Latvia’s new government must urgently make decisions regarding the financing plan and implementation timeline of the Rail Baltica railway project, Matīss Paegle, Chairman of the Supervisory Board of Baltic joint venture RB Rail, told the LETA news agency.
Paegle stressed that RB Rail has proposed several options for addressing the project’s funding gap, but these solutions are closely linked to the project’s target completion date of 2030.
One option would be to implement a public-private partnership (PPP) for the northern section of the mainline, for example between Skulte and the Estonian border. Such a project would cost approximately 1 billion euros.
“However, this depends on government decisions, because properly preparing a PPP project takes around three years. Therefore, it is also a question of extending the project timeline,” Paegle explained.
At the same time, he argued that
Latvia should make use of the European Union’s SAFE financial instrument.
According to Paegle, Latvia chose not to utilise a 2.2 billion euros loan facility that could have financed roughly half of the mainline construction.
He noted that the money would eventually need to be borrowed anyway, but likely under significantly less favourable conditions and in larger amounts, as project delays currently increase costs by approximately 200 million euros per year.
Paegle also criticised the existing approach under which the mainline is being built only to the extent covered by available funding from the Connecting Europe Facility (CEF).
Under current financing,
Latvia has sufficient funding to construct only 52.66 kilometres of embankment,
while the country ultimately needs to build approximately 220 kilometres of the Rail Baltica mainline.
“If this decision is followed literally, we could end up waiting indefinitely for the completion of this project,” Paegle warned.
He further argued that the government should establish both a maximum project budget and a definitive completion deadline to provide a clear framework for implementation.
“At the moment, there is no such framework, which in my view is not a responsible approach to governing,” he said.
Commenting on the costs of the first phase of the project in Latvia, Paegle stated that the current estimate remains unchanged at 5.5 billion euros. However,
he emphasized that the final figure will depend heavily on future decisions.
“If redesigns are carried out or contract negotiations lead to savings, Latvia may be able to reduce costs. But if decisions continue to be delayed, inflation will most likely push costs even higher,” Paegle said.
As previously reported, Latvia’s new government led by Andris Kulbergs received parliamentary approval on 28 May with the support of 66 deputies, while 25 voted against.
The coalition consists of United List, National Alliance, New Unity, and Union of Greens and Farmers.
Latvian President Edgars Rinkēvičs tasked Kulbergs with forming a new government after former Prime Minister Evika Siliņa resigned.
The first phase of Rail Baltica is currently estimated to cost 14.3 billion euros across the Baltic states,
including 5.5 billion euros in Latvia. However, indexation and inflation could increase Latvia’s share to approximately 6 billion euros.
According to the latest cost-benefit analysis, total project costs across the Baltics could ultimately reach 23.8 billion euros. By comparison, the original 2017 cost-benefit analysis estimated total costs at just 5.8 billion euros.
The Rail Baltica project aims to create a European-standard railway corridor linking Tallinn with the Lithuanian–Polish border, thereby connecting the Baltic states directly to the wider European rail network. The project includes the construction of a new 870-kilometre railway line using the European standard gauge of 1,435 millimetres, designed for trains operating at speeds of up to 240 kilometres per hour.
Read also: Rail Baltica contract in Latvia found to be among the most expensive in the Baltics
The post Rail Baltica reaches critical juncture as Latvia’s new government faces urgent multi-billion-euro decisions appeared first on Baltic News Network.
