EU – Baltic States, Latvia, Legislation, Railways, Transport

"We have a contract with CAF, and we have the technology. The new trains are needed and eagerly awaited on the Eastern markets. Therefore it will not be difficult to relocate manufacturing to another country," pointed out Igaunis, writes LETA.

Igaunis believes though that the contract between PV and CAF will not be terminated. The state has announced that industrialization and industrial production exports are central to Latvia's development strategy – and the contract is good for both, pointed out Igaunis.

"However, if the contract is terminated, it will become obvious that mechanical engineer is not needed in Latvia and manufacturing will move to another country," added Igaunis.

As reported, the Finance Ministry has concluded after evaluation of the draft contract on procurement of new trains that, in organizing the procurement of new trains, the joint-stock company Pasazieru vilciens (Passenger Train) has not only failed to observe official objections from several ministries and other authorities, but also ignored the government's recommendations.

The Finance Ministry also refers to the European Commission's opinion that the planned modifications to the contract are so important that a new procurement process should be organized.

According to the Finance Ministry, Pasazieru vilciens has not taken into account objections that the Finance Ministry, Transport Ministry and the Procurement Monitoring Bureau made previously regarding any significant alterations of the contract and those sections of the contract that were not to be altered under any circumstances.

The Finance Ministry requests the Transport Ministry to promptly inform about its further actions and possible solutions to the further procurement process.

The Finance Ministry also requests the Transport Ministry, in cooperation with lawyers from the State Chancellery and the Finance Ministry, to assess all the possible risks so as to make sure that such risks do not exceed the prospective benefits from implementation of the contract.

Pasazieru vilciens previously informed Nozare.lv that the new trains will operate in Latvia already in the first half of 2014. The company will purchase 34 electric trains and seven diesel trains. CAF will ensure their service and maintenance during next 30 years.

The company emphasizes that the contract matches Pasazieru vilciens and state interests. Pasazieru vilciens has completed all Cabinet tasks to sign the contract, the company said.

The total cost of the project is estimated at LVL 144 million. The European Cohesion Fund's financing comprises LVL 100 million of the total financing.