VILNIUS, Feb. 12 (Xinhua) -- The Lithuanian government approved on Monday the reorganization of the state-controlled Lithuanian Railways by splitting the company's activities into three separate subsidiaries.
According to the plan prepared by the country's transport and communications ministry, Lithuanian Railways' freight transportation, passenger transportation and infrastructure management activities are to be split into three separate companies. After splitting, all three companies would remain under control of the holding company Lithuanian Railways.
INCREASE COMPETITION
The state railway company's reorganization by separating freight, passenger transportation and infrastructure activities is necessary to meet the requirements of the 4th Railway Package, a set of the European Commission legislation, aimed at increasing competition in the European Union's rail sector.
The state-controlled company says the reorganization plan is based on models implemented in Germany, France, Italy and Austria.
"The ministry, which is the shareholder, and the government also see that this model is the most efficient and the most transparent," Mantas Bartuska, chief executive of Lithuanian railways, told journalists on Monday.
Lithuanian officials and representatives of the company say the reorganization would also increase the strategic company's transparency and efficiency.
"For many decades Lithuanian Railways were turned into a state within a state. The company was lacking transparency, the results were manipulated," says Rokas Masiulis, minister of transport and communications. He referred to the previous top management of Lithuanian Railways which resigned amid corruption scandals more than a year ago.
"We have to ensure that this would never happen again, that the management wouldn't be politically involved and the company would never be dependent on political winds," said Masiulis.
The minister also noted that the approved reorganization of Lithuanian Railways is not "drastically liberal".
NO PRIVATIZATION
On Monday, Masiulis told the journalists he expects the reorganization to be completed by the end of this year. He also categorically dismissed the idea that Lithuanian Railways could be privatized or partially privatized any time in the future.
Masiulis also admitted that passenger transportation would probably remain unprofitable and would require subsidies from the state budget.
"We expect freight transportation and infrastructure management companies to be profitable and to pay dividends, which would be bigger than the subsidies for passenger transportation," says Masiulis.
The reorganization of Lithuanian Railways comes amid dispute regarding a fine of almost 28 million euros (34.38 million U.S. dollars) imposed to the company by the European Commission for dismantling a railway track to neighboring Latvia ten years ago. Recently, Lithuanian government decided to appeal against the fine to the EU's General Court.
