The leadership of RB Rail urges the new government of Latvia to quickly determine the funding and timelines for the implementation of Rail Baltica. According to project representatives, further delays will increase its cost by hundreds of millions of euros annually.
The new government of Latvia will soon have to make key decisions regarding the future of Rail Baltica — the largest infrastructure project in the history of the Baltic States. This was stated to the LETA agency by the chairman of the board of the joint venture RB Rail, Matis Paegle.
According to him, the project is currently facing not only a lack of funding but also uncertainty regarding the completion timelines.
RB Rail has prepared several options to address the issue. One of them involves implementing part of the main route through a public-private partnership (PPP) mechanism. This concerns the northern section from Skulte to the Estonian border, which is estimated to cost around one billion euros.
However, such a scenario will require additional government decisions and a revision of the work schedule. According to Paegle, preparing the public-private partnership project may take about three years.
In fact, Latvia now faces a choice: either seek new sources of funding or revise the project timelines.
Separately, RB Rail criticized the refusal to use the European financial instrument SAFE. According to Paegle, a loan of 2.2 billion euros could finance the construction of approximately half of the main route in Latvia. He noted that the need for borrowing will still arise later, but the conditions may be less favorable.
Particular concern is raised by the rising cost of the project. According to RB Rail, each additional year of delay increases expenses by about 200 million euros due to inflation and rising construction costs.
Currently, the available European funding in Latvia is sufficient only for the construction of about 53 kilometers of railway line. Meanwhile, the total length of the main route in the country is about 220 kilometers. This means that without additional sources of funding, the implementation of the project may be delayed indefinitely.
Paegle also believes that the government needs to officially determine the final budget of the project and the deadline for its completion. In his opinion, the lack of clear boundaries creates additional risks for both contractors and investors.
The cost of the first phase of Rail Baltica in Latvia is currently estimated at 5.5 billion euros. However, this amount could rise to about six billion euros considering indexing and further price increases.
For comparison, back in 2017, the total cost of Rail Baltica for the three Baltic States was estimated at 5.8 billion euros. Today, calculations show 23.8 billion euros, and the cost of the first phase of the project could reach 14.3 billion euros.
Rail Baltica is expected to connect the Baltic States with the European railway network via a new standard gauge line from Tallinn to the Polish border. Trains on certain sections will be able to reach speeds of up to 240 kilometers per hour.
Now, one of the first serious decisions regarding the project will have to be made by the new government of Prime Minister Andris Kulbergs.
