The Estonian government has cut back next year's planned public transport subsidies by €6 million – with half of that being cut from Elron's budget.

"Which does not mean that we're essentially taking €3 million away from Elron, because we can find coverage for certain needs by reallocating existing funding, but to a certain extent, we'll still need to request additional subsidies," said Minister of Regional Affairs and Agriculture Piret Hartman (SDE).

According to Elron CEO Lauri Betlem, they have not yet received an official mandate for cuts from the ministry; they've heard about the planned cuts impacting them through the media.

In addition to these cuts, Elron will also have to account for additional costs next year, including a €1.5 million hike in infrastructure charges.

"If we assume an average 5 percent rise in energy unit prices, that adds another half a million," Betlem pointed out. "So next year, all things considered, we'll have €5.5 million less to operate with, and if we look at our total subsidy amount, that's a 15 percent cut. A cut like that isn't made so easily; it will mean quite a noticeable reduction in service volumes."

Simply eliminating early morning or late-night rail service, however, won't be enough to cover the shortfall, and according to Betlem, raising ticket prices won't come up with the necessary €5.5 million either.

Until now, Elron's new trains were slated to enter passenger rail service next September, but now the company will have to revise its plans.

Public transport, meanwhile, is facing an even bigger budget gap.

"Next year's state budget provides for €119 million; our shortfall next year is €50 million," Hartman said. "There is an agreement in place between the current coalition partners that we will find some coverage for this from the state budget reserve."

The minister noted that Estonia's public transport needs significantly more support than what is allocated in the state budget, but both current expenditures as well as revenues need to be reviewed.

"We need to review opportunities for generating own revenues as well – that in places where it's possible to raise ticket prices, we need to look those over," Hartman said. "Where and to what extent these [price hikes] will happen has not yet been agreed on."

North Estonia Public Transport Center (PEÜTK) has repeatedly proposed ending free public transport for the elderly and children in order to raise extra money for adding more departures on overcrowded routes. The minister, however, says that free transport for these groups of riders must be maintained in accordance with the coalition agreement.

--

Follow ERR News on Facebook and Twitter and never miss an update!