Latvian Railway - the Hub for a Multimodal Transport Corridor

The geographical position of Latvia determines its essential role in international transport network. Beside the East - West transit corridor, the international Via Baltica highway crosses Latvia in the North - South direction.

Most of the cargo transport in Latvia is transit, mainly raw materials from Russia - oil and oil products, metals, chemical cargoes as well as containers. The transit traffic is ensured by a multimodal transport infrastructure, consisting of ports, railway and road network, pipelines and air transport.

The long-term programs of the Latvian transport development are aimed at full incorporation in the Trans-European multimodal transport system.

The advantageous geographical position, ice-free Baltic ports and a developed transport infrastructure have made Latvia an important transport corridor linking the CIS countries and Europe, as well as serve as a link in the trans-continental cargo traffic.

The currently less busy North - South transport corridor may increase its significance in the future. This direction is represented by the Via Baltica highway, presently the only section of Latvian transport infrastructure which is an important part of the First Trans-European Transit Corridor, along with railways in both, North - South and East - West corridors.

The basis of the Latvian transport system consists of three big ports, one international airport, 2,413 km of railway network and a total of 20,400 km of roads. Two pipelines of oil and of oil products are strategically important elements of the transport corridor as well.

The three biggest Latvian ports - Ventspils, Riga and Liepaja - handle about 90% of the total cargoes that go through the ports. The railways of Latvia mainly serve as the hinterland connections of the ports. The dominance of transit in the cargo traffic means that Latvia already is an integral part of the regional transport system and plays an important role in the development of international trade.

The development of the transport business of Latvia is characterised by a gradual increase of foreign investment. Until the end of June 1999 the foreign direct investment totalled more than 1.7 billion USD. Of these 26% went to the transport and communications sector. The biggest investor here is the Russian company Transnefteprodukt, which has invested 61.8 million USD or 34% of the capital of the Latvian oil pipeline company LatRosTrans. The Latvian ports too have proved interesting to foreign investors. Currently a Belgian stevedore company Noord Natie is taking part in a huge investment project - construction of a new container terminal at the port of Ventspils. The 70 million USD project has succeeded in obtaining the credit resources of the EBRD and the European Investment Bank.

In order to improve the quality of the infrastructure and the services provided by the Latvian multimodal transport corridor, huge investment is necessary in the future. The investment needs of the transport infrastructure have been assessed within the EU TINA (Transport Infrastructure Needs Assessment) initiative. The total sum mentioned in the final TINA report of October 1999 amounts to 1989.7 million Euro.

Transport and communications is one of the priority branches of Latvian economy. In 1999 it provided 16 % of the GDP. In 1990 it provided 11 million USD of the added value, but in 1998 - already over 800 million USD, and it shows the competitiveness of the Latvian transport corridor and a tendency towards growing importance of transport in the wellbeing of the country.

About 25% of all Latvian exports of goods and services are transit services. The transport business provides 90 thousand jobs or almost 9% of the 2.6 million population of Latvia.

Currently the railway infrastructure is managed only by the state-owned JSC Latvijas Dzelzcels (LDz), which is also the leading railways operator.

The main cargoes shipped through the Latvian rail transit corridor are oil products, mineral fertilisers and metals. In the first half of 1999 these cargoes amounted to ³/₄ of the total cargo traffic of LDz. Other important cargoes are sugar, timber and cotton. Of all Latvian ports Riga handles the bulk of rail shipments - almost 60%.

At present the railway infrastructure in the East - West transit corridor allows to transport 50 million tons of cargo annually. The cargo traffic in the East - West direction is expected to grow in the future. It has been envisaged to increase the capacity of Latvian railway to 60 million tons annually.

According to the LDz Investment Program a total of 280 million USD will be invested in various infrastructure projects from 1999 till 2003.

The bulk of these investments could be financed by international banks. LDz signed an agreement with the EBRD and the European Investment Bank on financing the implementation of the project Reconstruction of the East - West Transit Corridor on November 30, 1998. The project anticipates the construction of the cargo terminal Juras parks of the Ventspils railway station and the reconstruction of the railway on the East - West corridor. The total sum of the project is 120.8 million Euro, including the EBRD credit of 20.5 million USD (about ECU 17 mln), the EIB credit of ECU 34 million, Phare funds of ECU 5 million and LDz own funds - ECU 64.8 million. The project will be completed by December 2002.

In order to transform the railway system of Latvia in accordance with the EU standards and to increase its competitiveness in the transportation market, LDz restructuring was launched in 1996. The reconstruction project of the enterprise was developed in co-operation with the Sweden's SwedeRail AB and the Dutch Nethconsult.

The restructuring of LDz was started already at the end of 1996, when four administrations were set up - each one for operations in a different market segment - The company's operational responsibilities were split among the Infrastructure, the Rolling-stock, the Passenger Traffic Division and the Real Estate administration. In 1998 they were joined by the Cargo Transportation, but in 1999, when the passenger traffic administration was reorganised, two new structural units were set up - the passenger transportation enterprises Elektrovilciens and Dizelvilciens.

The restructuring of LDz takes place simultaneously with the changes in the legislation pertaining to the railway transport. With reference to EU Directive 91/440, the Law on the Railway was adopted in 1998, which envisages the separation of the railway infrastructure and operator activities, as well as the liberalisation of the transportation market.

During the last years LDz has paid great attention to the issues of quality control, standardisation and certification. LDz bases the establishment of its quality systems on internationally approved quality standards. Based on the standards of the LVS EN ISO 9000 group, the quality control system is already being introduced in two structural units of LDz.

In 1998 the environment policy of LDz was approved. It provides for a systematic, purposeful and preventive approach to the problems of environment. In 1998 the elaboration of the Environment project of LDz was completed under the guidance of the Swedish company SwedeRail AB.

Sponsored by Latvijas Dzelzcels