The privatisation process of Operail was successfully completed. Estonian state-owned company AS Operail sold its business operations along with its subsidiary Operail Repairs OÜ for EUR 19 million to AS Tiigi Keskus, an Estonian company which won the auction. Therefore, the Republic of Estonia is no longer involved in rail freight transport or the maintenance and repairs of rolling stock.
“Since the start of the Russian aggression war in Ukraine, the volume of goods transported on Estonian railways has dropped dramatically. Estonia is a small country with short distances for transportation. However, railway transport is a volume-based business where profits increase with the volumes of goods and the distances they must travel. For this reason, turning a profit on the Estonian railways only by transporting goods is complicated,” explained Vladimir Svet, Minister of Infrastructure.
The minister pointed out that freight business in general and particularly conducting business abroad are not activities that are necessary for the state from the strategic point of view. “For this reason, a decision was made to sell the business operations of Operail to a private investor. This way, the government can focus its resources on strategic activities that the state needs, private entities can do business, and the operations of Operail can continue and develop, supporting the sustainability of railway as the most eco-friendly and the safest manner of transportation in Estonia.”
Svet thanked the Operail’s employees and partners who carried out the privatisation. “Substantial interest in the company shows that the employees and advisors have done a good job.”
Richard Tomingas, a Member of the Supervisory Board of AS Tiigi Keskus (the new owner of Operail), stated that the company plans to continue in the Estonian railway sector, and in the future, expand its activities if possible. “We will receive the keys tomorrow, and then, we can learn about the daily ins and outs of the company in greater detail. At first glance, it seems that we must kick-start container transport. Looking to the future, the importance of rail will increase – more goods must be transported along railways than on highways to meet national climate objectives,” he explained.
AS Tiigi Keskus, the winner of the auction, has created a separate subsidiary called RailProject OÜ for the purchase of Operail; the members of its management board are Merle Kurvits, who will be the CEO of the company going forward, and Richard Tomingas. All business operations of Operail, its assets and valid agreements, including employment agreements with its employees, as well as its subsidiary Operail Repairs OÜ, will be taken over with today’s transaction by RailProject OÜ. “This means that there will be no changes for the customers, partners, or employees of Operail as a result of the transaction. The staff of Operail will continue with their daily responsibilities tomorrow – with freight transport in Estonia and the maintenance and repairs of rolling stock,” assured Tomingas.
According to Sander Salmu, Deputy Secretary General for Mobility at the Estonian Ministry of Climate and a Member of the Supervisory Board of AS Operail, the process of privatisation went well. “In the first stage, Operail drew a surprising amount of interest, which continued in the second stage where several reasonable offers were made in the sense of continuing its business operations as well as the price. This allowed the process to continue at the planned speed and the facilitators of the process – both Operail and its advisers – have been praised for the orderly and professional proceedings by various parties. The best offers were relatively similar to each other, indicating that the auction also helped establish the market price of the assets,” added Salmu. Offers exceeded the minimum price established by the owner before the beginning of the process.
After the transaction’s conclusion, the state is going to own a legal entity without any business operations as well as a subsidiary without any business operations. Since the business operations of AS Operail were sold to the new owner along with the trademark, the state enterprise will be renamed AS Raudtee Varad.
The state enterprise will continue to hold the gondolas belonging to a Russian company which have been in the possession of Operail so far. These wagons are frozen assets which cannot be returned to Russia or purchased from the Russian company due to sanctions. Therefore, the wagons are in the possession of the state-owned company without any business operations until a solution compliant with international law has been reached for handling the frozen assets. The state enterprise will also continue to hold financial assets to cover the expenses of freezing the assets and the costs of resolving the matter in court.
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