The supervisory board of the Estonian state-owned rail cargo operator EVR Cargo on Thursday approved the plan to expand its freight car business in Russia. The company is planning to move forward with the business once it has received approval from the Estonian government.
EVR Cargo supervisory board chairman Neeme Jõgi told daily Postimees that it will not be possible to move forward with the second stage without the consent of the government. "As the company is going beyond its daily economic activity and set norms, we decided to ask for the consent of the shareholder," he said.
Jõgi, who had previously been critical of the plan, agreed with the management board this time, as he found that he had no reason or need to remain of a different opinion. "I noted this time as well that I believe the risks to be extraordinarily higher, but if the shareholder is willing to take these risks, then the company must do everything in its power to ensure that these risks are not realized and that the result is a positive one," he explained.
The company's supervisory board signed its papers on Thursday. Jõgi was unable to say when the government's decision might be expected, however.
On June 14, EVR Cargo entered into a contract worth €17.8 million for the purchase of 300 container platforms and 200 open wagons, marking the first stage in a plan to invest €35 million in wagons.
EVR Cargo intends to rent out the container platforms to major international customers who service cargo carriage between China and Europe; the open wagons are to be rented out for carrying bulk goods on the growing Russian domestic market.
EVR Cargo is an Estonian state-owned rail cargo operator which operates in the carriage of goods, repair of railway engines and freight cars and freight car rentals. Together with the new freight cars, EVR Cargo's rolling stock will consist of 66 engines and 3,022 cars.
The company's loss in 2016 totaled €189,000, down from €1.8 million the year before, while sales revenue fell 19.8 percent on year to €51.8 million. A change in supply and demand on the freight car rental market considerably increased rental prices, and the company's freight car rental revenue jumped 39 percent to €1.5 million.
Editor: Aili Vahtla