Latvian Railways to buy defunct freight car manufacturer

Last week the government greenlighted the Ldz Ritošā Sastāva Serviss, a Latvian Railways subsidiary, to buy the Rīgas Vagonbūves Uzņēmums Baltija (RVU Baltija) company for building freight cars in Daugavpils. Previously, however, the company's private investors were unable to start production, while the demand for freight cars is currently low, reported Latvian Television's "De Facto" Sunday. 

Previous plans for the freight car factory included an investment of several million lats, with former Latvian Railways head Uģis Magonis saying four years ago that the company could produce up to 1,000 freight cars a year, employing a hundred people.

However the company has thus far built merely two open wagons, ceremoniously unveiled a year and a half ago. As the cars have not received certification, there's no use building more.

At the moment RVU Baltija is owned by the railways subsidiary (25%) and UK citizen Georgiy Chesnokov (75%), formerly a citizen of Russia. Last year Chesnokov offered selling his part or splitting up company assets. Latvian Railways decided to take over the inactive business.

The takeover had to be approved by the government. The proposal was handed to the Transport Ministry late last year, where it was stuck until last Tuesday when it was okayed despite objections by Unity ministers.

Minister of Economy Arvils Ašeradens (Unity) said that as the takeover does not concern strategically important infrastructure, it should be very clear why the government goes ahead with the deal if it should do so.

"If we start doing that [taking over defunct companies] we will have many requests to do the same in the future too," said Ašeradens.

The proposal was waved through by ministers from the Greens and National Alliance. However PM Māris Kučinskis sounded a note of caution, saying that "if there's a zero there a year later, or if nothing will be started this year, we will have trusted you in vain."

The company had failed previously, in part because of restricted access to EU funds and because the private investor decided to withdraw from the market, according to Guntis Innuss, technical director at the Latvian Railways subsidiary.

Both company representatives and industry experts say that the availability of freight cars is quite high at the moment, so the Transport Ministry annotation that the company would produce freight cars for Latvian Railways should be viewed skeptically.

"Now when the market is saturated with empty cars, when cars are available, when there are no problems accessing them, they don't even have to be bought, they can be rented," said former Transport Minister Anrijs Matīss (Unity).

However current Transport Minister Uldis Augulis (Greens), who championed the initiative, said that the company would produce platforms for transporting Abrams tanks.

"The company is meant for the task of building NATO platforms, for the needs of NATO, so that the forces that will be here could be safely moved with the platforms suitable for the task," said Augulis.

While the Defense Ministry told De Facto that the National Armed Forces would rent the platforms.

Economy
Economy