Eesti Raudtee and Baltic Railway Services

completed

In 1999, the government of Estonia decided to privatize the state railway company AS Eestii Raudtee through the sale of 66% of the shares through public auction. Within three years of the share sale, all the land occupied by the company will be re-registered to grant 50-year leases of the land to EVR. Baltic Railway Services won the bid and purchased 66% of EVR’s shares on August 31, 2001. EVR is a vertically integrated railway which includes the management of fixed infrastructure (track, bridges, stations, signaling and communications, etc.) and operation of freight transport services. EVR is the dominant freight operator in Estonia and operates a 693 km long railway network in Estonia. The principal route consists of the main 210 km west-east axis from Tallinn to the Russian border at Narva. The first 77.5 km are double track as far as Tapa where a second route branches off towards Tartu in the south. At Tartu, the line further divides into a route into Russia via Petseri and also to Latvia via Valga. According to EU rules, Estonia has separated the operation of trains and ownership of rail infrastructure. As the owner of the railway network EVR is required to maintain the network and provide network access to the various licensed passenger operators and freight operators in return for a track access charge. The IFC project comprises: (i) the company’s investment plan over the next five years including the replacement of EVR’s locomotive fleet, track replacement and renovation, improvement of signaling and communications, station renewals and investments in environmental protection; and (ii) the acquisition of 66% of EVR’s shares by BRS. Total IFC project cost is estimated at US$226.8 million. The railway sector plays an important economic role in Estonia by transporting large amounts of oil products, oil shale, and other bulk commodities that constitute a substantial part of transit traffic through Estonia. This role is enhanced by helping in the strategic regional development of the port of Tallinn.