Operail starts preparatory work for privatization of the company
On February 15th, the government of Estonia made a substantive decision during the cabinet meeting. They proposed the full privatization or divestment of Operail, which is a part of Operail’s strategic plan. The strategy aims to improve the company´s economic results by involving a private investor. This strategic step would also enable the expansion of operations into foreign markets.
Operail’s management prepared the strategy plan last fall at the owner’s request. Operail’s Council approved the strategy at the end of November. At the same time, the plan was introduced to the owner’s representative, Minister of Climate Kristen Michal. Operail was then left to wait for the government’s approval to proceed with the plan.
„Rail transport is a volume business where small quantities and short journeys do not pay off. Unfortunately, in the context of railways, Estonia is a very small country. Moreover, geographically we are located at the endpoint of the railway network. Therefore, it is difficult to achieve profitability by operating solely on the Estonian rail freight market,” explains Merle Kurvits, member of the board.
“Selling the company to a private investor allows Operail to expand its operational scope towards Europe, which is a competitive advantage in a volume business. This also contributes to the preservation and development of the railway as the most environmentally friendly and safest mode of transport in Estonia. This in return boosts our industrial and logistics sectors and consequently, the overall Estonian economy,” added Kurvits.
Operail will start implementing the plan immediately, including the first steps of privatization, but the precise timeline of the process is yet to be decided. “We will do our best to ensure that the process is both correct and fast, because Operail’s business activities on the Estonian freight market are currently unprofitable, but today we have the resources and potential that could bring significant benefits to both the future private owner and the Estonian railway sector,” said Kurvits.
Original article HERE
Image source: operail.com