OPINION | Ventspils has «three sea ports» – this is not good for entrepreneurship

From ancient history we know a triumvirate is not the best form of governance. The Roman Empire tried it twice and in both cases the outcome was disappointing. A similar situation has been present at Ventspils sea port, where Freeport of Ventspils authority, VAS Ventas osta and the municipality’s own Ventspils osta compete for control in different areas. It is the sea port businesses that are desperately trying to not go mad in this situation. Newcomers to the sea port, on the other hand, may get the urge to «turn their ship» around after they study the situation and how things are done there.
The «dual government» at the Freeport of Ventspils started on 9 December 2019, when Aivars Lembergs and Freeport of Ventpils authority were presented with US sanctions. To prevent the possible paralysis of sea port operations, the government in Latvia made the most logical decision at the time – founded a new sea port management company VAS Ventas osta. The sea port of Ventspils and the sea port of Riga were then transferred under state supervision. Representatives of municipal administrations were forced from their seats in sea port boards. In Ventspils’ case this was a very logical decision, considering «the toxic Lembergs».
Now the government has on the discussion table potential changes to the role of municipal administrations in sea port management.
But let’s go back to events of the last couple of years. Minister of Transport Tālis Linkaits said at the time that the foundation of Ventas osta is a step towards a new sea port management model. However, when the Freeport of Ventspils was removed from the list of sanctions, Linkaits said there is no need to create any parallel institutions and said it is more important to look at Ventas osta as a pilot project for a sea port management reform. Two years have passed but we have yet to witness any major accomplishments.
But what about the current situation? If we look at it from Ventas osta viewpoint, everything seems fine. (This is where it is worth mentioning that among the four council members of VAS Ventas osta the sole board member was picked without a selection process from among ministry representatives and had no prior sea port business experience.)
Some activities happen and wages are paid regularly. But no one asks for any special results from this «pilot project».
According to VAS Ventas osta financial account for 2020, the net turnover of the company that has a base capital of EUR 35 000 for this period of time was EUR 2 079 743. Administrative costs reached EUR 147 946 (this includes board member’s wage of EUR 36 222 and four council members’ wage of EUR 40 330). Profits after taxes were EUR 398 108.
The state was eligible for dividends worth nearly EUR 239 000. However, this money was diverted instead towards maintenance of sea port of Ventspils public infrastructure. It is possible that this way the newly founded company proved its worth as a «pilot project» and its economic grasp. However, there is one important nuance.
Because Ventas osta needed money to cover wages and other expenses, Freeport of Ventspils authority handed over to this company four contracts signed with shipping agencies.
Some of the money was spent on the needs of Ventas osta and the other half was used to pay for sea port infrastructure use and sea port services and returned to the Freeport of Ventspils authority. Basically the money moved from one pocket of the state to the other. The difference, however, is that some of this money was spent on wages of Ventas osta employees, board and council members. But if we look at information published on the website of the Ministry of Transport, the objective of VAS Ventas osta is «promoting sea port development, promoting Latvia’s participation in international commerce, developing sea port territory, attracting investments, enhancing and expanding the range of see port clients». So far it looks as though this range was «expanded» at the expense of contracts previously signed by the Freeport of Ventspils authority.
In 2020 the Freeport of Ventspils had two managers. By the end of the year, however, another surprise came from then Aivars Lembergs’ led Ventspils City Council in the form of municipal company Ventspils osta.
More on this topic: BNN ANALYSES | US sanctions’ «jubilee». Lembergs still craves control over the freeport
Several important pieces of infrastructure owned by the sea port were handed over to this company with the municipal administration’s blessing. As a result of this Freeport of Ventspils authority and Ventspils City Council started fighting over sea port territories and signing and re-signing of rent contracts with sea port businesses. But while the two sides accuse one another of the lack of communication, explain who owns what, and the Ministry of Transport is busy explaining Ventspils osta has no legal right to work at the freeport, because in accordance with the law, sea port operations are managed by the Freeport of Ventspils authority, not the municipality’s own institution, only sea port businessmen are the ones who suffer.
First of all, the question remains open as to which of the three ‘sea ports’ is responsible for actual port operations and who is in charge of the triumvirate. Secondly, there is a lot of confusion over which of the three – Freeport of Ventspils authority, Ventas osta and Ventspils osta – is even authorized to accept contract offers.