State companies want new owners

Eesti Teed alustas uudse pindamistehnikaga töö tegemist Rakveres.

PHOTO: Eesti Teed

The looming coalition of the Center Party, Conservative People’s Party (EKRE) and Isamaa promises to privatize three state companies: Eesti Teed, Operail and Enefit Green.

Talk of selling AS Eesti Teed has been around since 2016. It has made its way into two coalition agreements. “In this light, it is quite peculiar we are still owned by the state,” said CEO Andres Agukas.

He is convinced Eesti Teed should be sold as soon as possible. “The longer we wait, the worse it gets,” he said. Constant doubt is having a negative effect on development: missed investments, business directions and markets.

The state halted the privatization process late last year as the company’s value had fallen sharply. The reason for the latter was the decision to take away Eesti Teed’s road administration contracts and open the market.

Agukas described it as hardly a good enough reason. “When we had insider contracts with the road administration, we didn’t have any value,” he said. The CEO added that profits of all road maintenance companies have fallen on the free market.

Agukas said that waiting and postponing decisions does not have the potential to improve things. “A company’s value does not grow automatically,” he said and added that he hopes Eesti Teed will be privatized soon as it was the first item in the coalition agreement’s chapter on the economy.

The new coalition also plans to privatize 49 percent of railroad logistics company Operail. CEO Raul Toomsalu said he likes the idea. “Decisions regarding state companies are often politically motivated – especially when elections are looming – as opposed to following business logic,” Toomsalu explained his position.

Unlike Andres Agukas, Toomsalu believes the privatization of Operail is not an urgent matter and should be carefully thought out. One option is to sell the minority stake to a financial investor who could facilitate the company’s expansion. “We have ambitious goals that require a lot of extra financing,” Toomsalu said, pointing out plans for locomotion building and railcar rentals.

After the financial investor helps improve the value of the company, Operail could either be sold to a long-term investor or listed. This would help the company develop and help the state get a better price at the same time.

The coalition has also promised to privatize and list on the Tallinn exchange Eesti Energia renewable energy subsidiary Enefit Green. The plan would see 49 percent of shares listed. CEO of Enefit Green Aavo Kärmas said the coalition agreement held nothing new for the company. “Preparations have been underway for some time and there is a mandate,” he said.

It has been speculated Enefit Green wants to be listed before Midsummer’s Day 2019.