Latvia is currently unable to increase railway infrastructure charges for Russian grain transit by 300% or impose a complete ban, Prime Minister Andris Kulbergs (United List) acknowledged following a government meeting on Tuesday. Until recently, Kulbergs had criticised LatRailNet, the company responsible for setting railway infrastructure charges, for acting too slowly to introduce substantially higher tariffs.
The prime minister noted that he would travel to Brussels this week to discuss the issue.
Last week, Kulbergs, Estonian Prime Minister Kristen Michal and Lithuanian President Gitanas Nausėda sent a joint letter to European Council President António Costa and European Commission President Ursula von der Leyen, calling for a ban on Russian grain transit through the European Union (EU).
“The biggest problem is that the EU has exclusive powers over both tariff and transit matters. We can take action under certain conditions, but that involves specific risks,” Kulbergs said.
He stressed that Russian grain has not been included in any sanctions so far.
Furthermore, according to the prime minister, the grain no longer belongs to Russia but to companies from Latvia’s strategic partner countries, including the United States, Switzerland and Japan.
“These are the companies buying the grain, some of the largest corporations in the world,” Kulbergs claimed.
He added that companies from these countries also purchase grain from farmers in the Baltic states.
According to Kulbergs, government ministers were informed on Tuesday that banning Russian grain transit could expose Latvia to immediate legal claims worth between 200 million and 800 million euros.
The prime minister claimed that Lithuania is currently involved in litigation over a similar case, with claims amounting to 12 billion euros.
He also asserted that Lithuania would most likely have to pay 450 million euros in connection with the proceedings later this year.
Kulbergs said he intends to present these examples in Brussels to support discussions on introducing a common EU-wide ban.
At the beginning of October, Estonia decided to introduce national sanctions prohibiting the transit of Russian and Belarusian grain through its territory.
However, Kulbergs pointed out that Estonia’s situation differs from Latvia’s.
According to the prime minister, Estonia had no existing grain transit contracts when it introduced the ban.
Latvia, by contrast, already has contracts covering the transit of 300,000 tonnes of grain.
Kulbergs acknowledged that he had previously been unaware of the potential costs associated with legal proceedings resulting from such restrictions.
The prime minister stressed that he must assess the risks these lawsuits could pose to the state budget.
If Latvia were required to pay substantial compensation, the question would be which other areas of government spending would have to be reduced.
Kulbergs also admitted that when the government decided to pursue a 300% increase in railway infrastructure charges, it had not been known that such a substantial increase could not be implemented.
Tuesday’s government agenda also included a proposal to change the institutional framework for setting railway infrastructure charges.
Under the proposal, responsibility for determining these charges would be transferred from LatRailNet, a subsidiary of the state-owned railway company Latvijas dzelzceļš, to the Public Utilities Commission (SPRK).
However, Kulbergs claimed that the issue had not been discussed during the meeting.
As previously reported, a decision adopted by LatRailNet takes effect on Tuesday, increasing railway infrastructure charges for Russian grain transit by an average of 25%.
LatRailNet board chair Justīna Hudenko told LETA that charges for different components of infrastructure use would rise by between 21.4% and 27.4%, resulting in an average increase of 25%.
According to Hudenko, the calculations take into account infrastructure costs associated with all grain shipments in the relevant transport category.
She explained that this approach makes it possible to increase infrastructure charges while justifying their level on the basis of the costs associated with the relevant freight services.
As previously reported,
Kulbergs had suggested considering the dissolution of LatRailNet and transferring its responsibilities for setting railway infrastructure charges to the Public Utilities Commission.
The prime minister was dissatisfied with the pace at which LatRailNet was implementing politicians’ plans to impose substantially higher tariffs on grain transported from aggressor states.
On the 17th of September, the Saeima adopted urgent amendments to the Railway Law aimed at accelerating the revision of infrastructure charges for Russian grain transit shipments by the end of the year.
The amendments are intended to make it possible to increase infrastructure charges more quickly for grain transit shipments whose transport documents identify a departure station located in Russia.
The regulation will remain in force until the 31st of December, 2026.
The government has also previously approved changes allowing the Food and Veterinary Service to collect samples from grain shipments transported in transit and conduct laboratory tests to verify whether the declared country of origin is accurate.
Kulbergs has previously emphasised that Latvia wants to restrict Russian grain transit while maintaining opportunities to support exports by Ukrainian and Latvian farmers through Latvian ports.