State-owned road maintenance firm to be privatized

Artist's rendering of planned Võõbu-Mäo junction.
Artist's rendering of planned Võõbu-Mäo junction. Source: Road Administration

State-owned road maintenance firm AS Eesti Teed is to be privatized, the Ministry of Economic Affairs and Communications has announced.

AS Eesti Teed was established in 2012 as road maintenance company which also engages in construction work, from the merger of several other companies.

It is to be put up at public auction with a starting price of €16.9 million, with the plan being to divest it during the second quarter of this year, ERR's online news in Estonian reports.

AS Eesti Teed's founding came at a time when a sufficiently competitive market was not in existence for privatization of the maintenance sector to take place, with the agreement concluded at the time giving the state the necessary overview of the cost-based prices of maintenance work, which helped with the organization of the sector as a whole, the ministry says.

"The reorganization of the maintenance market resulted in a tight competitive environment, favorable price levels for the state, and eliminated the need to retain state-owned enterprises in an area where private entrepreneurs operate successfully under market conditions," Taavi Aas (Center), Minister of Economic Affairs and Infrastructure, said.

AS Eesti Teed has now proved its viability in a highly competitive free market environment, the company is profitable and this amounts to the right moment to transfer it to private equity, Aas said.

"It remains the task of the state to ensure the most attractive business environment in this sector," Aas continued.

Road maintenance work is reportedly most frenetic during summer and winter.

The state budget currently does not take into account AS Eesti Teed revenue, as the final sale price is to be made clear when the transaction is concluded.

AS Eesti Teed was established in 2012, from the merger of five companies specializing in road maintenance: AS Pärnumaa Teed, AS Tartumaa Teed, AS Võrumaa Teed, AS Virumaa Teed and AS Saaremaa Teed.

The ministry is being advised by Redgate Capital AS and BakerTilly Baltics OÜ, with legal advice coming from EllexRaidla Law Firm.

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Editor: Andrew Whyte

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