They wanted to raise the tariff by 300%, but it turned out to be 25%: why Latvia could not sharply increase the cost of transit of Russian grain

The government aimed to accelerate the cessation of grain transit from Russia and other aggressor countries by significantly increasing the cost of using Latvian railway infrastructure. However, the initial plan has not yet been implemented, reports LSM.lv. The company LatRailNet, responsible for setting infrastructure tariffs, raised the fee by about 25%, although the government urged it to set the rate at 300% of the previous one. The company claims that they went as far as current EU rules allow. "The infrastructure fee is not a transit charge that can be set at a single figure. It must be based on economic calculations and costs," explained the chairperson of the board of LatRailNet, Justina Khudenko. According to her, the maximum possible level of costs was applied in the calculations, resulting in the tariff being increased by about a quarter. The company found no legal grounds for tripling the fee. Thus, the problem lies not only in who sets the tariff. European norms require that the fee for using railway infrastructure be economically justified and related to the costs of providing the relevant service. At the end of September, the Saeima adopted amendments to the railway law, allowing for quicker reviews and implementation of new infrastructure tariffs. However, the specific amount of the increase was not stipulated by the deputies in the law. "The law does not define the magnitude of the increase. The Cabinet of Ministers urged LatRailNet to set the tariff at 300% of the previous one, but this was merely a government proposal," explained the head of the Saeima Legal Bureau, Dīna Meistere. The State Railway Administration initially reached a similar conclusion. In its assessment, EU legislation does not allow for setting infrastructure fees above a level that can be justified by actual costs for the relevant service. This means that simply transferring authority to another organization will not solve the problem: the same European restrictions will have to be observed by the new tariff system operator. Earlier, Prime Minister Andris Kulbergs stated that to expedite the cessation of grain transit from aggressor countries, LatRailNet should be liquidated, and its functions transferred to the Public Utilities Regulation Commission. LatRailNet itself warns that the liquidation of the company may be significantly more complicated than it seems, and the possibility of sharply increasing tariffs will not automatically arise from this. Now the company has sought clarifications directly from the European Commission to determine whether there is a legal possibility to increase the fee more significantly. A response is expected in about two weeks, although the European Commission is not obliged to provide such clarification. Thus, the future of the idea of tripling the tariff remains uncertain for now: there is a political decision, but a mechanism that does not contradict EU rules needs to be found for its implementation.