27 July 2009

The recent change in methodology for calculating railway infrastructure charges, as proposed by the Ministry of Economic affair, allowed the infrastructure owner EVR Infra and railway operator E.R.S. Ltd - a fully owned subsidiary of Vopak E.O.S. - to enter into a long term agreement fixing maximum infrastructure charges for a  three year period.

The new agreement permits Vopak E.O.S. to provide its customers with a transparent and stable pricing mechanism for railway transportation to its oil terminal facilities not depending on the quantity of cargo carried in aggregate on Estonian Railway infrastructure. Previously, Vopak E.O.S. was unable to forecast  transportation expenses for its customers as infrastructure charges were made on a monthly basis depending on total quantity of cargo carried on Estonian Railway infrastructure. Chairman of the Board of Vopak E.O.S., Arnout Lugtmeijer said: ‘having a known price level for the next three years permits to market our terminal services in a much better way as we have eliminated our exposure on unpredictable pricing of transportation services and it allows us to entirely focus on providing our customers with optimal solutions within our terminal facilities to market their oil products. Overall, fixing the price level increases the competitiveness of the logistics chain for Estonian port activities.’

During the first half of 2009, a new methodology was established through joint efforts of the Ministry of Economic Affairs and Transportation, the Transit Commission and Techniline Jarelevalve Amet, together with specialists from Estonian Railways and the Transit and Logistics Association . The new methodology provides for entering into long term agreements, which in turn allows very significant infrastructure companies such as port operators to enter into long term commitments with their customers. Implementation of this new tariffs system makes the direction of transportation cargoes by railway through Estonia much more attractive.

Vopak E.O.S. has through its fully owned subsidiary E.R.S. Ltd become a major railway operating company in Estonia over the past year. On a monthly basis, E.R.S. Ltd transports for Vopak E.O.S. customers’ in excess of 1 million Mtons of cargo. Arnout Lugtmeijer said: ‘We made a decision 2 years ago to take charge of railway transportation in Estonia as the cost of transportation very much determines the competitiveness of our oil terminal facilities. We have been able to improve efficiency and performance in both railway and terminal activities by better synchronizing these activities and this eventually is to the benefit of our customer. Having the infrastructure agreement behind us now, we hope we can further develop improved relations with EVR’s transportation company EVR Cargo’.