Georgian Railway spent GEL 42 million 487 thousand on the subsidy of passenger transportation last year.
As known, passenger transportation is unprofitable for Georgian Railway, so this direction is financed with the revenues from freight shipments.
According to the document on a fiscal risk analysis prepared by the Ministry of Finance late last year, Georgian Railway’s expenditures on passenger transportation is about GEL 40 million per year.
"Georgian Railway" subsidizes passenger transportation at the expense of annual revenue from cargo turnover, which costs the company about GEL 40 million annually. Georgian Railway would close 2020 with a profit without the quasi-fiscal activity," said the Ministry of Finance.
Georgian Railway tries to divert these expenditures to the state budget for several years. Relevant amendments have been made to the code on Railway, but 2022 budget does not provide funds for the financing of passenger transpiration, despite the fact General Director of the Railway, Davit Peradze, had some expectations in this regard.
BM.GE got interested if the Ministry of Finance is considering subsidizing passenger transportation of the Georgian Railway. The agency declared it was a "good practice" to cover such expenditures from the state budget, but such activity was not panned this year.
"The state budget 2022 does not provide funds for this purpose. The Ministry of Finance of Georgia continues to work actively with the relevant agencies and in the coming years, in line with the enterprise reform, similar expenditures will be financed from the budget.
In general, reimbursing such expenditures from the budget is a good practice and one of the most important components in the concept of state-owned enterprise reform.
Within the framework of the reform, such expenditures will be compensated (or eliminated altogether) for all state-owned enterprises along with the Georgian Railway," the Ministry of Finance explained.
