Off the wire
• U.S. stocks end higher amid earnings, data  • Spacecraft TGO successfully positioned, confirmation of Schiaparelli contact underway  • Syrian army declares 3-day humanitarian truce in Aleppo  • Brazil's Lula leads polls for 2018 presidential race despite legal woes  • Qatargas, Petronas UK sign new 5-year LNG deal  • Messi ruins Guardiola's return to Camp Nou on chaotic night  • Rio Pro moves to new venue  • Profile: Croatian new prime minister Andrej Plenkovic  • State of Rio short of budget to pay police for Olympic overtime  • 1,800 people evacuate rebel-held area near Damascus  
You are here: 　 Home

Latvian rail passenger carrier "halfway through" with procurement of new trains

Xinhua, October 20, 2016 Adjust font size:

Latvia's state owned rail passenger carrier Pasazieru Vilciens is currently "halfway through" with a procurement of new trains, the company's CEO Andris Lubans said on public radio Wednesday.

Train tickets are expected to increase by 20-25 percent as a result of the costly deal, Lubans said, citing the rail company's business plan.

Five train makers are competing in the second round of the tender for the right to supply the trains to Latvia, and Pasazieru Vilciens has already approached several banks in Latvia and elsewhere in Europe on the deal's possible financing.

The rail company's status as state owned enterprise, however, is causing problems, as the purchase of the trains will increase Latvia's budget deficit, which Latvia has committed to keeping under 1 percent of GDP.

Since government subsidies to Pasazieru Vilciens make up more than 50 percent of the company's revenues, the carrier is considered part of the public sector under the European Union's rules, which means that its liabilities would increase the budget deficit, Latvian Transport Ministry official Dins Merirands explained.

To avoid this situation, the government plans to pay part of the subsidies, which Pasazieru Vilciens needs to pay for the use of railway infrastructure, directly to Latvian Railways, the company maintaining the railway infrastructure.

The estimated cost of the train purchase deal is around 200 million euros (220 million U.S. dollars), Lubans said.

The management of Pasazieru Vilciens hopes that the number of rail passengers will grow after the old trains are replaced with the new ones, as there are quite a few residents of Latvia's regions who travel to work in the capital city Riga on a daily basis, but only a fraction of them use commuter services.

Although more passengers would provide more revenues, it will not be enough to repay the loan, which is why Pasazieru Vilciens plans to raise fares by 20-25 percent, Lubans said.

The five bidders that have qualified for the second round of the tender to supply 32 new passenger trains to Latvia include Spain's Patentes Talgo S.L, Poland's Stadler Polska Sp. z.o.o., Russia's Uralskie Lokomotivy, Spain's Construcciones y Auxiliar de Ferrocarriles S.A., and Czech company Skoda Vagonka a.s. Endit