On Tuesday, the government approved the Ministry of Transport’s (SM) proposed amendments to the Port Law and the Liepāja Special Economic Zone (SEZ) Law, forwarding them to the Saeima for further consideration. These amendments aim to reinstate municipal participation in the governance of the Freeports of Rīga and Ventspils and to redefine the boundaries of port territories.
The Ministry of Transport notes that, following extensive discussions with industry experts and other stakeholders, a compromise solution has been reached to apply the port governance reform to the ports of Rīga and Ventspils. The governance of the Liepāja SEZ would be affected by this reform after the 31st of December 2035.
Minister of Transport Atis Švinka (Progressives) stated during the cabinet meeting that the proposed amendments to the port reform would balance state and municipal collaboration in port governance and enhance the involvement of entrepreneurs. He emphasized that political-business practices should be a thing of the past.
Minister of Economics Viktors Valainis (Union of Greens and Farmers) indicated that his party would submit a separate opinion on the amendments, advocating for a unified governance model for all three major ports and a strengthened role for municipalities in port management. He stressed that the final decision rests with the Saeima.
Valainis added that more radical changes are necessary, as the current proposal maintains the state’s leading role in port governance. “Responsibility should be returned to municipalities, and the Ministry of Transport should focus on the ‘Rail Baltica’ railway project and the national airline ‘airBaltic.’ This is a matter of work efficiency,” Valainis remarked.
Švinka responded that practical operations in ports demonstrate the need for state support for municipalities, such as through the reallocation of funds.
He emphasized that professionalism, rather than political decisions, is essential in port management.
State Secretary of the Ministry of Transport Andulis Židkovs added that, concerning the Port Development Fund, a separate port entity, possibly in the form of an association, would likely be established, and the Ministry of Transport would assume the functions of the Secretariat of the Latvian Ports, Transit, and Logistics Council.
Prime Minister Evika Siliņa (New Unity) added that if the Port Development Fund remains, it should have clearly defined objectives and a spending plan.
The Ministry of Transport identifies the main benefits of the reform as the depoliticization of ports, professional governance, municipal involvement in decision-making, separation of property, and the opportunity for owners to develop industrial facilities adjacent to ports.
The ministry explains that changing the governance model of the Rīga and Ventspils ports, while maintaining the independence of the Liepāja SEZ, allows for adaptation to the needs of each port. This step will promote more precise and efficient resource utilization, ensuring that the governance of both the Rīga and Ventspils ports is coordinated and transparent, aiming to foster the long-term development and international competitiveness of the ports.
In contrast, the Liepāja SEZ will continue to operate under its current governance model until December 31, 2035, with necessary improvements regarding transparency and neutrality, allowing it to maintain its existing momentum and promote regional growth. This differentiated approach provides greater governance adaptability, preserving the diversity of Latvia’s port sector and its ability to respond to specific development needs, the Ministry of Transport emphasizes.
The governance of all three major ports is intended to retain the legal status of derived public persons, while small ports will be designated as institutions of the respective municipalities.
The draft law proposes the establishment of a port council as a supervisory body in port governance, representing the interests of the state and municipalities. The existing boards of the Rīga and Ventspils Freeport authorities will cease to exist. Operational activities of the ports are to be delegated to the port authority’s executive apparatus, led by the port manager. The port council will perform supervisory functions, not decision-making functions, similar to supervisory boards in capital companies.
Port councils will consist of four members: two representatives from the state—one each from the Ministry of Transport and the Ministry of Economics—and two representatives from the respective municipality. The representative nominated by the Minister of Transport will have a casting vote in case of a tie between state and municipal representatives.
Currently, the boards of the Rīga and Ventspils Freeport authorities comprise four members—representatives nominated by the Ministers of Economics, Finance, Transport, and Smart Administration and Regional Development, appointed and dismissed by the Cabinet of Ministers.
The board of the Liepāja SEZ currently includes nine members—three representatives from the Liepāja City Council, three representatives of Liepāja entrepreneurs appointed and dismissed by the City Council, and three state representatives delegated by the Ministries of Economics, Finance, and Transport, appointed and dismissed by the Cabinet of Ministers.
The port council will be responsible for making key strategic and financial decisions, including setting and approving port fees and service pricing policies, annual financial plans, port development strategies, and matters related to the disposal of real estate within the port territory.
If the term of the Liepāja SEZ is extended beyond the 31st of December 2035, a council similar to those in the Rīga and Ventspils Freeport authorities will be established within the Liepāja SEZ governance.
