The Freeport of Riga: The State Audit Office approach assessing Krievu Sala project is short-sighted and bureaucratic
The Freeport of Riga Authority says the State Audit Office in the preparation of a report on implementation of the project “The Krievu Sala Infrastructure Development for Relocation of the Port Operation from the City Center” has demonstrated absolutely formal approach, without taking into consideration the port’s and stevedores’ work specifics. One of the critical remarks, expressed by the Auditor General Mrs.Elita Krumina in response to the statement, distributed by the Freeport yesterday, stating that the FPR does not see and does not acknowledge any violations in implementation of the Krievu Sala project, is that the Freeport has inefficiently utilized resources by transferring the “open warehouse” from the project territory to the equivalent area on Krievu Island.
“I want to emphasize that, first of all, we are talking not about the “warehouse” within the meaning of the State Audit Office, but about an open-space storage area – where various cargo such as lumber, construction materials, peat, etc. is placed, and then loaded on ships and transshipped to the designated ports in other countries. In the present case the stevedoring company has been working on the territory of the Krievu Island since the nineties, at that time due to the growing volume of freight it was possible to attract and handle additional cargo volumes. One of the main objectives of the Freeport is to promote transshipped cargo volume increase and not hinder the entrepreneur with all kinds of formal restrictions,”explains the Freeport of Riga CEO Mr.Leonids Loginovs.
“Secondly - to anyone who understands business processes, it is clear that the company's downtime does not foster cargo volume growth and involvement of human and technical resources, which in turn results in loss of revenue, or actual losses. According to the State Audit Office, the Freeport should have taken this territory away from the stevedore before term during the Krievu Sala project development, not allowing the stevedoring company to handle cargo. The Freeport, in its turn, followed the logic of the economy - from 2009 to 2011, when the project documentation was elaborated, the preparations and planning activities were carried out, the stevedoring company was not prevented from continuing its operation on that territory, the certain part of which belonged to Krievu Island, in order to handle growing cargo volumes,” continues Mr.Loginovs.
At the time when the construction of railway access tracks to the new berths was started on Krievu Island, the stevedoring company had to leave this area. With the aim to ensure the continuous operation of the successful merchant on this territory and not lose the increasing amount of cargo that would otherwise have gone to Tallinn port or Klaipeda port, it was decided to allot the equivalent area of 12 hectares at another location on Krievu Island to the company, and in compliance with the relevant laws and regulations to organize an identical cargo storage area. Consequently, the State Audit Office reproaches in regards of wasteful spending are absurd. The Freeport considers that there is no reason to talk about any losses - on the contrary, eliminating downtime and making it possible to run a successful company on that territory resulted in revenues from rental and taxes significantly exceeding the Freeport’s expenses due to relocation. For example, the turnover of the stevedoring company, working on the territory, from 2009 to 2010 increased by 323 thousand tons, the state budget has received additional revenues in the amount of nearly 4 million Euros, while the Freeport income has grown by almost 400 thousand Euros. Provided, the Freeport of Riga was guided by the principles of the State Audit Office, the mentioned funds would have been received not by the Latvian national budget, but would go to Estonia or Lithuania.
