Latvia, Lithuania at odds over compensation of dismantled railway section

Source: Xinhua| 2018-09-05 02:10:18|Editor: Mu Xuequan
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RIGA/VILNIUS, Sept. 4 (Xinhua) -- Latvian rail companies are demanding over 82 million euros (95 million U.S. dollars) worth of compensation from neighboring Lithuania for a dismantled railway section, local media reported on Tuesday.

In response, Lithuanian transport minister Rokas Masiulis slammed Latvia for demanding the compensation, saying that the Latvian move was a surprise to him and "like a stab in the back".

Masiulis said Latvia's claim is unfounded, and the sums of claims are "cosmic". According to Masiulis, Latvia's compensation demands are politically motivated.

In breakdown, Latvian national rail company Latvijas Dzelzcels (Latvian Railways) is demanding 56.92 million euros in compensation for the income it did not earn between 2009 and 2017 because of the lost railway connection.

Its subsidiary LDz Cargo, meanwhile, demands 25.4 million euros for unearned income the company could have generated by shipping oil from a refinery of Polish oil company Orlen in Mazeikiai, Lithuania.

The 19-km long section of track connecting Lithuania and Latvia, close to the Orlen refinery in Mazeikiai, was suddenly closed and dismantled in late 2008.

Lithuania said the closure of the railway connection was due to the poor condition of the tracks and the need for repairs. However, the rail section was never restored.

After the European Commission issued its ruling and fined Lithuanian Railways 28 million euros, the Lithuanian government promised last December to rebuild the Mazeikiai-Renge railway line. Earlier this year, Lithuanian Railways started rebuilding railway track.

Lithuanian Railways paid the fine in January.

The dismantle of the railway prevented oil company Orlen Lietuva, a subsidiary of Polish oil company PKN Orlen and a major customer of Lithuanian Railways, from using the services of other railway companies.

According to Latvian media reports, the Latvian companies' claims are based on the ruling by the European Commission which found in October 2017 that Lithuania had breached the EU's anti-trust rules by removing the tracks on the Mazeikiai-Renge railway section, thus hindering competition on the rail freight market.

The two Latvian rail companies said they would now wait for Lithuania's response, but warned they would consider a lawsuit if their demands are rejected.

"We hope that we will succeed in reaching an agreement, otherwise, if we fail to do that, we will seek justice in court," Latvijas Dzelzcels representative Maris Ozols said on public radio.

In his response, Lithuanian Prime Minister Saulius Skvernelis has called the Latvian rail companies' demand "incomprehensible and legally baseless".

"Next month, Latvia holds parliamentary election, and that kind of aggressive move could help during election. I see no other explanation," Lithuanian transport minister told Lithuanian national radio LRT.

Masiulis said the ministry would wait for more information from Latvia before considering any response.