Ofotbanen AS
Encyclopedia
Ofotbanen Drift AS, trading as Ofotbanen, is a Norwegian
passenger and freight railway company. The company operates a fleet of six locomotives, three multiple units, 22 passenger and 48 freight cars. The sole service is the passenger train Unionsexpressen
between Oslo and Stockholm, but the company is seeking contracts for other passenger and freight transport. It has previously offered freight haulage on contract.
The company was founded in 2001, and took over Norges Statsbaner's (NSB) passenger operation of the Ofoten Line in 2003. The following year it entered the freight market, in particular with timber trains for Norske Skog
. It further expanded into other services, such as charter trips. In 2006, the company almost went bankrupt, and was taken over by Rail Management. In 2007, the automotive distributor Autolink
started purchasing the autorack
operations from Ofotbanen, and at the same time bought 40% of the company. 2008 saw a dramatic decline in operations, as both the Norske Skog, Autolink and passenger train services were terminated. In April the company started service with the Unionexpressen between Oslo
and Stockholm
. The company went bankrupt in October, but was immediately re-established as Ofotbanen Drift. In May 2010, the new company filed for bankruptcy.
Operation will not commence until February 2009, following the bankruptcy in 2008. That year, the company had lost its three large contracts, and it is uncertain what external operations the company will be performing. The company does hold an operation and safety license from the Norwegian Railway Inspectorate
, and plans to commence operations with Unionsexpressen between Oslo
and Stockholm
in cooperation with Scandinavian Railway
.
The company is based in Narvik
, a city that is only connected to the rest of the Norwegian railway network
through Sweden
. The company is led by CEO Terje Østensen and Chairman Thor Ask Terkelsen.
, it operates one daily round trip, in 5 hours 45 minutes, between Oslo and Stockholm, using renovated stock from the 1960s. While more expensive than SJ, the service aims at being more luxurious. One of the four cars is a traditional dining car
, and the company markets the product as a first-class only service. Each train has a capacity of 84 riders, and provides perks such as Wi-Fi
and 2+1 seating. The service has not operated since 7 October 2008, due to the bankruptcy in Ofotbanen, and SJ no longer being willing to rent out locomotives to the company.
diesel locomotives, and a single El 13
electric locomotive. Ofotbanen has 22 B3 passenger carriages, used for charter trains. These are supplemented by three two-car Class 68 electric multiple units. The 48 freight cars the company uses are owned by Nord-Norsk Spedisjon. Of these, 19 are timber cars. All stock is painted dark green. All motorized stock is used stock that NSB has chosen to take out of service.
for NOK 250,000 each, well under market price, from Norges Statsbaner (NSB). The purchase raised controversy, because the potential operator Banetransport had offered full market price for the trains. Also, NSB had to rent back several of the locomotives for six months, while six of eleven brand-new Class 93 trains were out of service. NSB paid the whole purchase price for the six-month rental.
In 2003, NSB announced that they wanted to discontinue their operations in Narvik, hoping they could leave operation of passenger trains on the Ofot Line to Ofotbanen. In May, NSB signed an agreement with Ofotbanen, where the latter would take over NSB's responsibilities to operate trains from Narvik
to Riksgränsen
along the Ofot Line. The initial contract would last until 2006, and NSB paid NOK 13 million for the service. From 15 June, Ofotbanen took over all passenger transport on the line, including empolying all former NSB employees in Narvik. On the same day, Connex Tåg
took over the operations on the Swedish side of the boarder after winning a public service obligation
contract with the Swedish government, and dismissing SJ
of the right to offer the service. An operating and security license was granted from the Norwegian Railway Inspectorate
to Ofotbanen on 11 June.
, a freight competitor of Ofotbanen, had felt that they were being unfairly treated by the port after the municipality had bought shares in Ofotbanen and appointed Arnøy as chair. The legality of the port's purchase of the shares was considered by the Norwegian Coastal Administration
; though deemed legal, the port authority was required to sell the shares within three years. In April, Ofotbanen received a permit to operate in Sweden, and started offering charter trains between Narvik and Kiruna
in Sweden, primarily for cruise ship passengers. It also announced that it was going to bid for the public service obligations for subsidized passenger railway transport that the government was planning to conduct in 2006. In June, Ofotbanen received permission to operate freight trains throughout the entire railway network in Norway
. This was the first time such permission was granted to a different company than NSB or its subsidiaries.
