Ministry of Transport: New Funding Model (Latvia)

By introducing direct payments to the state budget from Latvian ports’ revenues, implementation of port functions, stipulated by law, will have to be financed from the state budget. That was the conclusion reached by the Ministry of Transport, evaluating operation of Latvian and Estonian port authorities and their funding models.

The Ministry of Transport indicates, that Latvian and Estonian ports have significantly different funding model, namely, in Estonia, the state not only provides for port functions employing budget resources , but ports also receive a government subsidy. Latvian Port Authorities have to fund implementation of their functions, stipulated by the Law on Ports, from their own resources.

With the aim to ensure such functions as management of navigational equipment, Harbour Master office, environmental protection, winter navigation, port police and other functions, as well as to pay for port dredging works, Riga, Ventspils and Liepaja Port authorities in 2012 spent 24.8 million Lats. On the contrary, in Estonia those functions are ensured by the Estonian Maritime Administration and the Estonian Border Guard, that are financed by the state budget. It should also be noted that in 2011th and in 2012 the Estonian port JSC ” Tallinn Sadam ” received subsidies from the national budget in the amount of 12.65 million Lats in total.

Thus, the Ministry of Transport objects to imposition of separate, new charges on ports without revising their overall funding model, and indicates, that additional charges will threaten implementation of functions, stipulated by law, and competitiveness of ports , thus reducing the amount of funds allocated for investment.

The Minister of Transport Mr.Anrijs Matiss concedes that provided a port charge is introduced and the state is to pay for the port functions’ implementation, the impact on the state budget could even be negative. Therefore the Minister suggests that no hasty decisions, that will result in lower cargo turnover of not only the ports, but also of the Latvian railway, should be taken.

[mappress]

Press Release, September 10, 2013