The Estonian government has officially announced the commencement of the privatization process for the state-owned railway company Operail, this is reported by the railway transport news portal Railway Supply.

Privatization of Operail
Photo: Operail

This initiative was spearheaded by the country’s Ministry of Climate.

Operail, a key player in Estonia’s freight railway market, has faced significant challenges in recent years.

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According to board member Merle Kurvits, despite its dominant market position, Operail has experienced a substantial decrease in freight volumes.

While the total volume of freight transport on Estonian Railways dropped by 39% over the past year, Operail’s volumes plummeted by nearly 70%.

This decline is attributed to the cessation of freight transport to Russia and Belarus, setting Operail apart from its competitors.

The privatization process began with the Estonian cabinet’s approval of the Ministry of Climate’s proposal to conduct a public auction.

All of the company’s freight and repair enterprises will be put up for auction.

Notably, this decision comes just a few years after the government decided to sell Operail’s wagon leasing and freight operations in Finland.

Those deals were finalized in early 2023 after a two-year process.

The current asset sale is overseen by LHV Bank.

Information about the sale of Operail’s remaining assets surfaced in February 2024.

One reason cited for this move was the difficult position of a railway transport company operating with small volumes and short trips within one country.

In such conditions, maintaining profitability becomes increasingly challenging.

At the same time, Merle Kurvits expressed hope that privatization would open new opportunities for Operail.

She believes that selling the assets will enable the company to expand its operations towards Europe while maintaining a positive impact on Estonia’s railway industry.

This strategic decision aims to overcome existing difficulties and adapt to new market conditions.

The privatization of Operail marks an important milestone in the history of Estonian railway logistics.

This decision reflects the government’s drive to optimize the performance of state enterprises and attract private investment to enhance efficiency and competitiveness.

Given the changing market and economic realities, this move could be crucial for the sustainable development of the country’s railway sector.

Thus, the privatization of Operail represents a significant step for Estonia’s transport sector.

It is expected to improve the company’s operational efficiency, service quality, and expand its presence in the European market.

Ultimately, this step could become a catalyst for further growth and development in Estonia’s railway logistics.

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