Kivila said that in general, the first round of investments required in the “Rail Baltica” project in the Baltics could amount to 14.28 billion euros, of which 5.6 billion euros in Lithuania, 3.2 billion in Estonia, while approval is still needed in the case of Latvia.
Kivila added that the total cost of the project in Latvia could be 9.6 billion euros, including in the first round due to the scope reduction and project implementation phases, these costs could be 5.5 billion euros, however, a potential saving of up to 400 million euros is possible from the optimization of technical solutions, and there are other potential savings.
It was previously estimated that the first phase of the project in Latvia will cost 6.4 billion euros. This calculation also included the connection Misa – Riga Airport, the cost of which was estimated at approximately 900 million euros. This phase is expected to be financed by attracting public-private partnership (PPP).
Kivila mentioned that after dividing the project into phases, the next step is the optimization of technical solutions. For example, 151.8 to 170.7 million euros could be saved in the optimization of technical solutions for noise barriers, and 105.5 million euros in road transmissions. It is also possible to save 83.2 million euros in reducing road-related costs.
Āriks Diļevs, the chairman of the board of SIA “Eiropas dĺzceļa lijnas” (EDzL), stated that there are other potential cost reduction opportunities and what has been done to reduce costs. For example, the total financial savings at Riga Airport are 11.8 million euros, while the actual savings at Riga Central Station are 503,650 euros. Also, potential savings are possible in the Salaspils Intermodal Logistics Center, as well as savings of 605,600 euros have been found in connection with the movement control center.
Diļevs also informed that savings will also be possible on the main track, as the concluded construction contract includes the construction project review and construction preparation phase, in which three reports will be prepared for each building permit, one of which is a cost optimization report.
Kivila also added that the budget of “RB Rail” this year has been reduced by 15% – to 35.4 million euros, while the budget of EDzL has been reduced by 12% – to 9.88 million euros.
Kristīne Malnača, deputy state secretary of the Ministry of Transport (MoT), added that the MoT proposes to connect Riga Airport and Riga Central Station in the existing railway infrastructure (1520 mm) before the first phase of “Rail Baltica”. She stated that the calculations show that in the Riga Airport-Riga Central Station train movement could be every 30 minutes, but the journey time would be 15 minutes.
Commenting on the project’s long-term financing strategy, the representative of “RB Rail” Ojārs Daugavietis added that in the summer, the working group of the Ministry of Finance (FM) worked on the financing strategy. “The technical document of the financing strategy, or the description with the potential directions in which the Baltic states can work, has been submitted for review to all three countries in mid-October. Comments are awaited to identify the directions that are the most suitable solution for the financing of the project for which country, since all countries, most likely, there will be no unified position,” said Daugavietis.
He added that an Investor’s Day with potential market participants on private investments, public-private partnership (PPP) is planned for early December. After these negotiations, it will be clear what are the wishes, requirements and interest of investors for participation in PPP projects.
“By the end of the year, there should be a direction in each country, which are the next steps in 2025 and forward, to finance the missing part of the funding,” Daugavietis said.
“RB Rail” added that the financial structure of “Rail Baltica” could be formed by a prominent Australian infrastructure investor who has shown great interest in the project.
LETA already announced that the Ministry of Transport (MoT) has prepared a scenario for the first phase of “Rail Baltica” implementation in Latvia, which envisages the construction of one track from the border of Lithuania to Estonia, as well as the creation of a European-wide track connection with one of the two Riga international stations, while before the completion of the first phase of the project, it is planned to connect the two Riga international stations in the existing railway infrastructure.
According to the data of the latest cost-benefit analysis of ”Rail Baltica”, the total cost of the railway line in the Baltics can reach 23.8 billion euros. In the previous cost-benefit analysis in 2017, it was estimated that the project would cost a total of 5.8 billion euros.
The “Rail Baltica” project envisages the creation of a railway line of European standard gauge from Tallinn to the border of Lithuania and Poland, so that it will be possible to connect the Baltic states with other European countries by rail. In the Baltic States, it is planned to build a new 870-kilometer long European-gauge (1,435-millimeter) railway line with a maximum train speed of 240 kilometers per hour.
Interview between Time.news Editor and Rail Baltica Expert:
Editor: Welcome, and thank you for joining us today. The Rail Baltica project is quite ambitious, involving significant investment across the Baltic states. Can you tell us the estimated investment required for the first phase of this project?
Expert (Kivila): Thank you for having me. The initial round of investments for the Rail Baltica project is projected to be around 14.28 billion euros. Specifically, Lithuania requires about 5.6 billion euros, Estonia 3.2 billion euros, while Latvia is still pending some approvals for its part of the budget.
Editor: That’s a substantial amount! What can you tell us about the plans for Latvia, specifically regarding its costs and potential savings?
Expert: In Latvia, the total estimated cost for the project could reach 9.6 billion euros. However, if we consider reductions in scope and specific implementation phases, we might complete it for around 5.5 billion euros, with optimization measures potentially saving us up to 400 million euros.
Editor: Optimization seems to be a key theme here. What aspects of the project are being reviewed for cost reduction?
Expert: Absolutely. After segmenting the project into phases, we’re focusing on optimizing technical solutions. For instance, we could save between 151.8 to 170.7 million euros through improved noise barriers and another 105.5 million euros from better road transmissions. These optimizations are part of our strategy to manage costs effectively while maintaining quality.
Editor: Those figures are impressive! It sounds like you have a keen eye on potential savings. How are you tracking these savings across various components of the project?
Expert: We’ve identified specific areas where we can realize savings. For example, we’ve already saved 11.8 million euros at Riga Airport and 503,650 euros at the Riga Central Station. Additionally, we are exploring savings at the Salaspils Intermodal Logistics Center. These figures reflect our commitment to scrutinizing every aspect of the project for cost-effectiveness.
Editor: It seems like the project is moving in a systematic manner. Can you elaborate on any changes to the project’s budget allocations?
Expert: Indeed. This year, the budget for Rail Baltica has been reduced by 15% to 35.4 million euros, and similarly, the budget for EDzL has been cut by 12% to 9.88 million euros. These adjustments are part of our overall strategy to ensure that we remain financially flexible while optimizing costs.
Editor: Kristīne Malnača suggested integrating existing railway infrastructure before the first phase. How impactful do you believe this connection would be for commuters?
Expert: Connecting Riga Airport with Riga Central Station is crucial. The proposed plan indicates that train service could occur every 30 minutes, with a journey time of just 15 minutes. This connectivity will enhance accessibility and significantly ease travel for both locals and tourists.
Editor: It sounds like there are many moving parts in this project. What’s the long-term financing strategy looking like?
Expert: The Ministry of Finance has been actively working on a financing strategy. As of mid-October, a technical document outlining potential financing directions was submitted for review across all three Baltic states. We anticipate there will be varied responses, as a unified position among the countries might be challenging to establish.
Editor: It sounds like you’re preparing for future investor outreach. Can you share any details about the upcoming Investor’s Day?
Expert: Yes, we are planning an Investor’s Day for early December, targeting potential private investment and public-private partnership opportunities. After these meetings, we’ll gain valuable insights into the interests and requirements of potential investors, providing us with clarity on the next steps for financing the project.
Editor: Thank you for sharing these insights. With such robust strategies and community awareness, it seems like Rail Baltica is positioned for success in the coming years. We look forward to seeing how these plans develop!
Expert: Thank you! We’re excited about the potential of Rail Baltica, and your interest in the project is greatly appreciated. We aim to create a transformative impact for the region.