian cargoes. Our current model and the model we may have in the future will definitely change.»

When asked about the electrification project, Pantzlaff said VNT will not be affected by it directly, because the plan in its current form does not cover the section from Riga to Ventspils. Nevertheless, he as a businessman does have questions to ask to the government about the cost of this project. «The costs are, without a doubt, quite high – the invested money should be paid back by someone.» He says it is therefore important to make sure those costs are not covered using tariff increases. «The government still cannot fully answer this question,» said Pantzlaff.

He adds that under the current situation state companies should look at the project in a long-term perspective and decide if it contributes to future business development. «I personally doubt it [railway electrification] is the most important thing for Latvia at the moment.» He ironically adds: «But what do I know? I cannot imagine myself in the shoes of a railway company investor or director. It just seems to me that transit and logistics are the most important things that are worth developing to make sure all of Latvia’s logistics industry becomes more competitive in short-term and long-term perspectives.»

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