In spite of the fact that Transport Ministry’s proposed law amendments will affect all businesses involved in the transit industry, there have been no discussions with organizations representing those businesses so far, as reported by Baltic Association – Transport and Logistics (BATL) board member Ivars Landmanis.
He says the changes to the Law on Ports will provide port authorities the right to engages in commercial operations, which would negatively impact the business and investment environment at Ventspils and Riga ports.
In the letter, the head of BATL says the proposed amendments to the Law on Ports are rushed and should not be progressed further, because they would change the management of Latvia’s major ports, where the role of municipalities is not entirely clear. Neither is there any synergy with port service clients.
Landmanis also stresses that port authorities will take over services the market is able to provide on its own. This means breaching the principles of free and fair competition, pushing out private service providers from the market.
The legislative draft provides the most direct intervention in the tugboat market, pushing out local private service providers from this market segment, stresses Landmanis.
«This is a threat for foreign investments in Latvia.»
Opposite to Transport Ministry’s public claims, BATL, as representative of port service users, has no answer how amendments could help improve the situation in the transit industry, how it can secure equal competition conditions among Latvia’s large ports, and how it will improve low competition among ports of neighbouring countries, as stressed in the official letter.
BATL also notes that the legislative draft provides no mechanism for cooperation with port users (the ones who attract freights to ports), as though they are not part of ports.
It is worth mentioning that BATL secures 50% of all freights handled at Ventspils port, its members average annual turnover exceeds EUR 145 million, their paid taxes exceed EUR 12 million annually, and they also employ 1 000 people.
If the law provides ports the right to provide services and engage in commercial activity, they will receive the status of state capital companies. This means, according to Landmanis, a state monopoly could be formed in port operations.
Landmanis explains that the law amendments will directly permit ports as capital associations the right to perform economic operations.
«If port capital associations are allowed to perform both public and private functions, a monopoly could form in these areas. Similarly how it is with Latvian Railway, where part of its services are delegated to its subsidiary LDz Cargo, which provides them as exclusive services to clients on a market where it is expected to engage in competition,» explains Landmanis.
Secondly, ports as strategic national objects should remain subject to public law in both economic and security fields. Otherwise the interests of the state are put at risk, BATL notes.
BATL representative also stresses that in spite of the fact that it will affect all businesses engaged in the transit industry, there have been no discussions with organizations representing this industry. Even after the legislative draft was developed, BATL as the industry’s association was not provided with it to learn the organization’s opinion.
The letter also mentions that generally BATL supports the initiative to improve the management of port authorities by introducing good management principles and securing efficient use of resources and political independence, however
commercial operations and the pursuit of profits cannot be used as the end goal, as it would negatively impact the investment environment and the competitiveness of the transit corridor, stresses Landmanis.
BATL: Transport Ministry proposes ill-considered changes for ports without consulting with businesses
