Government approves EUR 6.5 million for Latvian Railway

LATVIA – Ministry of Transport (06/12/2022)

The Government has approved the allocation of EUR 6.5 million for GAS «Latvijas dzelzceļš» (LDz) to meet the financial balance sheet requirements in 2020, thus completing the required payments of the financial balance sheet for that year.

"Railway" / Photo by mandu yuri / CC BY 2.0

According to the LDz report, additional state budget funds of €9.5 million were required to meet the financial balance requirements in 2020. By decision of the Cabinet of Ministers in April this year, 3 million euros were allocated to the Ministry of Transport and the remaining necessary funding of 6.5 million euros is currently being allocated from the state budget programme «Contingency funds».

The legal framework in force in the country defines the obligation of the state to provide funding in cases where the manager of public railway infrastructure faces a deficit of financial resources due to shortfalls in income from economic activities and covering the costs of providing infrastructure.

In a situation where the freight market is unstable, the volumes of traffic are agreed with the shippers in the short term, but the infrastructure needs to be preserved and maintained, LDz continues to revise internal processes, changing technological processes in order to reduce costs and increase efficiency.

However, the cost of maintenance and use of public railway infrastructure still exceeds the budgeted funding for this purpose, so the government is addressing the issue of funding from contingency funds. This need is caused by a decrease in freight traffic intensity and at the same time a decrease in revenue for the infrastructure manager compared to previous years.