Budget, Financial Services, Latvia, Transport

International Internet Magazine. Baltic States news & analytics Thursday, 28.03.2024, 18:09

Subsidy needed by Rigas Satiksme might grow to EUR 134 mln despite belt-tightening

BC, Riga, 20.02.2019.Print version
Despite the belt-tightening measures taken so far, the subsidy needed by Rigas Satiksme municipal transport company this year might increase by another EUR 12 million to EUR 134 mln, the company’s acting CEO Anrijs Matiss told LETA.

The company’s management came to this conclusion based on an audit report prepared by Ernst & Young on the situation in the municipal enterprise. In Matiss’ words, the report is “extremely critical” and lists a number of measures that have to be taken to keep the company going.


The recommendations provided by Ernst & Young auditors concern the choice of business partners, prime cost estimates and other processes. In recent years, Rigas Satiksme has sustained losses worth millions of euros under the leadership of its former management, according to the audit report.


“The losses have occurred as a result of several processes, including budget drafting, prime cost calculation, making business deals and debt recovery. The contract with Rigas Mikroautobusu Satiksme [minibus operator] alone causes us a monthly loss of EUR 600,000. Also, the compensation requested from the city council in 2018 is EUR 11.6 mln smaller than needed, and as a result of this the company is operating with losses. This year, the loss might be approximately EUR 3 mln,” said Matiss.


Although earlier this year’s subsidy to Rigas Satiksme was not expected to exceed the EUR 122 mln allocated to the municipal transport company in 2018, the company’s new management has concluded that an estimated EUR 134 mln would be necessary this year to keep Rigas Satiksme operational. The subsidy has to be increased even though a number of austerity measures are being taken and the company has found a way to save EUR 9.5 mln.


Commenting on the opinion that the company’s former management board should be called to account for its thriftless decisions, Matiss said that it is for Riga Mayor Nils Usakovs (Harmony) as the holder of Rigas Satiksme shares to take such decisions.


As reported, the Corruption Prevention Bureau has started a criminal case on three procurement tenders organized by Rigas Satiksme: 2016 tender to buy low-floor trams for a total of EUR 62,597,477, 2013 tender to buy trolley-buses for a total of EUR 131,646,135, and one more 2013 tender to buy buses worth EUR 75,808,297.


Following the Corruption Prevention Bureau's decision, all five Rigas Satiksme board members stepped down. Usakovs then appointed a temporary board that is comprised of Matiss, Rigas Satiksme employees Edmunds Zivtins and Janis Gedusevs, and former Riga City Council official Armands Kruze.


Rigas Satiksme's total debt liabilities exceed EUR 200 mln.







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