Another financial aid package for Estonian Railways
In a few months, Estonian Railways (EVR) will receive a second state financial aid package. The state-owned company, which recorded a financial loss of 20.7 million euros in 2022, will receive 8.7 million euros from the state’s monetary reserves. However, this should be one of many interventions in the company’s financial condition, as its losses are forecast to increase in the coming years. Railway Supply magazine writes about this with reference to RailFreight.
Last April, the Estonian government allocated EUR 12 million to EVR as a first compensatory step after Russian rail freight traffic in Estonia decreased. However, as losses increased during the year, the government had to intervene again to cover the lost 20.7 million euros.
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At the beginning of 2022, the state again provided financial injections of 14.6 million euros to offset EVR’s losses in 2021. It is important to note that the Estonian government is required by law to support a struggling company.
The current situation faced by Estonia and other Baltic countries after they partly or completely severed ties with Russia is closely related to the volume of freight traffic. Smaller freight volumes mean lower revenues and therefore an increased need for financial support.
Until August 2022, EVR freight volumes were more than halved, and the situation is likely to remain unchanged in 2023. Tentatively, in 2021, EVR freight volumes amounted to 12.76 million tons. According to the government forecast, the company’s cargo volumes are unlikely to reach 5.5 million tons in 2023, which means even more significant financial losses, which could amount to 30.2 million euros.
The state has already prepared a budget of 25.9 million euros to support the EVR this year. However, the budget will need to be increased annually. This is because the Estonian government predicted an even bleaker future for EVR. According to ERR, the upcoming losses are estimated at “32 million euros in 2024, 34 million euros in 2025 and 38 million euros in 2026”.
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