State could make electric railway traffic more cost-effective

7/2/2003 | 12:00 AM

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TALLINN, 2 July 2003 - The SAO examined the activity of the state-supported electric railway company AS Elektriraudtee in a follow-up audit. The audit showed that some of the proposals made in the audit two years ago have successfully been implemented. Nevertheless, at the moment the state is not acting sufficiently to its own good.

The proposal on ticket prices has been implemented. At the time of the previous audit, the Minister had not laid down the ticket prices nor authorised any administrative agency to do so, whereas now the Railway Administration has the right to lay down the ticket prices, and the actual train fares of AS Elektriraudtee correspond fully to the requirements of the Railway Administration.

On the basis of another proposal by the SAO, the service life of rolling stock has grown from 8 years to 10 years, which contributes to the reduction of costs.

Despite the implemented recommendations, the SAO again identified systematic shortcomings, which may substantially damage taxpayers’ interests. Neither the development plans nor the Public Transport Act specifies the minimum standard of transport service that taxpayers should receive for their money. Without such specification, the Minister and the carrier can agree on any standards. At the moment the contract between the state and AS Elektriraudtee specifies only the train kilometre as the basis for receiving support. This fails to make the carrier become concerned about improvement of service quality and is not related to passengers who are users of the service.

Another considerable shortcoming is that although the Public Transport Act stipulates the limit of support to 70 % of transport costs, no definition of transport costs has been provided, thus enabling the company to get money from the state to cover all business expenses.

According to the reply of the Minister of Economic Affairs and Communications, the situation should improve with the completion of the Public Transport Development Plan by the end of the year 2003. Also, the Minister considers it necessary to specify the definition of transport costs in the legislation, and address in detail the question of transport costs in the contract to be concluded with AS Elektriraudtee.

Sven Soiver
Press Representative of State Audit Office
Telephone: (372) 640 0787
GSM: (372) 53 414464
E-mail: [email protected]

  • Posted: 7/2/2003 12:00 AM
  • Last Update: 10/2/2015 5:28 PM
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