Challenges of the Rail Baltica Project 12/11/21

Kristjan Kaunissaare, Rail Baltica coordinator in the Estonian ministry of economic affairs and communications (EMEAC), told RailFreight.com that, by now, Estonia has determined ‘most of the railway corridor and the detailed route’, construction is already underway and has ‘tasted the first fruits’ in the form of an airport tram line in Tallinn.
Yet the tiniest Baltic country was compelled to admit it won’t be able to meet the deadline of 2026 as the year of the project’s completion in the country.

“Two major influences impacted that: the Pärnu County Plan and the designing process of the main route. Due to the COVID-19, the Spanish designer was unable to carry out the geotechnical studies, which resulted in a six-month delay. In addition, there are additional deviations from the schedule, which is why it must be admitted that one of the RB designers in Estonia, IDOM, responsible for the Harju and Rapla sections, is not on their promised schedule,” the Estonian official said.

According to him, the final schedule will be specified after the completion of the main project, but at the moment it is clear that in 2026 it will not be possible to get from Tallinn to Vilnius just yet. But Estonia already wins ‘significantly’ from the ambitious project, the Estonian official insists.

“For example, from the airport tram line, which was completed in 2017. Construction of the Ülemiste and Pärnu terminals will begin next year. Construction of the Old Harbour tram line will also begin, which should be completed in 2023. The broader vision is that we can open the Tallinn-Pärnu line earlier, but it is too early to give an exact date yet,” the official said.

Relatively good position

“As the European Court of Auditors’ audit showed, although there have been delays in our project, we are still in a very good position compared to Europe’s other largest infrastructure objects,” Kaunissaare underlined.

The European Court of Auditors (ECA) has sent alarm bells earlier this year, warning that the 870km Rail Baltica scheme linking Estonia, Latvia and Lithuania will smash the budget ceiling, miss its deadline and have what it called a ‘doubtful economic value’. The ECA inferred that after scrutinising eight multi-billion schemes in the EU with a total cost of 54 billion euros.

According to the Estonian official, with regards to the county spatial plans, the Rail Baltica route corridor was initially established in all three counties affected by the route – Harju, Rapla and Pärnu counties.
But by its decision of May 2020, the Estonian Supreme Court partially annulled the Pärnu County Plan. “In 2021, quite a lot of effort has been put into updating the annulled plan. The re-establishment of the Pärnu county plan is expected by the end of 2022,” Kaunissaare says.

Yet overall, Estonia is well underway with the technical design of the Rail Baltica main route, he claims. The design of the main route is planned to be completed by 2022, the section between Pärnu and Ikla by 2023, due to the partial annulment of the county plan.

Construction

“Project solutions are completed in sub-sections, to go into construction at a fast pace,” he noted, adding that during the years 2021-2023, the main emphasis is on the construction of viaducts, bridges and ecoducts. “This year, we will start construction on seven Rail Baltic sites, including bridges, viaducts, eco-products.”.

By 2023, more than 30 objects must be completed. In 2022, Rail Baltica plans to invest a total of 94 euros million in Estonia. Tõnu Grünberg, board chair at Rail Baltic Estonia, the firm overseeing the Estonian section of a line which will traverse all three Baltic States, from north to south, has told Estonian media that 2026 has been the goal, but it has not been “set in stone at the European level”.

Cost and engineering factors also play their part, he admitted to Postimees, an Estonian newspaper.”Rising construction prices are affecting us, especially the construction of wildlife crossings and viaducts. We also know that we must not overheat the construction market. We have assessed the project schedules with the Ministry of Economic Affairs and Communications and the Transport Administration and reviewed that there will be no over-the-top construction volumes in 2024 and 2025. The Estonian construction sector would not be able to manage it and prices would go up a lot. This, too, is why it is actually good that 2026 will not be the deadline,” he was quoted.

According to the new state budget strategy, the Estonian government will invest 1,2 billion euros during 2022-2025 – most of the construction work on the main line is bound to start in 2022 and 2023, Kaunissaare said. It is estimated today that Estonia needs an additional 400 million euros of European funding to complete Rail Baltica’s Estonian line and stations.

What about Latvia?

It is estimated today that Estonia needs an additional 400 million euros of European funding to complete Rail Baltica’s Estonian line and stations. When it comes to Latvia, the country’s ministry of transport told RailFreight.com that the premier railway project has made ‘significant progress’ in the country this year.

“The construction has already started in Latvia on two Rail Baltica main line sections. In November 2020, on the Riga Central Terminal section and, in June 2021, on the Rail Baltica Station at the International Airport RIX section and the completion depends on availability of financial resources, but targeting 2026,” the ministry’s written response says.

