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World Bank Document TRANSPORT SECTOR RESTRUCTURING IN THE BALTIC STATES Public Disclosure Authorized TOWARD EU ACCESSION Public Disclosure Authorized Proceedings of the 2nd Seminar held in Parnu on November 24-25, 2003 The Seminar was hosted by: The Estonian Ministry of Economic Affairs and Communications The World Bank Public Disclosure Authorized Edited by Lauri Ojala, Tapio Naula and Cesar Queiroz March 2004 Public Disclosure Authorized The second seminar on transport sector restructuring was held in Parnu, Estonia, on November 24 and 25, 2003 to review recent progress in this field in each of the Baltic States and to discuss possibilities for further restructuring of their respective transport sectors in the near future. The seminar was a follow-up of the first seminar held in Riga in 2000. The proceedings reflect the significant progress that the Baltic States have made in modernizing their transport sectors over the past few years. The Governments of Estonia, Latvia, and Lithuania deserve to be congratulated for their achievements, which will help to promote economic growth in the region. The Governments of the three states participating in the seminar attached considerable importance to the topic, as reflected by the high level of their delegations, led by the respective Ministers of Transport and Communications. The EBRD, EIB, NIB and ECMT joined the World Bank at the Seminar, and made a significant intellectual contribution to the proceedings. TRANSPORT SECTOR RESTRUCTURING IN THE BALTIC STATES TOWARD EU ACCESSION Proceedings of the 2nd Seminar held in Parnu on November 24-25, 2003 The Seminar was hosted by: The Estonian Ministry of Economic Affairs and Communications The World Bank Edited by Lauri Ojala, Tapio Naula and Cesar Queiroz March 2004 2004 The International Bank for Reconstruction and Development / THE WORLD BANK 1818 H Street, N.W., Washington, D.C. 20433, U.S.A. Published for The World Bank by Logistics, The Turku School of Economics and Business Administration, Rehtorinpellonkatu 3, 20500 Turku, Finland e-mail: [email protected] All rights reserved. No part of this publication may be reproduced, stored in a retrieval system, or transmitted, in any form or by any means, electronic, mechanical, photocopying, recording, or otherwise, without the prior permission of The World Bank. Printed in Paino-Raisio, Finland First printing March 2004 This paper is published jointly to communicate the results of the recent seminar with minimum delay. The typescript of this paper, therefore, has not been prepared in accordance with the procedures appropriate to formal printed texts and the World Bank accepts no responsibility for errors. Some sources cited in this paper may be informal documents that are not readily available. The findings, interpretations, and conclusions expressed here are those of the authors and do not necessarily reflect the views of the Board of Executive Directors of the World Bank or the governments they represent. The World Bank cannot guarantee the accuracy of the data included in this work. The boundaries, colors, denominations, and other information shown on any map in this work do not imply on the part of the World Bank any judgment of the legal status of any territory or the endorsement or acceptance of such boundaries. ISBN 951-564-181-0 2 CONTENTS List of Attachments....................................................................................................................................................5 List of Figures............................................................................................................................................................6 List of Tables .............................................................................................................................................................7 List of Boxes .............................................................................................................................................................8 Acronyms .............................................................................................................................................................9 A. EXECUTIVE SUMMARY ......................................................................................................12 B. STATEMENTS OF THE MINISTERS OF TRANSPORT ..................................................28 B.1 MINISTER ATONEN’S STATEMENT ..........................................................................................28 B.2 MINISTER ZILE’S STATEMENT ................................................................................................29 B.3 MINISTER BALCYTIS’ STATEMENT .........................................................................................34 C. SEMINAR OBJECTIVES AND PARTICIPATION.............................................................38 D. STRATEGIC CONTEXT ........................................................................................................40 D.1 GLOBAL TRENDS IN THE TRANSPORT SECTOR .........................................................................40 D.2 THE BALTIC STATES’ ECONOMIC PROFILES ............................................................................43 D.3 TRANSPORT SECTOR HIGHLIGHTS IN THE BALTIC STATES ......................................................47 D.4 TRANSPORT SECTOR PROJECTS AND INTERNATIONAL FINANCIAL INSTITUTIONS...................54 D.5 EUROPEAN UNION ASSISTANCE TO THE TRANSPORT SECTOR IN THE BALTIC STATES.............58 D.6 INSTITUTIONAL FRAMEWORK IN THE TRANSPORT SECTOR IN THE BALTIC STATES.................62 D.7 TRANSPORT SECTOR RESEARCH AND EDUCATION...................................................................68 E. MERCHANDISE TRADE, FDI AND THE BUSINESS ENVIRONMENT .......................70 E.1 MERCHANDISE TRADE ............................................................................................................70 E.2 TRANSPORT SERVICES TRADE.................................................................................................72 E.3 FOREIGN DIRECT INVESTMENT...............................................................................................74 E.4 MEASURING THE BUSINESS ENVIRONMENT IN THE BALTIC STATES........................................75 F. THE TRANSPORT SECTOR IN THE BALTIC STATES AND EU MEMBERSHIP......81 F.1 EC’S ASSESSMENT ON ESTONIA .............................................................................................82 F.2 EC’S ASSESSMENT ON LATVIA ...............................................................................................85 F.3 EC’S ASSESSMENT ON LITHUANIA..........................................................................................87 F.4 PLANNED TRANSPORT SECTOR INVESTMENTS INTO TEN-T NETWORK...................................89 F.5 PREPARING THE ESTONIAN TRANSPORT SECTOR FOR EU MEMBERSHIP ..................................89 F.6 PREPARING THE LATVIAN TRANSPORT SECTOR FOR EU MEMBERSHIP....................................90 F.7 PREPARING THE LITHUANIAN TRANSPORT SECTOR FOR EU MEMBERSHIP ..............................90 G. ROADS AND ROAD TRANSPORT ......................................................................................93 G.1 ROAD NETWORKS ...................................................................................................................94 G.2 SAFETY ISSUES IN ROAD TRAFFIC ...........................................................................................94 G.3 VEHICLE STOCK......................................................................................................................97 G.4 MANAGEMENT OF ROADS AND ROAD CONSTRUCTION ............................................................98 G.5 ECONOMIC ANALYSIS ...........................................................................................................100 G.6 TECHNICAL ISSUES ...............................................................................................................101 G.7 ROAD FINANCING .................................................................................................................105 G.8 VIA BALTICA........................................................................................................................108 G.9 ROAD TRANSPORT INDUSTRY ...............................................................................................109 G.10 MARKET CHARACTERISTICS IN ROAD FREIGHT TRANSPORT..................................................110 G.11 ROAD TRANSPORT PERMITS .................................................................................................114 G.12 INTERURBAN AND INTERNATIONAL BUS TRANSPORT............................................................116 G.13 REGULATORY ISSUES IN ROAD TRANSPORT SERVICES ..........................................................117 G.14 CONCLUSION ........................................................................................................................119 3 H. RAILWAYS ............................................................................................................................121 H.1 VOLUME OF RAIL OPERATIONS .............................................................................................122 H.2 ORGANIZATION ....................................................................................................................124 H.3 RAIL TRANSPORTS’ FINANCIAL PERFORMANCE ....................................................................124 H.4 RAIL INFRASTRUCTURE
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