At the end of last year, Rail Baltica stated that 43% of the project was ‘construction ready’. Thinking that it is possible to go from that to 100% completion in five years may be a little naive, especially considering that expected costs skyrocketed from 5,8 to almost 24 billion euros. Malepszak argued that adding up the lack of funds paired with growing costs and the complicated technical requirements set by the EU made it impossible to finish the project in time.

Estonia’s pessimism and Latvia’s struggles

The Polish deputy minister of infrastructure is not the first politician from one of the countries involved raising red flags about Rail Baltica’s schedule. Last year, opposition party member of the Latvian Parliament and Rail Baltica Committee Head Andris Kulbergs shared similar worries, claiming that it would be delayed to 2035, especially for the Latvian section. Latvia is in fact struggling to secure the funds and already had to significantly downgrade the initiative.

From Russia’ GTT to the European Vehicle Register

Traditionally, rail freight services in the Baltics relied on the Russian GTT system, which included sharing data on rolling stock and cargo to the Kremlin. However, a new platform to register broad-gauge platform wagons to the European Vehicle Register now makes this procedure unnecessary. A test for this new type of service was launched at the beginning of 2024.

“It is the first time in the history of the restored Independence of Lithuania, when a train moves in the Baltic States based on the data of European Vehicle Register, based on the European certificate of Entities in Charge of Maintenance and – the most important! – without providing any redundant data to the Russian systems”, said the CRO of Lithuanian Railways Gediminas Seckus.

In a reaction to the start of construction works, Latvian transport minister Kaspars Briškens praised Rail Baltica: “The significance of the Rail Baltica project in ensuring a fast and reliable connection for the Baltic region with Western Europe is particularly high in the current geopolitical conditions. The delivery of our shared ambition is to ensure a cross-border connection during the first phase of the Rail Baltica project by 2030, including the integration of Riga. Thus, the construction of the mainline is a top priority.”

What shape will Rail Baltica take?

While the construction of Rail Baltica in Latvia has now started, the integration of Riga, as mentioned by the Latvian minister, is not yet set in stone. Growing estimated construction costs have hampered the rail project, forcing the Baltic states to readjust their ambitions in order to cut costs.

In this respect, the Baltics need to take the EU’s wishes into consideration. The EU is set to finance 85 per cent of Rail Baltica and wants to see tangible results. To secure funding, the Baltic states will need to adhere to Brussels’ wish of completing the mainline first and foremost.

In order to stay within budgetary limits and meet the EU’s expectations, the three countries may have to make amendments to the original plan. This may involve reducing maximum speeds, delaying a connection to Riga, and bypassing Vilnius. While construction in Latvia may have now started, the final form of Rail Baltica is yet to be determined.

Also read:

• Latvia appoints special Rail Baltica secretary amid strategy change
• Rail Baltica will not pass through all of Riga before 2030 deadline
• Latvian rail freight numbers drop for second consecutive year

According to the confidential memo, the government is three billion euros short in financing. A revised plan to suppress Rail Baltica’s costs has not proven sufficient. The plan envisioned a restructuring of the construction of Rail Baltica into various stages, which allowed the country to reduce expenditures until 2030 by a third.

Alternative plan

Cutting costs by a third has not turned out to be enough. In the memo, the transport ministry makes clear that it sees no way to complete the Riga part of Rail Baltica before 2030 – the deadline for additional EU financing.

The ministry proposed an alternative solution to the government. It wants to connect Rail Baltica with two of the capital city’s stations, namely the airport and Riga Central Station. From there, trains would have to return in the opposite direction and circumvent the capital city. According to transport minister Briskens, it would increase the travelling time to Riga by approximately twenty minutes.

Deadline

Earlier, an EU Commission representative warned that Rail Baltica needs to be finished by 2030. The project needs to demonstrate tangible results to justify financing and to attract interested parties for tender contracts. If the mainline is not completed by 2030, the project could lose access to one billion euros in EU funding.

Subsequently, the Latvian transport ministry announced that it may initially bypass Riga to meet the 2030 deadline. The announcement came to the dismay of many, as Riga hosts half the country’s population and is its main economic centre.

The construction of the Latvian section of Rail Baltica has been plagued by issues. Inflation, high energy costs and limited availability of building materials and labour have increased the railway’s projected costs from 5,8 billion to 8 billion euros. Design, land expropriation and construction all face delays.

RailFreight Summit 2024

Are you interested in learning more about Rail Baltica and its logistical significance for the broader CEE region? Then the RailFreight Summit 2024, taking place between 15 and 17 April in Warsaw, Poland, is the perfect occasion to connect with industry professionals and dive deeper into the topic.

This year’s edition of the RailFreight Summit turns the spotlight on trending issues like the TEN-T expansion, connections with Ukraine, significant projects like RailBaltica and their potential for the creation of more efficient logistics corridors, Poland’s role as a logistics node and a performance assessment of intra-European and Eurasian services.

You can check the event’s programme here and secure your participation ticket here. Additionally, do not miss the chance to explore the networking and site tour possibilities that could provide excellent opportunities for boosting your business in Poland and the CEE region.

Also read:

• EU: Rail Baltica needs to be done by 2030 with or without Riga
• Lack of Baltic commercial operators hinders intermodality, says Samskip
• Rail Baltica Estonia signs new contracts, optimistic about progress

While the transit of Russian agricultural goods through Latvia continues, the possibility remains that the imported grains originate from occupied Ukrainian territories, leading Briškens to want to introduce a complete ban. The transport ministry commented on the fact that a total Russian grain ban could lead to major losses for the Latvian ports and rail sector. Ports could be faced with losses totalling 60 million euros, whereas the rail sector may be met with 40 million euros in losses.

Not a new challenge for the sector

Earlier in 2023, the Latvian rail sector reported reductions of 20 to 25 per cent in freight volumes due to reduced trade with Russia. In a move to compensate for lost volumes, the chairman of the state-owned railway company pleaded for Ukrainian grain exports to go through Latvia as its ports and railways have plenty of capacity left. A major obstacle remains pricing; the railway route to the Baltics involves two gauge changes and is very expensive for Ukrainian grain exports.

Briškens stressed that Latvia cannot introduce such a ban on its own and will have to find allies. He has contacted his Baltic and Finnish counterparts to formulate a common position on the matter.

Also read:

• Grain volumes grow in Latvia, but overall performance drops
• First Ukrainian freight train reaches Latvia after a year-and-a-half hiatus
• LDZ Cargo auctions 47 redundant freight wagons