Not only COVID-19 to blame

Although Latvia is “almost on track to attain the targeted date”, the Latvian ministry admits, the project has bumped into several roadblocks. Some of them, like COVID-19, are downright unexpected. “Due to the pandemic restrictions, contracted specialists for the design of Rail Baltica main line could not start field work and perform geotechnical studies in a timely manner, which has led to a change in the date of completion of the detailed technical designs – now expected by the end of 2023 instead of the initially planned end of 2022,” the ministry says.

But the virus cannot be the scapegoat for all the snags. The other burdens stem from the ‘extreme scale’ of engagement with involved parties, according to the ministry. A major setback for Latvia’s Rail Baltica came in October, when the country’s Procurement Monitoring Bureau (IUB) banned signing an agreement on construction of international railway line Rail Baltica’s Riga center infrastructure project.

Complaints on the tender on the Rail Baltica Riga center infrastructure project announced by the Riga City Council city development department were filed by Celu Buvniecibas Sabiedriba Igate, Lithuania’s Kauno Tiltai, Guliver and Tilts companies. IUB decided to ban signing the agreements on the project before necessary amendments to the tender requirements are made.

Midway

To speed up the project implementation process in the country, Latvia is midway to passing several legislative amendments, the Latvian ministry claims. “Just this October the Cabinet of Ministers approved the proposal to draw up a special Rail Baltica law to address specific issues like disproportionate requirements set in the technical regulations issued by state or municipal institutions, as well as possessors of certain utilities, in some cases the accommodation of which would mean non-eligible expenses under the CEF regulation; or the need to set a longer maximum construction term for construction of an infrastructure object of this size and length,” the ministry says.

Together with other Baltic partners, Latvia has so far participated and secured financing under 5 CEF calls. Under EU MFF 2014 – 2020, Latvia has so far secured 382 million euros, whereof 317 million euros came from the EU.
The Latvian Ministry of Transport has said that 167.7 million euros are planned to be allocated for the implementation of the Rail Baltica railway project in the draft budget for 2022, of which 124.3 million euros are European Union (EU) funding. Application for the next CEF call will be submitted in January 2022. But already before that, Rail Baltica is looking for additional financing opportunities. For example, under the Three Seas Initiative Investment Fund as well as the EU Military Mobility.

Further south

In 2023, Latvia plans to complete the design phase and apart from the already started construction on the Riga Central Terminal and the Rail Baltica station at the airport RIX, to start construction on the Southern section to establish a cross-border connection to Kaunas in Lithuania. Here, it will possibly connect to Poland via the already existing 1435 mm line – even before the new line on this section is developed according to Rail Baltica technical parameters, targeting 2027, the ministry said.

Approached by RailFreight.com, Loreta Maskalioviene, vice-minister of the Lithuanian ministry of transport and communications, also blamed the COVID-19 pandemic for slowing down ‘many industries’ and ‘presenting challenges’ to the design process of Rail Baltica in all three Baltic states, including Lithuania.

Yet the Lithuanian official claims that Rail Baltica in Lithuania has not been delayed and Lithuania ‘remains committed’ to connecting the three Baltic States’ capitals by the end of 2026. However, her fellow countryman, Rimantas Sadzius, the Lithuanian member of the European Court of Auditors (ECA), has said the delay to the line was mainly the result of additional costs for the Kaunas-Vilnius link in Lithuania, a spur to Riga Airport in Latvia and a tram line in Tallinn, the capital of Estonia.

Kaunas Intermodal Terminal open

This summer, Lithuania’s Rail Baltica saw Kaunas Intermodal Terminal (KIT) opened to commercial traffic. “It will be the main logistical centre of Rail Baltica, serving container flows in Europe and Asia and ensuring the ability to exploit the synergy between different gauge 1435 mm and 1520 mm railway systems,” the deputy minister says.

Currently, on the Lithuanian side, preparatory works for the construction of the Rail Baltica line towards Lithuania–Latvia border are finished. Territorial planning in the Kaunas–Vilnius section and Kaunas–Lithuania/Poland border is also moving forward, the deputy minister said. Route alternatives for the Kaunas–Vilnius section have been prepared and presented to the public. It is planned to complete the special plans for both sections by the beginning of next year.

Extra funding

Additional EU funding of 19,7 million euros has been secured for the Rail Baltica project through a Grant Agreement with CINEA, Maskalioviene said. Part of those funds will be used for the designs of the Kaunas railway infrastructure in the station area and a Kaunas-based infrastructure maintenance facility.

