TALLINN - A top government official said the government had no plans to nationalize Eesti Raudtee (Estonian Railway), despite disappointment with how Baltic Rail Services has been meeting its post-privatization commitments and hints by the majority owner that it was thinking of selling the railway infrastructure back to the government.
“The question is not topical at present,” Economy and Communi-cations minister Edgar Savisaar told reporters on July 21.
Nevertheless, Savisaar, who is now acting prime minister, did not rule out the possibility that the state would consider taking part of the company back if Baltic Rail Services refuses to meet its obligations. He said the government was hoping the disputed issues could be settled through negotiation and that a compromise confirming Estonian Railway’s business could be reached.
Tensions around Estonian Railway heated up in June when Savisaar said the state would consider buying back the infrastructure from the privately controlled company, while the CEO Edward Burkhardt accused the minister of deliberately undermining the ..............
............... enterprise’s operations with the intention to regain control.
Earlier, however, Savisaar said that the state would consider buying back the company’s infrastructure if the price was reasonable. The use of the rail infrastructure is still heavily regulated by the state and has become the source of a major dispute with the private investor.
For that to happen the rail company must bring its activity into line with the railway law and European Union legislation, secure transparency of operations and draw a clear line between infrastructure administration and freight operation activities, the minister said.
“Once the aforementioned transparency has been achieved and owners of Estonian Railway wants to sell Estonian Railway – that is, the rail infrastructure – to the state at a reasonable price, we’ll consider this proposal very seriously,” Savisaar said last month.
The minister is scheduled to meet with Burkhardt next month. “I see no questions over which we would fail to find an agreement with Estonian Railway,” he observed.
Several state officials, including Savisaar, were against the privatization of Estonian Railway from the beginning and now claim that Baltic Rail Service, which holds 66 percent, has not abided by the privatization agreement signed in 2001.
Meanwhile, Henry Posner III, one of the owners of BRS, was quoted in an interview to Forbes as saying that his biggest headache these days was Estonian Railway.
Forbes wrote that Henry Posner III, the grandson of a Polish emigre and owner of Railroad Development Corp, has over the last dozen years invested nearly $20 million piecing together freight-rail scraps in Argentina, Guatemala, Peru, Malawi, Mozambique and Estonia. But Posner said his worst headache was not in Africa or Latin America but in Estonia, where problems had risen due to the government’s economic policy and ambitions of Russia’s Severstal, the country’s largest metal producer.
He said operating Estonian Railway had cost him $500,000 in less than a year. Problems first arose in 2003 when the newly elected government decided to rewrite rules governing tariffs and force open access – requiring a railroad to allow all freight newcomers on its tracks, Posner said.
Forbes wrote that companies operating under the corporate umbrella of Severstal are trying to exploit the new access rules, with one of them, Spaceom, accusing Estonian Railway of overcharging for use of its tracks. Posner said Severstal’s insiders were operating in the Estonian government.
Posner said that RDC intended to protect its investment in Estonia and several professionals had been brought in to defend its interests. “In Estonia all roads lead to Moscow, not to Brussels,” he said.