Another financial aid package for Estonian Railways, ‘one of the many to come’
Estonian Railways (EVR) will receive the second package of governmental financial assistance in a few months. The state-owned company that noted a financial loss of 20,7 million euros in 2022 will receive 8,7 million euros from the state’s monetary reserves. However, this is set to be one of the many financial state interventions for the company as its losses are forecasted to increase in the coming years.
The Estonian government allocated 12 million euros to EVR last April as the first compensational step after Russian rail freight traffic in Estonia deteriorated. However, since losses increased through the year, it needs to intervene again with the additional fund to cover the 20,7 million euros lost.
In early 2022, the state again provided a financial injection of 14,6 million euros to compensate for EVR’s losses in 2021. It is essential to mention that the Estonian government must support the struggling company by law.
Estonia needs deep pockets for EVR
The current situation that Estonia and other Baltic States face after they partially or entirely cut off ties with Russia is closely related to freight volumes. Fewer freight volumes mean fewer revenues and, thus, an increased need for financial support.
Until August 2022, EVR’s freight volumes had more than halved –a situation that will probably not change in 2023. Indicatively, in 2021 EVR’s freight volumes totalled 12,76 million tons. According to the governmental forecast, the company’s freight volumes will hardly reach 5,5 million tons in 2023, signalling an even more considerable financial loss that could reach 30,2 million euros.
The state has already drafted a budget of 25,9 million euros to support EVR this year; however, the budget will need to increase yearly. That is because the Estonian government has predicted an even gloomier future for EVR. According to the Estonian Public Broadcasting (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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