State investment in Estonian railways to increase, network company to report bigger loss than expected

Estonia's railway network will require investments in the coming years as well. (Virumaa Teataja/Scanpix)
11/29/2016 11:13 AM
Category: Business

While next year’s budget allocates €4m to state-owned railway company Eesti Raudtee, what it needs is actually closer to €15m. As the European Union’s support payments are slowly shrinking, the need for state investment in Estonia’s railway infrastructure is increasing.

EU law stipulates that each member state is responsible to maintain its railway network. Last year, the Estonian state allocated €5m to this end, and €7.5m this year. For 2017, the amount has been reduced to just €4m. According to ETV’s “Aktuaalne Kaamera” newscast, the actual need for funding is much higher.

Ain Tatter, in charge of the Ministry of Economic Affairs and Communications’ roads and railways department, said that Eesti Raudtee had not yet published its 2017 budget, but there was the indication that they might expect a €15m loss. This would mean that the state would have to look for additional sources to cover such a deficit next year.

The company may run into a similar problem this year already. The allocated €7.5m in state support for 2016 might not be enough to cover Eesti Raudtee’s deficit, which could grow to €12m, Tatter said.

According to Priit Rohumaa, chairman of Eesti Raudtee’s supervisory board, they still have to work on the numbers. “We run a seasonal business, a lot depends on that. The freight volumes of the last few months are still missing, could be there won’t be a loss as large as expected at the beginning [of the year],” Rohumaa said.

In addition to the state budget spending planned, another €85m in EU funds money will be invested by 2020. The Estonian state’s need to pay for the maintenance of its railway network will increase every time the European Union supports it less.

“With the investments of the current financial period we are making it to a level where the Tallinn-Tartu passenger train can make the distance in an hour and 45 minutes. Depending on the aims set for the railway in the next period, investments will certainly be necessary to keep up the present speeds, and if they don’t come from EU funds, then they will have to be replaced with state budget means,” Tatter added.

Editor: Dario Cavegn

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