Operail had already sold off part of its business in 2023. Credit: Operail

The Estonian Government has begun the auction process for state rail company Operail as it prepares to divest all of its operations into a private entity. 

The rail logistics company revealed that the Estonian cabinet had approved a proposal from the Ministry of Climate to begin a public auction of all its freight and repairs businesses. 

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Merle Kurvits, member of the board of Operail, highlighted the company as holding the biggest market share of freight rail in Estonia but said recent years had been challenging for the industry. 

She said: “While overall freight volume on the Estonian railway decreased by 39% last year, Operail’s volume decreased by almost 70%, for unlike our competitors, Operail ceased freight transportation to and from Russia and Belarus.” 

The auction comes only a few years after the government first decided to sell off the company’s wagon leasing and freight transportation in Finland businesses, with deals closing at the beginning of 2023 after a two-year process. 

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However, while the sale process has only just begun – carried out by LHV Bank – Estonia had announced its intention to sell the remaining assets of Operail in February 2024. 

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The company has cited the difficulties of operating a rail transport company with small volumes and short journeys within a single country as part of the reason for divesting the business. 

Kurvits previously said that it was hoped a sale could allow Operail to “expand its operational scope towards Europe” while continuing to benefit Estonia’s own rail industry.