The Estonian government approved the beginning of the second and final phase of the sale of the state-owned rail freight operator Operail. Interesting parties can now submit biding offers out of which the company’s next owner will surface.
The main reason behind Operail’s privatisation is that “cargo transport is not a strategically important activity for the state”, according to the country’s Minister of Infrastructure Vladimir Svet. The first announcement of a full privatisation was made in February 2024. The initiative was then officialised by the Estonian government in June with the beginning of a public auction, with interested parties submitting non-binding offers.
Operail struggling over the past two years
Operail has been struggling to remain afloat since the introduction of sanctions placed by the European Union on Russia and Belarus in 2022 in the context of the war in Ukraine. By September of that year, the company had halved its international volumes and laid off over 100 workers.
Operail also completely stopped transporting Russian and Belarusian goods at the beginning of 2023. Moreover, in the first months of that year, the Estonian company finalised the sale of its Finnish subsidiary, an initiative that sparked some controversies. In addition, Operail sold over 2,300 wagons and stopped carrying out regular freight services, opting only for project-based ones.
Currently, Operail employs about 200 people. “The interest in the company shows that the employees have done a good job, and the new owner will be able to continue working with a well-functioning and industrious team”, Svet claimed. The auction is being conducted by LHV Investment Banking Unit.