PPA critical of state fleet plans, yet to approve proposal

PPA boat during a maritime parade.
PPA boat during a maritime parade. Source: Siim Lõvi /ERR

In just over a month, a new state agency should be up and running, bringing together almost 300 maritime vessels under a single management structure. However, the Police and Border Guard Board (PPA), which owns a large share of the vessels expected to be involved, is yet to approve the proposal for the establishment of the new state fleet.

Discussions on how to bring the majority of Estonia's state-owned maritime vessels under a single management structure have now been going on for over a year. There are currently 300 state-owned vessels in Estonia. 150 are owned by the Ministry of the Interior and around half of those belong to the Police and Border Guard Board (PPA).

"The operating model, as well as the division of tasks being created between the state fleet as a whole and the agencies, is not really clear," said Krista Aas, deputy director general of the PPA. Aas added, that the most important thing for the PPA is, that its ability to save lives and tackle pollution should not suffer as a result of the changes.

"We have repeatedly suggested that the administration of the Ministry of the Interior join this project during the next phase," Aas said, adding that the Ministry of Economic Affairs and Communications could also begin by merging its own fleets. "Maybe, in the course of this process, some confusing and critical issues will be resolved, the law will be sorted out and then we will be able to join," she said.

The criticism comes just 40 days before the new state body is due to start work. The Ministry of Economic Affairs and Communications is currently in the middle of preparing suitable premises and equipment and the deadline for applications for the role of director general has already passed. A quality manager, director general and director of technical administration are also due to be hired in the coming weeks.

"It was indeed a surprise to receive this feedback," said Kaupo Läänerand, deputy secretary general for maritime affairs at the Ministry of Economic Affairs and Communications. According to Läänerand, who previously headed the Police and Border Guard Board's (PPA) fleet, feedback from the PPA is important.

"It's unfortunate that when consolidations take place, they can be difficult at some point. However, we have found the PPA to be a very good partner and we take their suggestions into account as far as possible," Läänerand said.

PPA: Promised savings may not materialize

"In the PPA's opinion, the documents submitted are incomplete and contain manipulative and misleading data and information throughout," Aas said, referring to a series of documents, which includes the decree on the formation of the state fleet, the statutes of the new agency and the budget.

According to the Ministry of Economic Affairs and Communications, bringing the vessels together under a single organizational structure would save €34 million over 10 years. However, Krista Aas believes, that the data used to support this assessment is misleading.

"If we look at our own calculations, we have a pretty strong basis to believe that the kind of savings, which are currently being presented, may not materialize," Aas said, highlighting that VAT had been suggested as one of the areas in which costs could be reduced. "However, VAT is such a zero-sum game in terms of the state budget. There will be no real savings made from that," she said.

According to Kaupo Läänerand, savings could also be made through the more efficient use of existing resources, as each state-owned vessel is only used 3.8 percent of the time on average.

"If we can bring that up to seven percent, the Estonian state will have already gained a lot," said Läänerand, noting that to do so, would mean reducing the number of vessels. "We have four ships side by side in Romasaare harbor. If we take one of them out and start cross-utilizing more, that could already reduce the need for investment in one of the ships by €2.5 to 3 million," Läänerand said.

However, Krista Aas pointed out that these kinds of calculations do not consider the fact that having fewer vessels, would increase the burden on those that remain in use. "Depreciation costs, fuel costs, equipment maintenance - these additional costs are not being taken into account," she said.

Aas also disagrees with the view, that the PPA's vessels are underused. "The utilization rate of PPA vessels is significantly higher than 3.8 percent. And if we add to that the obligation to be on standby, their utilization rate is as high as 100 percent," Aas said. "However, these considerations are also not being included in the calculations."

According to Läänerand, who preferred not to discuss the calculations in detail, the ministry's decision to establish the new state fleet was reached after consultation with financial experts.

"These calculations have been made by specialist firms and checked by various financial managers. There is no point in going through it all again," he said, adding that he was sure that the decision to establish the interconnected fleet is the right one.

"We will check the PPA's calculations, however, just as two lawyers can come to different conclusions, there can also be different views about the data." Läänerand continued.

According to him, the most significant savings from the creation of the state fleet will come as a result of the vessels being managed together. "We (currently) have eight (different) organizations in the country, which manage their own vessels independently. They repair the, they have their own procurement procedures and they build them just for themselves," Läänerand said.

PPA vessels not recommended for cross-use

According to Krista Aas, the document sent to the PPA for approval states, that the state fleet will aim to apply the principle of cross-using vessels, something the PPA is not in favor of. "From the very beginning, we have been of the opinion that the cross-use of PPA vessels cannot be achieved," stressed Aas, who explained that, the police are often required to react quickly. "This means that (PPA) vehicles with the necessary equipment must be available with the right crew in the right place."

Aas said, that another issue stems from the fact that the PPA's vessels are specially equipped to assist in emergency situations. "Some of them have guns, radios and other specialized equipment onboard, and to send them off to perform other tasks in the meantime is simply not possible," she said.

Läänerand explained, that there are no plans to make all vessels in the fleet available for cross-use. He added, that the PPA had previously promised it would be prepared to provide transport to other agencies, and that more detailed arrangements could be made once the interconnecting agency was up and running.

"The percentage of vessels in the fleet, which are cross-utilized could be ten percent in the first year, and thirty percent the second year. We can increase the amount slowly like that, and so it's a question of making agreements," said Läänerand.

Ministry: Recruitment of director general not illegal

Läänerand stressed that the establishment of the state fleet was guided by the coalition agreement, the government's action program, and a cabinet decision made in September. "The PPA is a key partner in this major reform and we have had very good cooperation from them in preparing for this," Läänerand reiterated.

"In the whole process, it remains unclear to the PPA how, and on what basis, the election of the director general of the state fleet will proceed," wrote Krista Aas, pointing out that the deadline for applications has already passed, yet there is still no new agency.

"And if we read the decree of the Government of the Republic, we interpret it as meaning that the competition for this post is announced by the minister (of economic affairs and communications) and conducted by a selection committee," Aas said.

In her letter to the Ministry of Economic Affairs and Communications, Aas suggested that the recruitment process to find a director general for the state fleet had been conducted illegally.

Läänerand however, rejected Aas's claim and confirmed that the head of the fleet will be recruited by the ministry. "The State Fleet will be a state agency managed by the government, and the top executives in civil service will not recruit a general manager for them," Läänerand said.

Aas conceded, that the ministry may also prove to be right. However, the PPA felt it necessary to make its observations known now, simply to avoid potential questions arising in the future about the legitimacy of the new agency's director general. "Particularly as there has been such confusion here recently in relation to the selection of the director general," Aas said.


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Editor: Michael Cole

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