CER | Estonia: Brits snap up privatized railway company

Brits get regional railways

The Estonian Privatisation Agency finally agreed to the terms of privatisation of regional railway company Edelaraudtee (South-Eastern Railways) to Britain's GB Railways. GB will be allowed to take a full stake in the regional passenger rail service, which will receive some EEK (Estonian kroons) 845 million in subsidies over the next nine years. That controversial decision by the Parliament earlier this year slowed negotiations with GB, as did GB's follow-up decision to the parliamentary subsidy ruling to invest only EEK 260 million into the company (instead of the previously agreed upon amount of up to EEK three billion).

Transport Minister Toivo Jürgenson said that the purchase price of EEK ten million and a promise to add EEK 100 million in capital to the company remains, despite the lower investment schedule. The talks had dragged on through the debate over subsidies, and other companies have quickly queued up to steal the prize away from GB—now an apparent moot point.

GB Railways signed the agreement later in the week, paying half of the EEK ten million with privatisation vouchers.

Telecom market opens

More signs of the impending opening of the telecommunications market in Estonia came this past week with the linking of the telephone networks of monopoly holder Eesti Telefon and newcomers. As Eesti Telefon loses its monopoly starting 1 January 2001, scores of companies have queued up to enter the lucrative market.

Two of the companies, ISP Uninet and Sweden's Tele-2 signed an agreement this past week to link their networks without using Eesti Telefon as a medium, lowering the costs for calls between customers of the two companies. Both companies also have agreements with Eesti Telefon to connect their networks.

Several other companies are also fighting for the market. More and more companies are announcing their new tariffs, trying to undercut each other in various key markets, including local calls, calls to local and foreign mobile phone networks, long distance calls, etc. Competition is likely to be fierce once the services begin operations in a few weeks.

Billion-kroon plans

A financing agreement was signed this past week for the construction of a terminal for steel exports at the port of Muuga, with the investment to reach a record EEK 3.75 billion. The project, planned by US company International Steel Industries, will also include a processing centre at the facility. The facility, financed by Italian and German banks, should be completed by 2002.

This investment, the biggest one-time investment in Estonia, has not been universally welcomed, as oil transhipment companies at the Muuga port complain that this would not allow them to expand, due to the lack of space.

On another note, Lõunatäästus announced the construction of an EEK one billion processing plant in Põlvamaa to manufacture biodegradable plastic. The plant, which should be in operation by 2003, should be able to manufacture 60,000 tonnes of the environmentally friendlier plastic. The factory will use organic products to produce the biodegradable plastic.

And in other news...

President Lennart Meri floated two possible candidates for legal chancellor: lawyer Kaido Pihlakas and Rein Müllerson. The latter is a professor of international law and politics at London's King's College. Former Supreme Court chairman and current member of the European Court of Human Rights Rait Maruste said that Müllerson would not be a good choice, since his specialty is international and human rights law, not domestic legal issues.
Organisers are optimistic about an expected record crowd at the Elton John concert scheduled for 22 July 2001. Though the flamboyant star is also scheduled to play in Riga, promoters hope that by skipping Helsinki he could bring thousands of Finnish fans across the Gulf.
Though way oversubscribed, all the farmers that took part in the recent computerisation scheme will get their computers by year's end, promised the partners of the public-private sector scheme. Instead of the predicted 1000 computers, some 3400 computers were purchased, with the government footing the interest payments on the leased computers. Price for a computer system is about EEK 14,000. Some 75 per cent of the farmers are also linked to the Internet under the plan. Officials are pleasantly surprised at the large number of farmers interested in computers and the Internet.
The Estonian Food and Veterinary Inspectorate banned the import of German beef for five years, following an earlier ban on beef from many other EEC states. Officials are also urging vigilance on the part of importers of bone meal and other substances that are linked to the ban, saying that unscrupulous EU producers could try to move them to Estonia at a very low price. Foodstuffs unfit for EU consumption often end up in Estonia and other candidate states, despite ongoing protests.
The government, under advice from the legal chancellery, agreed not to seek an extension of the so-called "conscience" oath taken by officials and candidates to high national posts describing, if any, collaboration with a foreign intelligence agency. The original law came as a part of the law that activated the constitution and was in effect for eight years.
Agriculture Minister Ivari Padar was happy to hear that the European Commission has agreed to distribute SAPARD money even for this year. Estonia is slated to receive EUR 12.137 million each year from 2000 to 2006, though it could still be months before the 2000 amount is received.
A cornerstone was placed in a ceremony for a new military base at Tapa. The new base will house an airspace defence battalion and three infantry battalions when it is completed in a few years.
Estonia's Dagmar Makko won the 2001 Miss Baltic Sea contest.

Exchange Rates As of 30 November 2000
Currency	Estonian kroons (EEK)
1 US dollar	17.93
1 British pound	25.56
1 German mark	8
1 euro	15.65

[Up-to-date exchange rates]

Mel Huang, 30 November 2000

Moving on:

Sources:

Baltic News Service (BNS)
Eesti Päevaleht
ETA
Postimees
SL Õhtuleht