Switching to short-term contracts would encourage passenger transport companies to revert to using older buses, said Ivo Ošenieks, President of the Latvian Passenger Carriers Association (LPPA), in a statement to the news agency LETA.
The association objects to the change in conditions in state-announced tenders for the Cēsis, Limbaži, and Sigulda routes, which provide for three-year contracts, whereas the previous practice was to sign contracts for ten years.
The association points out that short-term contracts will mean that carriers will be unable to recoup investments in purchasing new vehicles and will be forced to use older buses of various makes, increasing operating costs, reducing reliability, and doing nothing to address the CO₂ emissions problem.
According to the association’s calculations, capital investments under three-year contracts will not have time to amortize evenly, and the cost per kilometer will increase by 15–25% compared with ten-year contracts.
Ošenieks stresses that short-term contracts are not the right way forward
and that such an approach has not been discussed with the industry. “In passenger transport, it was important to ensure long-term contracts so that carriers could transition to the newest possible bus models, taking long-term loans for this purpose,” the association’s head explained.
He noted that the industry had relied on predictability and the conditions agreed upon in 2019 for the period 2021–2030.
“This decision on short-term contracts does not improve the situation in the sector and is against the interests of residents—it eliminates the motivation to invest in environmentally friendly buses, improve passenger comfort, or develop modern information and ticketing systems,” said Ošenieks.
The association explains that
the life cycle of buses and related passenger transport infrastructure is 10–12 years.
Therefore, with a three-year contract, a carrier will not be able to recoup the investment in new vehicles and will be forced to use older buses, which increases operating costs.
Similarly, capital investments, including depots, washing lines, repair facilities, and offices, would have to be amortized within 36 months (three years) instead of ten years, which would significantly raise the cost per kilometer for the state.
Ošenieks added that the state itself does not benefit from such an approach, as it will have to pay higher budget compensations due to accelerated amortization, while administrative costs will also rise, since tenders will need to be conducted every three years. Moreover, the state will fail to meet its long-term transport and decarbonization strategy goals.
The association emphasizes that this approach also contradicts general European practice,
as the optimal and most common standard in Europe is a 10-year contract, which ensures investment returns in transport and infrastructure, guarantees high service quality, and enables fleet renewal.
As previously reported, the Road Transport Administration (ATD) has announced a procurement for regional bus transport in the Cēsis, Limbaži, and Sigulda areas, according to information published in the Electronic Procurement System (EIS).
The contracts are planned for a three-year term, with a total estimated contract value of €24.953 million (excluding VAT). The tender is divided into two parts: providing regional transport in the “Cēsis” network section and in the “Sigulda, Limbaži” network sections.
It was also reported that on the 12th of August, representatives of public transport passenger carriers held a protest at the Cabinet of Ministers, calling on the government to compensate for cost increases caused by unpredictable emergency circumstances. Later, on the 16th of August, passenger carriers organized another protest, “One Hour Without Public Transport,” to draw attention to insufficient funding for the public transport sector.
The carriers demanded compensation for 10% of their losses resulting from long-term contracts affected by emergency conditions during the period from the 1st of July, 2022, to the 31st of August, 2025.
In mid-September, ATD representatives met with passenger carrier representatives to discuss current issues related to long-term contracts. After the meeting, ATD stated that it would seek legal options to meet the passenger carriers’ demands.
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