As of Monday, the Estonian state will no longer be involved in railway freight transportation or the maintenance and repair of rolling stock.

Since the beginning of Russia's war of aggression in Ukraine, freight volumes on Estonian railways have plummeted. Minister of Infrastructure Vladimir Svet (SDE) highlighted that freight transport, especially international operations, is not a strategically necessary activity for the state.

"As a result, the decision was made to sell Operail's business operations to a private investor. This allows the state to redirect its resources to strategically important activities while enabling private companies to engage in business," Svet said.

Richard Tomingas, a member of the supervisory board of Operail's new owner, AS Tiigi Keskus, stated that the company plans to continue its railway operations in Estonia and, if possible, expand them in the future.

"We will take over tomorrow, at which point we can familiarize ourselves more thoroughly with the company's daily operations. At first glance, it's clear that we need to step up container freight activities," Tomingas said.

Tiigi Keskus, which won the auction, has established a separate subsidiary, Railproject OÜ, for the acquisition of Operail. The management board of Railproject OÜ will include Merle Kurvits, who will continue as the company's CEO, and Richard Tomingas. With this transaction, all of Operail's business operations, assets and existing contracts, including employee contracts and the subsidiary Operail Repairs OÜ, will be transferred to Railproject OÜ.

Fate of sanctioned rail cars to be resolved by the state

Following Monday's completed transaction, what remains under state ownership is a legal entity without business operations, along with its non-operational subsidiaries. Since AS Operail's business operations were sold to the new owner along with the trademark, the state-owned company will be renamed AS Raudtee Varad (Railway Assets). The state expects the company to consolidate its subsidiaries into a single legal entity at the earliest opportunity and resolve an ongoing court case.

The state-owned company will retain control of railcars previously owned by Operail but belonging to a Russian company. These are considered "frozen" assets, which cannot be returned to Russia or purchased from the Russian company due to sanctions. As a result, the railcars will remain in the possession of the non-operational state-owned company until a resolution is reached in compliance with international law. The company will also retain funds to cover expenses related to asset freezing and legal proceedings.

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