In September, Ofotbanen was one of six companies prequalified to bid for the first public service obligation tender on the Gjøvik Line. However, the company chose to not submit a bid, and the contract was won by the NSB subsidiary NSB Anbud. In September, the mechanical company Narvik Sentralverksted, that had provided maintenance for the Norwegian National Rail Administration in Narvik since 1999, accused the municipality of illegally subsidizing Ofotbanen through providing the company with subsidized rent for their workshops. Ofotbanen had just won the public tender for the contract, and the company threatened to take the municipality to court for violation of competition laws. The matter was soon resolved, without the courts being involved. In December, the government granted permission for Ofotbanen to operate charter trains throughout the entire railway network.
By November 2004, the largest owners of Ofotbanen were Cargo Nor (26.1%), the Municipality of Narvik (12.5%), Narvik Port (12.5%) and Moe Media (8.5%). In addition, employees had bought shares for more than NOK 1 million. During a general meeting on 13 December 2004, a capital placement was initiated for NOK 5.2 million. An anonymous, British consortium named GB Group bought a 36% stake for NOK 2.5 million. In 2004, the company had a revenue of NOK 20 million. The following general assembly in December 2005, GB Group made a private placement of NOK 11.7 million in Ofotbanen, increasing the consortium's ownership to 52%.
Freight transport started in 2004, when an agreement with Norske Skog
was made to transport timber along the Røros, Meråker and Nordland lines to the paper mill at Skogn
. The activity was further increased in 2006, when a contract worth NOK 30 million was signed to transport 250000 tonne of timber, including some to the other paper mill in Halden
. The following year, Ofotbanen also entered the container freight market, with a train running from Narvik via Sweden to Oslo, both via the Meråker Line and via the Kongsvinger Line. The trains would continue to Drammen when necessary. Ofotbanen was also in negotiations about transporting 700 annual trains of ore for Rana Gruber, but the contract was instead awarded to CargoNet. By 2005, Ofotbanen only had a 50% utilization of their stock, but in March a contract for the rest of the year was signed securing full use of the equipment to transport timber in Southern Sweden, with two trains in continual traffic. The extraordinary traffic was needed to clean up after the Gudrun
storm, and the contract gave a revenue of NOK 20 million.
were giving liquidity problems, and Ofotbanen announced that they needed more capital, estimated at NOK 8 million. GB Group said they were not willing to invest more money in the railway company. Ofotbanen had then been losing money continually since the start-up in 2001; in 2004, it had a deficit of NOK 4 million of a NOK 20 million revenue. At the extraordinary general meeting on 4 September 2006, the company was sold for NOK 1 million to Rail Management, a holding company for the London-based shipping owner Mons Bolin. In November, the Norwegian Rail Inspectorate threatened to withdraw the company's safety license, since they had failed to show proper maintenance of the rolling stock.
On 31 January 2007, Autolink
—Norways largest distributor of automobiles—bought 40% of Ofotbanen, and transferred their train haulage contract to them. This made Autolink Ofotbanen's largest customer. In March, Autolink ordered an additional 70 new autoracks for NOK 175 million. In June 2007, a new report from the Rail Inspectorate showed that Ofotbanen had severe safety problems—the company was using engineers without necessary licenses, and was not performing safety analysis. Director of the inspectorate, Erik Ø. Johnsen, stated that the inspectorate did not believe that Ofotbanen was taking safety seriously. CEO of Ofotbanen, Terje Østensen, felt that the issues taken up by the inspectorate were mere formalities, and that it was difficult to make necessary documentation, stating that in his opinion, none of the procedures criticized actually influenced safety.
From the beginning of 2008, Ofotbanen lost two important contracts. All the timber contracts with Norske Skog were transferred to CargoNet and Hector Rail
. At the same time, the public service obligation contract on the Ofot Line was won by SJ. This included a subsidy of NOK 3.0 million from the Norwegian Ministry of Transport and Communications
for the 40 km (24.9 mi) section on the Norwegian side of the border. Therefore, SJ started operating trains all the way to Narvik, and Ofotbanen lost the contract of operating the trains on the Norwegian side of the border. Ofotbanen had been receiving NOK 4.5 million in subsidies from NSB for the operation from 15 June.
With the termination of NSB and SJ cooperation Linx on the Oslo–Stockholm route in January 2005, Ofotbanen announced they would be willing to take over operation of the route from the summer. However, SJ and NSB held monopolies on non-subsidized passenger trains services in their respective countries, and it would not be possible for a private company to operate the route. In May 2007, the company announced its plans for the Oslo–Stockholm train, after necessary permissions had been granted from Norwegian and Swedish authorities. By then, SJ had already reopened its route on the line. In March 2008, plans had been launched to start operations in April, but Ofotbanen had not met the requirements to get a safety licence from the inspectorate. The company rented rolling stock from SJ, including an Rc locomotives, and newly renovated cars from the 1960s. The service was a cooperation between Ofotbanen and the Swedish company Scandinavian Railway
.
