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6 Estonian state-owned transport companies to be merged into consortium

Six Estonian state-owned companies of the transport and infrastructure sector are to be merged into a consortium, if the government approves a plan at the end of this month for a reform of state-owned companies drawn up by the Ministry of Economic Affairs and Communications, Postimees said.

The six companies are the railway infrastructure company Eesti Raudtee (Estonian Railways), the rail cargo operator EVR Cargo, the port company Tallinna Sadam (Port of Tallinn), the pilotage company Eesti Loots, the operator of regional ports Saarte Liinid and the airport company Tallinna Lennujaam (Tallinn Airport). The new company would take over the support services of all these businesses, such as IT, real estate management, financial management, legal counseling and internal audit. In this way, the railway company would be dealing with just the tracks and the port company with the quays in the future, the newspapersaid, cites LETA/BNS.

Minister of Economic Affairs and Infrastructure Kristen Michal announced his wish to carry out a comprehensive reform of the businesses in his area of government already a year ago, immediately after taking office as minister of economic affairs in the second government of Taavi Roivas. Now the reform plan overseen by the Ministry of Finance has become mature enough to be put before the government, Postimees said.

It pointed out that in the future politicians can be elected only to the supervisory board of the new holding company, as politics presumably will be no longer dealt with on the level of individual businesses. Members to the five-strong supervisory boards of the subsidiaries will be appointed by the head of the holding company, and according to the plan they would be the CEO or the CFO of the holding company by virtue of office, a representatives of the Ministry of Economic Affairs and Communications and a representatives of the Ministry of Finance, plus two experts of the respective field.

Since the continuation of EVR Cargo as a separate state-owned company has been called into question by the steep decline in cargo flows, it is possible that EVR Cargo will be privatized either as a company or as assets.

The other companies due to be privatized are the road maintenance company Eesti Teed and the postal company Omniva, also known by its previous name Eesti Post. "The future for Omniva could be either a majority or minority owned listed company, or a company co-owned by a strategic investor. Listing the parcel business of Omniva, for instance, will not affect mail delivery and services, which will be regulated by the state in accordance with law," Michal said.

Eight state-owned companies will continue as independent units. The best-known of them are the newly established airline Nordic Aviation Group, the transmission system operator Elering and the operator of passenger trains Elron.

"Merging Estonian Railways and Port of Tallinn looks like a sensible plan, because they are working in very close collaboration already now. Bringing the management together would enable to significantly increase efficiency. At the same time, I remain cautious about the establishment of a holding company with so big a number of different fields of business, which might dislocate the focus," said Erik Laidvee, board member of the privately owned transit company Transiidikeskuse AS.

22.04.2016

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