Construction, Estonia, Financial Services, Legislation, Markets and Companies, Port, Transport

The notion that the penalties and the costs related to the substitute vessels are not commensurate is not correct, Michal said during question time in parliament on Wednesday, reports LETA/BNS.

The minister said the penalties for delay will be collected by deducting corresponding amounts of money from the payments to be made to the shipbuilders under the contracts.

"That we will withhold these payments is possible and very likely," Michal said.

The minister added that while lawyers definitely would find a possibility to argue over the terms of the contract and the possibility of arbitration also exists, the moment's state of affairs is such that the expenses have been largely covered by the penalties issued.

Valdo Kalm, CEO of the state-owned port company Port of Tallinn, said last week that if it really happens that one or both of the new vessels will not arrive in Estonia even by the beginning of January, the operator will lease substitute ships for the penalties it receives from the shipyards.

"The penalties paid by the shipyards cover most of the expense of substitute vessels already now. Let this refute the story that only two ferries will remain in service on the island routes," Kalm said.

The Port of Tallinn subsidiary TS Laevad began operating ferries between the mainland and Estonia's big western islands on Oct. 1 under a ten-year contract awarded to it in a public tender, using the ferries St.Ola and Harilaid rented from businessman Vjatseslav Leedo and the ferry Hiiumaa belonging to Olav Miil. The fourth vessel used for the service, Regula, was bought by TS Laevad for 4 mln euros this summer.