The necessary certificates were granted on 10 April, and the first trial run was made the following day. Ordinary service started on 25 April, though without the dining car
. The initial price was NOK 422, and travel time was 5 hours 45 minutes. The trains have four cars, of which three are regular open seating, and one is a dining car. From 15 June, full service was introduced. The company stated that the service was meant to be more luxurious than with SJ, including wider seating (three instead of four abreast) and a wooden interior. The company markets the service as all first-class seating. The trains also had Wi-Fi
. After the full service was introducde, the price increased to NOK 593. By July, Ofotbanen had still not found a locomotive for the second train, and was still operating only a single round service. Passenger numbers were at 35 per departure, not close to the capacity of 84, or the necessary annual 100,000 needed to make a profit.
s of capital, nor sell their shares to Autolink. From 29 July, all automotive trains stopped running, and no cars were transported for ten days. The same day, all board members in Ofotbanen representing Autolink withdrew from their positions.
The matter ended in court, concerning if Autolink should be allowed to take control over four train radios that were located in locomotives owned by Autolink, but operated by Ofotbanen. In a shareholder agreement between Autolink and Rail Management, the ownership of the train radios had been transferred to Autolink, but the agreement has clauses that specified that Autolink could not start a competing railway company. Stating that Autolink had been disloyal with regard to the contract, Ofoten District Court
ruled on 17 July 2008 against Autolink's demand for an interim order to transfer the possession of the radios to Autolink. The court ruled that an interim decision could not be made due to the complexity of the contracts, and that a normal lawsuit would have to be carried out to determine the matter. The parties agreed that Autolink, on 13 February 2008, had bought five shunter
s from Ofotbanen for NOK 12 million, of which NOK 9.5 million was paid by Autolink deleting debt. On 18 September, Autolink won the appeal in Hålogaland Court of Appeal
, where Ofotbanen was convicted of stealing four radios.
Ofotbanen lost their license from the Norwegian Railway Inspectorate
on 7 October 2008 at 12:00. This was because Ofotbanen had not documented necessary accounting for 2007, nor provided evidence of necessary liquidity. On 24 October, the company filed for bankruptcy.
Autolink had already founded their company Cargolink
on 27 March, and received an operating and safety licence from the inspectorate on 18 September. They took control over the five shunters they owned, in addition to leasing ten Di 6
diesel locomotives. Operations started on 2 November, when all autorack trains were taken over by the new company.
Norway
Norway , officially the Kingdom of Norway, is a Nordic unitary constitutional monarchy whose territory comprises the western portion of the Scandinavian Peninsula, Jan Mayen, and the Arctic archipelago of Svalbard and Bouvet Island. Norway has a total area of and a population of about 4.9 million...
passenger and freight railway company. The company operates a fleet of six locomotives, three multiple units, 22 passenger and 48 freight cars. The sole service is the passenger train Unionsexpressen
Unionsexpressen
Unionsexpressen was an intercity train service provided between Oslo and Stockholm, the capitals of Norway and Sweden. The first-class only service was operated by company Unionsexpressen Scandinavian Railway AB, while haulage and Norwegian representation was operated by Ofotbanen.In 2005, the...
between Oslo and Stockholm, but the company is seeking contracts for other passenger and freight transport. It has previously offered freight haulage on contract.
The company was founded in 2001, and took over Norges Statsbaner's (NSB) passenger operation of the Ofoten Line in 2003. The following year it entered the freight market, in particular with timber trains for Norske Skog
Norske Skog
Norske Skogindustrier ASA or Norske Skog, which translates as Norwegian Forest Industries, is a Norwegian pulp and paper company based in Oslo, Norway and established in 1962...