In small ports, the board will be formed by the respective municipal council, consisting of no more than five members. The boards of small ports will include one representative from either the Ministry of Smart Administration and Regional Development, the Ministry of Economics, the Ministry of Agriculture, or the Ministry of Transport, appointed by the respective minister upon the municipality’s proposal. Additionally, the board will include municipal officials and representatives of commercial companies operating within the port in equal proportions.
The draft law also stipulates that the territory necessary for performing port authority functions will be retained for this purpose. This territory will be adjusted according to current needs, potentially reducing its area. Areas designated for SEZ purposes will be available for real estate disposal, privatization, and other property-related activities.
Given that the properties under port management are transferred from the state and municipalities, the draft law provides that they may only be used for port authority functions. SEZ territories, where various commercial activities such as manufacturing, cargo handling, storage, and logistics services occur, will offer more flexibility for attracting investors and development. This separation will help ports respond more flexibly to market demands, attract long-term investments, and promote sustainable development, according to the Ministry of Transport.
The procedure for disposing of land and other real estate within port territories will be organized to clearly distinguish between properties used for port authority functions and those in other parts of the port territory. The Ministry of Transport believes this approach will ensure effective port governance and clarify property regulations according to each area’s intended use.
The port territory designated for port authority functions, which will be transferred to the port authority’s management, will be intended for the core operations of the port. In this area, the sale of state and municipal land and other real estate to third parties will not be permitted. Property transactions will only be allowed between the state and municipality without compensation.
Considering that the port territory comprises properties owned by the port authority, municipality, and state, mutual exchanges of property between the municipality and port authority will be permitted. This arrangement is intended to ensure the continuous and stable operation of the port, the Ministry of Transport explains. In this territory, the port authority will not be granted preemptive rights, given the specific usage objectives and the need to safeguard state interests.
In the second zone—the part of the port territory not transferred to the port authority’s management and not directly related to port authority functions—property owners will have greater freedom of action, the Ministry of Transport reports. In this area, property disposal will be possible at the owners’ discretion, including sales to third parties. The only condition concerning preemptive rights is that the port authority will be granted such rights only when the municipality offers to dispose of its property. This condition will enable the port authority to acquire properties that may be strategically important for port development, the Ministry of Transport notes.
The draft law also provides that the port council will appoint the port manager through an open competition, who will be responsible for ensuring the operational activities of the port authority. The role of the port manager will expand, taking over several matters previously under the board’s competence, thereby promoting more professional and efficient port governance with an emphasis on strategic development and operational activities.
To facilitate more targeted and effective decision-making in port governance, the draft law proposes the establishment of a cooperation council, comprising key port stakeholders, including representatives of stevedoring companies, regular line operators, and other strategic partners.
Additionally, to ensure the efficient use of port authority resources, the draft law proposes consolidating various port activities, functions, and services, regardless of specific terminals or companies operating within the port. These activities may include the shared use of pilot boats, tugboats, hydrographic vessels, and other watercraft, maintenance of navigation aids, hydrographic services, emergency response measures, and other necessary port services.
The draft law also proposes reducing the number of board members in small ports from the current ten to a maximum of five.
In the new model, one board member position would be held by a state representative appointed by the respective ministry upon the municipality’s proposal. Depending on the specific activities of the port—whether more related to cargo handling, fishing, or tourism—the municipality may choose to invite a representative from the ministry it deems appropriate: the Ministry of Transport, the Ministry of Economics, the Ministry of Agriculture, or the Ministry of Smart Administration and Regional Development.
The selection of the remaining board members would be within the municipality’s competence, with equal representation from municipal officials and entrepreneurs operating within the port. To reduce costs, the remuneration of board members would also be decreased, which, according to the ministry, would be addressed through subsequent amendments to the Port Law and corresponding Cabinet of Ministers regulations.
As previously reported by LETA, in late July last year, the Ministry of Transport submitted the relevant informative report for coordination, abandoning the initial idea of transforming the Rīga and Ventspils Freeports into capital companies. However, the informative report received several objections from the Ministry of Economics and other stakeholders regarding governance issues, leading to prolonged coordination and discussions.
In February 2022, the Saeima adopted amendments to the Port Law in the final reading, which provided for the transformation of the Rīga and Ventspils ports into capital companies. In early 2023, the Saeima supported amendments to the Port Law extending the deadline for the liquidation of the Rīga and Ventspils Freeport authorities until the 31st of December 2023.
However, in January 2024, the Saeima adopted amendments to the Port Law in the final reading, allowing for the possibility of reviewing the course of the port reform if necessary.