LTG Infra receives state funding to cope with losses due to sanctions

The Lithuanian government will allocate 20 million euros to railway manager LTG Infra. Due to the sanctions against Russia, less goods are transported through Lithuania, resulting in lower income for rail infrastructure manager LTG. 

Until now, the Lithuanian railway network has been maintained only with the income from infrastructure users via track access charges and other fees.The financing allocated to the railway infrastructure will reduce the lost revenue of LTG Infra, and the railway manager can offer businesses more attractive charges for the use of railway infrastructure and facilities. The financing contract between the government and LTG Infra is valid for five years.

Reduced tariffs

LTG Infra has been reducing the tariffs for railway service facilities for goods transport between 33 and 200 percent for business since April. It is forecasted that the lower tariffs will not only maintain the existing cargo flows, but will increase rail freight by 0.5 million tonnes and 6,000 standard containers (TEU) of intermodal freight travelling to the west.

According to Marius Skuodis, Lithuania’s Minister of Transport and Communications, significantly less goods have been transported since last year due to sanctions, and the company’s results will undoubtedly be negatively affected by the declining volume of shipments from the East due to the Russian war in Ukraine. ”In the current geopolitical situation, we need to step up our efforts to ensure the efficient operation of the railways to encourage as much freight as possible from the West and to develop new directions for rail logistics”, said Skuodis.

45 million loss

LTG Infra is losing 45 million euros a year in revenue after the transit of Belaruskalij, a Belarusian producer and exporter of potassium fertilizers, was suspended in Lithuania from February. This amount may change due to the war started by Russia in Ukraine and the sanctions imposed on companies and the decrease in the volume of Kaliningrad transit.

“In other countries, it is common to co-finance the development of railway infrastructure”, says Karolis Sankovski, CEO of LTG Infra. In order to write off the declining revenue, the company says it continues the digitisation and automation of operations, the acquisition of services from market participants and the optimisation of operational functions, which started a few years ago. LTG Infra plans to save almost 7.5 million euros this year alone.

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Author: Esther Geerts


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