. It further expanded into other services, such as charter trips. In 2006, the company almost went bankrupt, and was taken over by Rail Management. In 2007, the automotive distributor Autolink
Autolink
Autolink AS is a Norwegian distributor of automobiles. With port facilities in Drammen, Oslo and Malmö, Autolink prepares and redistributes to dealerships three quarters of all automobiles in Norway. The company has outsourcing agreements with many of the largest automotive importers in the country...
started purchasing the autorack
Autorack
An autorack, also known as an auto carrier, is a specialized piece of railroad rolling stock used to transport automobiles and light trucks, generally from factories to automotive distributors...
operations from Ofotbanen, and at the same time bought 40% of the company. 2008 saw a dramatic decline in operations, as both the Norske Skog, Autolink and passenger train services were terminated. In April the company started service with the Unionexpressen between Oslo
Oslo
Oslo is a municipality, as well as the capital and most populous city in Norway. As a municipality , it was established on 1 January 1838. Founded around 1048 by King Harald III of Norway, the city was largely destroyed by fire in 1624. The city was moved under the reign of Denmark–Norway's King...
and Stockholm
Stockholm
Stockholm is the capital and the largest city of Sweden and constitutes the most populated urban area in Scandinavia. Stockholm is the most populous city in Sweden, with a population of 851,155 in the municipality , 1.37 million in the urban area , and around 2.1 million in the metropolitan area...
. The company went bankrupt in October, but was immediately re-established as Ofotbanen Drift. In May 2010, the new company filed for bankruptcy.
Operation
Norwegian Railway Inspectorate
The Norwegian Railway Inspectorate is a Norwegian government agency responsible for control and supervision of rail transport in Norway, including railways, tramways, rapid transits, heritage railways and side tracks....
, and plans to commence operations with Unionsexpressen between Oslo
Oslo
Oslo is a municipality, as well as the capital and most populous city in Norway. As a municipality , it was established on 1 January 1838. Founded around 1048 by King Harald III of Norway, the city was largely destroyed by fire in 1624. The city was moved under the reign of Denmark–Norway's King...
and Stockholm
Stockholm
Stockholm is the capital and the largest city of Sweden and constitutes the most populated urban area in Scandinavia. Stockholm is the most populous city in Sweden, with a population of 851,155 in the municipality , 1.37 million in the urban area , and around 2.1 million in the metropolitan area...
in cooperation with Scandinavian Railway
Unionsexpressen
Unionsexpressen was an intercity train service provided between Oslo and Stockholm, the capitals of Norway and Sweden. The first-class only service was operated by company Unionsexpressen Scandinavian Railway AB, while haulage and Norwegian representation was operated by Ofotbanen.In 2005, the...
.
The company is based in Narvik
Narvik
is the third largest city and municipality in Nordland county, Norway by population. Narvik is located on the shores of the Narvik Fjord . The municipality is part of the Ofoten traditional region of North Norway, inside the arctic circle...
, a city that is only connected to the rest of the Norwegian railway network
Rail transport in Norway
The Norwegian railway system comprises 4,087 km of track of which 2,622 km is electrified and 242 km double track. There are 696 tunnels and 2760 bridges....
through Sweden
Rail transport in Sweden
Rail transport in Sweden uses a network of 13,000 km of track, the 20th largest in the world. Construction of the first railway line in Sweden began in 1855. The major operator is the state-owned SJ AB....
. The company is led by CEO Terje Østensen and Chairman Thor Ask Terkelsen.
Unionsexpressen
The Union Express is a passenger train service between the Norwegian and Swedish capitals of Oslo and Stockholm. The service is a cooperation between Ofotbanen and the Swedish company Scandinavian Railway. In competition with SJSJ AB
SJ is a government-owned passenger train operator in Sweden. SJ was created in 2000, out of the public transport division of Statens Järnvägar, when the former government agency was divided into six separate government-owned limited companies.-Overview:SJ's operations fall broadly into subsidised...
, it operates one daily round trip, in 5 hours 45 minutes, between Oslo and Stockholm, using renovated stock from the 1960s. While more expensive than SJ, the service aims at being more luxurious. One of the four cars is a traditional dining car
Dining car
A dining car or restaurant carriage , also diner, is a railroad passenger car that serves meals in the manner of a full-service, sit-down restaurant....
, and the company markets the product as a first-class only service. Each train has a capacity of 84 riders, and provides perks such as Wi-Fi
Wi-Fi
Wi-Fi or Wifi, is a mechanism for wirelessly connecting electronic devices. A device enabled with Wi-Fi, such as a personal computer, video game console, smartphone, or digital audio player, can connect to the Internet via a wireless network access point. An access point has a range of about 20...
and 2+1 seating. The service has not operated since 7 October 2008, due to the bankruptcy in Ofotbanen, and SJ no longer being willing to rent out locomotives to the company.