In the 2014-2020 budget period, Rail Baltica was 85 per cent funded by the EU. The total cost of the project is estimated at around 5,8 billion euros, including around 2,5 billion euros for the section in Lithuania. According to current estimations, approximately 2,07 billion euros, including 1,76 billion euros from the EU, are needed to complete the project in Lithuania.

“However, due to the current increase of prices for construction material and works, the project estimate needs to be recalculated. Global project cost-benefit analysis will be updated in 2023,” the deputy minister admits.

2022 an important year

2022 will be particularly significant for Lithuania, Maskalioviene says. “Large scale construction works on the Rail Baltica main line from Kaunas towards Lithuanian/Latvian border will start (for that purpose, Lithuania has already submitted an application for 328 million euros in funding – L. J.), including the Neris bridge, one of the most complex construction objects on the Lithuanian section.

More than 1,5 km long, it will be the longest railway bridge in the Baltics. All territorial planning procedures in the sections Kaunas–Vilnius, also Kaunas railway node and Kaunas – Lithuanian/Polish border will be finished in 2022. After finishing territorial planning, land acquisition and design stages will start, followed by construction,” Maskalioviene says.

Gytis Mazeika, Lithuania’s other vice minister of transport, has said that the Baltica link in Lithuania will be completed by 2026. But as the project drags on, it garners a lot more scrutiny and doubt.The European Court of Auditors (ECA) suggests that the line would probably be completed in 2030, rather than the official deadline of 2026, and that its cost would be 7 billion euros, significantly higher than its original 5 billion euros budget, since revised to 5.8 billion euros. To pour gas on the fire, the auditors suggest that a lack of demand for passenger and freight services may mean that the line will not be economically viable once completed.

Opposition

The ECA findings are certainly music to ears of Priit Humal, Board member of the Estonian citizen movement “Avalikult Rail Balticust” (“Publicly about Rail Baltica”), which opposes the project.

“Originally, it was a good idea, but it has not turned out as planned. At this point, it has become a “black hole” that absorbs money from a variety of sources, and, most alarmingly, it will continue to do so in increasing amounts. It has become way too expensive to be considered a solution. And because of this, policy makers engage in misrepresentations in attempts to continue justifying it. To cover up these misrepresentations, documents are withheld from the public, and even worse, certain key persons require that their involvement in the project not be disclosed,” Priit Humal told RailFreight.com.

He however agreed that Poland and Lithuania have managed to renovate their existing railway and add beneficial parts to their network under the project. “These parts will be viable and beneficial to them. Latvia and Estonia have not managed (to do it) so well…Rising construction costs will exhaust our natural and budget resources at a time when we need those resources to be applied elsewhere,” he says.

“Unfortunately, the Rail Baltica initiators think they will be able to use a high EU co-financing rate to cover these added costs. This is highly unlikely. That rate will not be applicable if the project will be delayed or prices increased. At a certain point in time, it will become obvious that most of the project financing will come directly from our national budget and not from EU aid. One gets the impression that the ultimate goal of the project managers is that such a “moment of truth” come as late as possible. At that moment the stakeholders (the public) will be faced with an unpleasant decision. Will we continue to pour in our own money or will we leave all that was built up to that moment to sit largely unused, and be seen as a monument to poor decision making? I do not look forward to that moment,” Priit Humal emphasised.

Dragged on too long

Agreeing with this is Eligijus Masiulis, Lithuania’s former transport minister. He told RailFreight.com that the Rail Baltica project has ‘dragged on’ extremely long. “It will be 20 years soon. Over that time, our habits and social behaviour have changed significantly. The robust expansion of new technologies makes it far less attractive,” Masiulis says.

He claims that, from the standpoint of costs and benefits, the former clearly outweigh the latter. “And finally, let’s not forget that, from the beginning, Rail Baltica has been seen as a strategic political project,” Masiulis underscored.

This is what Poland, the EU’s ‘bad child’, is claiming and bristling against. “The implementation of the project solely depends on the goals and ambitions of national governments…The procrastination by Estonia and the political manoeuvring by Poland harms the project…Projects like this would be carried out much more efficiently and smoothly if they were implemented exceptionally through the (existing) centralized European structures”, Masiulis emphasised.

However, the silver lining is that the ECA found Rail Baltica as the best performing project of eight European railway projects it looked into. Will the ride on Rail Baltica smooth out after the bumpy run-in?

This article was authored by Linas Jegelevicius, a freelance correspondent from the Baltics.

Author: Majorie van Leijen