Lithuania to restructure state rail company

Lithuania will divide the state-owned railway company Lietuvos Gelezinkeliai (LG) into three separate entities managing the country’s railway infrastructure, passenger transport, and hauling of goods, the government announced on May 16.

The three entities will remain managed by LG holding company and will remain state-owned because of the railways’ strategic importance for Lithuania, the government said. Restructuring LG will, however, allow more efficient management, according to Vilnius.

The restructuring of LG is also in line with the EU standards that require an independent railways infrastructure manager, the company said in a statement on its website.

“[The company will] remain in the hands of the state, but will become more transparent, financially stable and more easily managed,” Transport Minister Rokas Masiulis said in a statement.

Ultimately, the minister added, LG should be less vulnerable to politics and bring higher revenues to the state coffers. That said, the passenger services are likely to remain unprofitable and losses will be covered by profits from other railway operations, Masiulis told reporters, according to Xinhua.

The current infrastructure, passenger, and goods transport branches of LG will each be transformed into a limited liability company by September 1, 2019, according to the government plan. The state LG holding company will have a 100% stake in each newly created entity.

LG’s revenue grew 11% to €443.7mn in 2017. The company carried 52.5mn tonnes of cargo, or 10% more than in 2016. The number of passengers inched up 0.7% to 3.8mn. The limited growth in passenger numbers the company explains by intensive repairs taking place across the rail network.

Revenue grew 7% y/y in January-April, according to preliminary data made available by LG. The company carried 17.6mn tonnes of cargo in the first four months of the year, a growth of 11.9% on the year. The number of passengers grew 3.6% y/y to 1.5mn.

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