Rolling stock
The company has five Di 3NSB Di 3
NSB Di 3 is a class of 35 diesel-electric locomotives built by Nydqvist och Holm for the Norwegian State Railways . The class was built between 1954 and 1969, and delivered in two series, Di 3a and Di 3b. They are based on the Electro-Motive Division F7 and are equipped with EMD 567 engines...
diesel locomotives, and a single El 13
NSB El 13
NSB El 13 is a Norwegian electric locomotive which was used by Norges Statsbaner for both passenger and freight trains.The locomotive is a heavier and upgraded version of the NSB El 11 which was popular among its crew but unsuitable for journeys in heavy snow on lines such as Bergensbanen. Like...
electric locomotive. Ofotbanen has 22 B3 passenger carriages, used for charter trains. These are supplemented by three two-car Class 68 electric multiple units. The 48 freight cars the company uses are owned by Nord-Norsk Spedisjon. Of these, 19 are timber cars. All stock is painted dark green. All motorized stock is used stock that NSB has chosen to take out of service.
| Class | Type | Quantity | Built | Power | Speed | Notes | |
|---|---|---|---|---|---|---|---|
 |
Di 3 NSB Di 3 NSB Di 3 is a class of 35 diesel-electric locomotives built by Nydqvist och Holm for the Norwegian State Railways . The class was built between 1954 and 1969, and delivered in two series, Di 3a and Di 3b. They are based on the Electro-Motive Division F7 and are equipped with EMD 567 engines... |
Diesel locomotive | 5 | 1957–69 | 1305 kW | 105 km/h (65.2 mph) | |
| |
El 13 NSB El 13 NSB El 13 is a Norwegian electric locomotive which was used by Norges Statsbaner for both passenger and freight trains.The locomotive is a heavier and upgraded version of the NSB El 11 which was popular among its crew but unsuitable for journeys in heavy snow on lines such as Bergensbanen. Like... |
Electric locomotive | 1 | 1958 | 2648 kW | 100 km/h (62.1 mph) | |
| |
Class 68 | Electric multiple unit | 3 | 1958–60 | 640 kW | 100 km/h (62.1 mph) | |
| |
Z71 | Diesel shunter | 5 | 1961–68 | 333 kW | 70 km/h (43.5 mph) | Sold to Cargolink Cargolink Cargolink AS is a Norwegian railway company. Owned by the automotive distribution company Autolink, Cargolink has operated both autorack and container trains since November 2008. Cargolink has a fleet of ten diesel locomotives, five shunters, 100 autoracks and 60 container cars... in 2008 |
Establishment
Ofotbanen AS was founded on 20 March 2001. In November, it bought five used Di 3NSB Di 3
NSB Di 3 is a class of 35 diesel-electric locomotives built by Nydqvist och Holm for the Norwegian State Railways . The class was built between 1954 and 1969, and delivered in two series, Di 3a and Di 3b. They are based on the Electro-Motive Division F7 and are equipped with EMD 567 engines...
for NOK 250,000 each, well under market price, from Norges Statsbaner (NSB). The purchase raised controversy, because the potential operator Banetransport had offered full market price for the trains. Also, NSB had to rent back several of the locomotives for six months, while six of eleven brand-new Class 93 trains were out of service. NSB paid the whole purchase price for the six-month rental.
In 2003, NSB announced that they wanted to discontinue their operations in Narvik, hoping they could leave operation of passenger trains on the Ofot Line to Ofotbanen. In May, NSB signed an agreement with Ofotbanen, where the latter would take over NSB's responsibilities to operate trains from Narvik
Narvik Station
Narvik is a railway station located in Narvik in Nordland, Norway on the Ofotbanen. The station is located 3.70 km from the line terminus at Narvik Port and is served by three daily passenger trains from, respectively, Kiruna, Luleå and Stockholm in Sweden. These passenger services are...
to Riksgränsen
Riksgränsen Station
Riksgränsen Station is a railway station located on the Norway–Sweden border at Riksgränsen, one kilometer into Sweden. The station opened in 1902 as part of the Ofot Line and Malm Line, and was the location of the switching between Norwegian and Swedish operations.-External links:* at the...
along the Ofot Line. The initial contract would last until 2006, and NSB paid NOK 13 million for the service. From 15 June, Ofotbanen took over all passenger transport on the line, including empolying all former NSB employees in Narvik. On the same day, Connex Tåg
Veolia Transport
Veolia Transport is the international transport services division of the French-based multinational company Veolia Environnement...
took over the operations on the Swedish side of the boarder after winning a public service obligation
Public Service Obligation
In transport, public service obligation or PSO is an arrangement in which a governing body or other authority offers an auction for subsidies, permit the winning company a monopoly to operate a specified service of public transport for a specified period of time for the given subsidy...
contract with the Swedish government, and dismissing SJ
SJ AB
SJ is a government-owned passenger train operator in Sweden. SJ was created in 2000, out of the public transport division of Statens Järnvägar, when the former government agency was divided into six separate government-owned limited companies.-Overview:SJ's operations fall broadly into subsidised...
of the right to offer the service. An operating and security license was granted from the Norwegian Railway Inspectorate
Norwegian Railway Inspectorate
The Norwegian Railway Inspectorate is a Norwegian government agency responsible for control and supervision of rail transport in Norway, including railways, tramways, rapid transits, heritage railways and side tracks....
to Ofotbanen on 11 June.
