The idea of selling off part of the state-owned postal company has been floated among officials and politicians for a number of years. It is now also backed by Piret Hartman.

Hartman explained that the main revenue generator for Eesti Post is the volume-based parcel business. "We've made a pretty big investment in Kaunas to create more capacity in the parcel business," Hartman said. "But if we want to go forward from here, the competition is intense and we need additional capital to increase the volume. The higher the volume, the greater the ability of Eesti Post to make a profit."

Last year, Eesti Post's market share in the parcel business here was 44 percent. In Lithuania, the market share was between 20 and 30 percent.

"Certainly a stronger foothold in the Baltics has been the goal for the time being. But when I have spoken to the head of Eesti Post, we are looking beyond the Baltics," Hartman said. "However, it all depends on our ability to make investments."

Preparing for an IPO will take at least two years

The money needed for the investment should not come from the state budget, Hartman said, but instead, from a private investor.

The money needed for the investment should not come from the state budget, Hartman said, but instead, from a private investor.

"Our proposal to the government is for partial privatization," Hartman said. "If the government gives us a mandate to take this further, current estimates suggest that the earliest it could happen is 2027. That's because preparing for an IPO will take time for the authority, and it certainly can't be done hastily."

While Hartman mentioned an IPO, or initial public offering of shares, she said it is not yet certain that Eesti Post will actually be listed on the stock exchange. It is also possible that a private investor will be sought for the state-owned company in another way.

The minister also did not speculate on how much of the state-owned company could be sold off. "Ultimately, it is always a question of the price at which it can be done," Hartman said. "There are a lot of different details when it comes to that question. That's what we're going to prepare for if the government gives us that mandate."

The minister stressed that the majority stake in Eesti Post should definitely remain in the hands of the state. "In order to ensure that the necessary public services are also organized by Eesti Post in the future," Hartman said.

Draft Postal Act due in coming weeks

For several years, the universal postal service, including ordinary mail, has been a loss-making business for Eesti Post. Hartman hopes to come out with a bill in the coming weeks that will make a significant change to the financial side of the universal postal service.

At present, the financing of the universal postal service works broadly as follows: the minister sets the price list for the service by decree, and if the state-owned company suffers a loss when delivering the service, it should at least get part of the money back from a special UPT fund. The fund, which is maintained by the Competition Authority, is mainly paid into by Eesti Post itself.

Disputes over how much compensation the Competition Authority should pay to Eesti Post have been in court for some time. Regardless of the forthcoming court ruling on the issue, all parties involved have realized that there is less money in the fund than needed.

Hartman therefore expects Estonian Minister of Justice Liisa-Ly Pakosta (Eesti 200), who is in charge of the Competition Authority, to request around €6 million from the government's reserves to top up the fund. This is the kind of roundabout way in which the law should be amended.

The universal postal tariff is likely to become cost-based in the future, with the Competition Authority ensuring the state-owned company does not charge too much for the service. "We still have to make sure that the price is reasonable and affordable," Hartman said.

---

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