Subsidy for Rīgas Satiksme might grow despite belt-tightening

Despite the belt-tightening measures taken so far, the subsidy needed by Rīgas Satiksme municipal transport company this year might increase by another €12 million to €134 million, the company’s acting CEO Anrijs Matīss told LETA February 20.

The company’s management came to this conclusion based on an audit report prepared by Ernst & Young on the situation in the municipal enterprise. In Matīss’ words, the report is “extremely critical” and lists a number of measures that have to be taken to keep the company going.

The recommendations provided by Ernst & Young auditors concern the choice of business partners, prime cost estimates and other processes. In recent years, Rīgas Satiksme has sustained losses worth millions of euros under the leadership of its former management, according to the audit report.

“The losses have occurred as a result of several processes, including budget drafting, prime cost calculation, making business deals and debt recovery. The contract with Rīgas Mikroautobusu Satiksme [minibus operator] alone causes us a monthly loss of €600,000. Also, the compensation requested from the city council in 2018 is €11.6 million smaller than needed, and as a result of this the company is operating with losses. This year, the loss might be approximately €3 million,” said Matiss.

Although earlier this year’s subsidy to Rīgas Satiksme was not expected to exceed the €122 million allocated to the municipal transport company in 2018, the company’s new management has concluded that an estimated €134 million would be necessary this year to keep Rigas Satiksme operational. The subsidy has to be increased even though a number of austerity measures are being taken and the company has found a way to save €9.5 million.

Commenting on the opinion that the company’s former management board should be called to account for its thriftless decisions, Matiss said that it is for Riga Mayor Nils Usakovs (Harmony) as the holder of Rigas Satiksme shares to take such decisions.

As reported, the Corruption Prevention and Combating Bureau has started a criminal case on three procurement tenders organized by Rīgas Satiksme: a 2016 tender to buy low-floor trams for a total of €62,597,477, a 2013 tender to buy trolley-buses for a total of €131,646,135, and one more 2013 tender to buy buses worth €75,808,297.

Following the accusations, all five Rīgas Satiksme board members stepped down. Ušakovs then appointed a temporary board that is comprised of Matīss, Rīgas Satiksme employees Edmunds Zivtiņš and Jānis Ģeduševs, and former Riga City Council official Armands Kruze.

Rīgas Satiksme's total debt liabilities exceed €200 million.

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