Expansion
In 2003, the company managed to cover it costs, and the company stated that it hoped to have a revenue of NOK 30 million the following year, through an ambitious expansion plan. A private offering for NOK 8 million was issued to allow this expansion. Among the purchasers was the Municipality of Narvik and Narvik Port Authority. In March, Chair Rune Arnøy was forced to withdraw after accusations of conflict of interest, since he was both chair of Ofotbanen and harbormaster at the Port of Narvik. CargoNetCargoNet
CargoNet AS is the primary operator of freight trains on the Norwegian railway system. It was formed as NSB Gods after NSB fissioned into a passenger and a freight company. NSB Gods changed its name to CargoNet at the beginning of 2002. It is owned by NSB and the Swedish freight company Green Cargo...
, a freight competitor of Ofotbanen, had felt that they were being unfairly treated by the port after the municipality had bought shares in Ofotbanen and appointed Arnøy as chair. The legality of the port's purchase of the shares was considered by the Norwegian Coastal Administration
Norwegian Coastal Administration
Norwegian Coastal Administration is a Norwegian government agency responsible for the water transport infrastructure along the 92,000 km Coast of Norway. It is responsible for coastal navigation infrastructure, pilotage and harbour and port infrastructure, including lighthouses...
; though deemed legal, the port authority was required to sell the shares within three years. In April, Ofotbanen received a permit to operate in Sweden, and started offering charter trains between Narvik and Kiruna
Kiruna
Kiruna is the northernmost city in Sweden, situated in Lapland province, with 18,154 inhabitants in 2005. It is the seat of Kiruna Municipality Kiruna (Northern Sami: Giron, Finnish: Kiiruna) is the northernmost city in Sweden, situated in Lapland province, with 18,154 inhabitants in 2005. It is...
in Sweden, primarily for cruise ship passengers. It also announced that it was going to bid for the public service obligations for subsidized passenger railway transport that the government was planning to conduct in 2006. In June, Ofotbanen received permission to operate freight trains throughout the entire railway network in Norway
Rail transport in Norway
The Norwegian railway system comprises 4,087 km of track of which 2,622 km is electrified and 242 km double track. There are 696 tunnels and 2760 bridges....
. This was the first time such permission was granted to a different company than NSB or its subsidiaries.
In September, Ofotbanen was one of six companies prequalified to bid for the first public service obligation tender on the Gjøvik Line. However, the company chose to not submit a bid, and the contract was won by the NSB subsidiary NSB Anbud. In September, the mechanical company Narvik Sentralverksted, that had provided maintenance for the Norwegian National Rail Administration in Narvik since 1999, accused the municipality of illegally subsidizing Ofotbanen through providing the company with subsidized rent for their workshops. Ofotbanen had just won the public tender for the contract, and the company threatened to take the municipality to court for violation of competition laws. The matter was soon resolved, without the courts being involved. In December, the government granted permission for Ofotbanen to operate charter trains throughout the entire railway network.
By November 2004, the largest owners of Ofotbanen were Cargo Nor (26.1%), the Municipality of Narvik (12.5%), Narvik Port (12.5%) and Moe Media (8.5%). In addition, employees had bought shares for more than NOK 1 million. During a general meeting on 13 December 2004, a capital placement was initiated for NOK 5.2 million. An anonymous, British consortium named GB Group bought a 36% stake for NOK 2.5 million. In 2004, the company had a revenue of NOK 20 million. The following general assembly in December 2005, GB Group made a private placement of NOK 11.7 million in Ofotbanen, increasing the consortium's ownership to 52%.
Norske Skog
Norske Skogindustrier ASA or Norske Skog, which translates as Norwegian Forest Industries, is a Norwegian pulp and paper company based in Oslo, Norway and established in 1962...
was made to transport timber along the Røros, Meråker and Nordland lines to the paper mill at Skogn
Norske Skog Skogn
Norske Skog Skogn is a paper mill located in Levanger in Norway. The mill was the first mill in the Norske Skog Corporation and opened in 1962. It has three paper machines and produces 600,000 tonnes of newsprint annually...
. The activity was further increased in 2006, when a contract worth NOK 30 million was signed to transport 250000 tonne of timber, including some to the other paper mill in Halden
Norske Skog Saugbrugs
Norske Skog Saugbrugs is a paper mill located in Halden in Norway. The mill is part of the Norske Skog Corporation and opened in 1859 with the name Saugbrugsforeningen...
. The following year, Ofotbanen also entered the container freight market, with a train running from Narvik via Sweden to Oslo, both via the Meråker Line and via the Kongsvinger Line. The trains would continue to Drammen when necessary. Ofotbanen was also in negotiations about transporting 700 annual trains of ore for Rana Gruber, but the contract was instead awarded to CargoNet. By 2005, Ofotbanen only had a 50% utilization of their stock, but in March a contract for the rest of the year was signed securing full use of the equipment to transport timber in Southern Sweden, with two trains in continual traffic. The extraordinary traffic was needed to clean up after the Gudrun
Erwin (storm)
Erwin was a powerful storm which hit Denmark and Sweden on 8 January 2005. The name Erwin was chosen by the German Weather Service, while the storm was named Gudrun by the Norwegian Meteorological Institute and was the name used in Sweden...
storm, and the contract gave a revenue of NOK 20 million.
Troubles
In April 2006, Ofotbanen declared that they were in severe financial difficulties. Accounts payableAccounts payable
Accounts payable is a file or account sub-ledger that records amounts that a person or company owes to suppliers, but has not paid yet , sometimes referred as trade payables. When an invoice is received, it is added to the file, and then removed when it is paid...
were giving liquidity problems, and Ofotbanen announced that they needed more capital, estimated at NOK 8 million. GB Group said they were not willing to invest more money in the railway company. Ofotbanen had then been losing money continually since the start-up in 2001; in 2004, it had a deficit of NOK 4 million of a NOK 20 million revenue. At the extraordinary general meeting on 4 September 2006, the company was sold for NOK 1 million to Rail Management, a holding company for the London-based shipping owner Mons Bolin. In November, the Norwegian Rail Inspectorate threatened to withdraw the company's safety license, since they had failed to show proper maintenance of the rolling stock.
On 31 January 2007, Autolink
Autolink
Autolink AS is a Norwegian distributor of automobiles. With port facilities in Drammen, Oslo and Malmö, Autolink prepares and redistributes to dealerships three quarters of all automobiles in Norway. The company has outsourcing agreements with many of the largest automotive importers in the country...
—Norways largest distributor of automobiles—bought 40% of Ofotbanen, and transferred their train haulage contract to them. This made Autolink Ofotbanen's largest customer. In March, Autolink ordered an additional 70 new autoracks for NOK 175 million. In June 2007, a new report from the Rail Inspectorate showed that Ofotbanen had severe safety problems—the company was using engineers without necessary licenses, and was not performing safety analysis. Director of the inspectorate, Erik Ø. Johnsen, stated that the inspectorate did not believe that Ofotbanen was taking safety seriously. CEO of Ofotbanen, Terje Østensen, felt that the issues taken up by the inspectorate were mere formalities, and that it was difficult to make necessary documentation, stating that in his opinion, none of the procedures criticized actually influenced safety.
From the beginning of 2008, Ofotbanen lost two important contracts. All the timber contracts with Norske Skog were transferred to CargoNet and Hector Rail
Hector Rail
Hector Rail is a Swedish-based independent train haulage provider operating in the European rail transport market, operating 29 locomotives. The company provides locomotives and drivers to freight customers who need to have whole unit trains hauled between two places with a regular time table.The...
. At the same time, the public service obligation contract on the Ofot Line was won by SJ. This included a subsidy of NOK 3.0 million from the Norwegian Ministry of Transport and Communications
Norwegian Ministry of Transport and Communications
The Royal Norwegian Ministry of Transportation and Communications is a Norwegian ministry established in 1946, and is responsible for transportation and communication infrastructure in Norway. It is led by Magnhild Meltveit Kleppa...
for the 40 km (24.9 mi) section on the Norwegian side of the border. Therefore, SJ started operating trains all the way to Narvik, and Ofotbanen lost the contract of operating the trains on the Norwegian side of the border. Ofotbanen had been receiving NOK 4.5 million in subsidies from NSB for the operation from 15 June.
Unionsexpressen
Unionsexpressen
Unionsexpressen was an intercity train service provided between Oslo and Stockholm, the capitals of Norway and Sweden. The first-class only service was operated by company Unionsexpressen Scandinavian Railway AB, while haulage and Norwegian representation was operated by Ofotbanen.In 2005, the...
.
The necessary certificates were granted on 10 April, and the first trial run was made the following day. Ordinary service started on 25 April, though without the dining car
Dining car
A dining car or restaurant carriage , also diner, is a railroad passenger car that serves meals in the manner of a full-service, sit-down restaurant....
. The initial price was NOK 422, and travel time was 5 hours 45 minutes. The trains have four cars, of which three are regular open seating, and one is a dining car. From 15 June, full service was introduced. The company stated that the service was meant to be more luxurious than with SJ, including wider seating (three instead of four abreast) and a wooden interior. The company markets the service as all first-class seating. The trains also had Wi-Fi
Wi-Fi
Wi-Fi or Wifi, is a mechanism for wirelessly connecting electronic devices. A device enabled with Wi-Fi, such as a personal computer, video game console, smartphone, or digital audio player, can connect to the Internet via a wireless network access point. An access point has a range of about 20...
. After the full service was introducde, the price increased to NOK 593. By July, Ofotbanen had still not found a locomotive for the second train, and was still operating only a single round service. Passenger numbers were at 35 per departure, not close to the capacity of 84, or the necessary annual 100,000 needed to make a profit.
Bankruptcy
In July 2008, Autolink canceled their contract with Ofotbanen. Two weeks later, Autolink announced that they would establish their own railway company, which they had been working with since March. They stated that the deal with Ofotbanen was discontinued because Rail Management would not allow additional private placementPrivate placement
Private placement is a funding round of securities which are sold without an initial public offering, usually to a small number of chosen private investors...
s of capital, nor sell their shares to Autolink. From 29 July, all automotive trains stopped running, and no cars were transported for ten days. The same day, all board members in Ofotbanen representing Autolink withdrew from their positions.
Ofoten District Court
Ofoten District Court is the district court serving Ballangen, Evenes, Gratangen, Hamarøy, Lavangen, Lødingen, Narvik, Salangen, Tjeldsund og Tysfjord. Located in Narvik, the cases may be appealed to Hålogaland Court of Appeal. The court has a chief judge, two professional judges and one deputy...
ruled on 17 July 2008 against Autolink's demand for an interim order to transfer the possession of the radios to Autolink. The court ruled that an interim decision could not be made due to the complexity of the contracts, and that a normal lawsuit would have to be carried out to determine the matter. The parties agreed that Autolink, on 13 February 2008, had bought five shunter
Switcher
A switcher or shunter is a small railroad locomotive intended not for moving trains over long distances but rather for assembling trains ready for a road locomotive to take over, disassembling a train that has been...
s from Ofotbanen for NOK 12 million, of which NOK 9.5 million was paid by Autolink deleting debt. On 18 September, Autolink won the appeal in Hålogaland Court of Appeal
Hålogaland Court of Appeal
Hålogaland Court of Appeal is the court of appeal located in Tromsø, Norway. It serves the counties of Nordland, Troms and Finnmark. In addition to Tromsø, the court may meet in Bodø and Mo i Rana. The court is administrated by the Norwegian National Courts Administration.From the Middle Ages,...
, where Ofotbanen was convicted of stealing four radios.
Ofotbanen lost their license from the Norwegian Railway Inspectorate
Norwegian Railway Inspectorate
The Norwegian Railway Inspectorate is a Norwegian government agency responsible for control and supervision of rail transport in Norway, including railways, tramways, rapid transits, heritage railways and side tracks....
on 7 October 2008 at 12:00. This was because Ofotbanen had not documented necessary accounting for 2007, nor provided evidence of necessary liquidity. On 24 October, the company filed for bankruptcy.
Autolink had already founded their company Cargolink
Cargolink
Cargolink AS is a Norwegian railway company. Owned by the automotive distribution company Autolink, Cargolink has operated both autorack and container trains since November 2008. Cargolink has a fleet of ten diesel locomotives, five shunters, 100 autoracks and 60 container cars...
on 27 March, and received an operating and safety licence from the inspectorate on 18 September. They took control over the five shunters they owned, in addition to leasing ten Di 6
NSB Di 6
NSB Di 6 is a class of twelve diesel-electric locomotives built by Siemens for the Norwegian State Railways from 1995 to 1996. Twelve engines were built at the MaK plant in Kiel whilst it was part of Siemens Schienenfahrzeugtechnik, and numbered Di 6-661 to 6-672.-Construction:During the late...
diesel locomotives. Operations started on 2 November, when all autorack trains were taken over by the new company.