On the other hand, it is necessary to allocate 76,894,527 euros for the payment of value added tax (VAT).
Among them, the necessary part of national co-financing in 2024 would be two million euros, in 2025 – 17.1 million euros, in 2026 – 24.2 million euros, in 2027 – 12.8 million euros, and in 2028 – 4, 9 million euros.
On the other hand, the amount required to pay VAT in 2024 is 2.5 million euros, in 2025 – 21.5 million euros, in 2026 – 30.6 million euros, in 2027 – 16.1 million euros, and in 2028 – 6.2 million euros.
Also, taking into account that funding for some activities was reduced or they were rejected, it is necessary to increase the co-financing part of the state budget by 33,791,985 euros, which is necessary for the performance of construction supervision and other activities related to construction works. In addition to the payment of VAT, the amount required is 6,386,685 euros.
The MoU report states that in the tenth call of the Connecting Europe Facility (CEI), EC funding has not been allocated for activities that have been supported so far, including land acquisition – in the amount of 44.95 million euros, so that construction works on the Vangaži-Estonia section can be applied for in future calls border, as well as for the activities implemented by the joint venture “RB Rail” (quality control, global project coordination), where Latvia’s share is 23,307,545 euros. In addition to VAT payment, 4,405,126 euros are required.
The MoU report states that the EC’s decision to support activities with reduced funding disrupts the usual ratio (85/15) between two sources of funding – the EC and the state budget, forcing an increase in the share of the state budget to finance construction-related activities that are not supported or reduced by the EC activities supported in scope.
In order to fulfill the conditions of the general envelope financing agreement, it is necessary to allocate funds from the state budget in the amount of 33.8 million euros in addition to the planned national co-financing of 15% (29.5 million euros), which would cover the reduced part of the funding allocated by the European Climate, Infrastructure and Environment Executive Agency (CINEA) with activities related to construction works.
The Memorandum of Understanding explains that funding is needed to perform construction supervision, technical expertise required in the construction process, support measures for project implementation, and to fully construct the Skulte building materials storage base/infrastructure maintenance point. In the general envelope, the EC has not allocated funding for the activities implemented by the joint venture “RB Rail”, that is, for the coordination, control and monitoring of the project, for the creation of a digital fixed asset management system. By dividing the costs of unsupported activities into similar parts among all the Baltic states, Latvia’s share from 2024 to 2028 totals 23.3 million euros.
The Cohesion Envelope financing agreement requires additional allocation of funds from the state budget in the amount of 44.95 million to carry out the expropriation of real estate. The Memorandum of Understanding states that the expropriation of land in the Vangaži-Estonian border section will allow the implementation of the “Rail Baltica” project in the northern part of Latvia to continue and to start planning the construction process in the direction of the Latvian-Estonian border, thus ensuring the establishment of a cross-border connection with Estonia.
The MoU report emphasizes that “Rail Baltica” is a cross-border project and in the event that Latvia is unable to provide national funding for the implementation of the project and refuses to conclude financing agreements because it does not find the opportunity to co-finance activities, this may create a significant risk for the further implementation of the project in Lithuania and Estonia as well, as there are the possibility that CINEA cancels the decision to grant funding to the “Rail Baltica” project due to the missing Latvian section.
The Memorandum of Understanding explains that the construction of the Latvian section of “Rail Baltica”, a project of EU importance, is necessary to achieve the global goal of the project – to connect the Baltic states with the European standard railway network. In addition to that, in 2024, according to the EFSI work program, only funding from the Cohesion envelope will be available in the next call.
The MoU report warns that if the General Envelope Financing Agreement is not concluded, Latvia will lose the allocated EISI funding in the amount of 167.1 million euros without the possibility to apply for it in the next calls and without the possibility to reapply in the next calls for activities that have already had a positive EC decision.
It has already been reported that the MoU will urge the Cabinet of Ministers to approach the EC with a request to explain in more detail the non-allocation of EU co-financing for essential construction activities of the railway project “Rail Baltica”.
The MoU states in its statement that the “Rail Baltica” project is on the eve of the full-scale construction phase, and Latvia is ready to start construction works on the main line stations in the direction of Lithuania. In the last CEIF call, significant funding from the EU was received for this purpose.
At the same time, the statement of the MoU expresses regret that the EU has not allocated co-financing for essential activities of “Rail Baltica”, including construction supervision and land expropriation. The MoU states that so far such activities have always been co-financed by the EU, and with high intensity – up to 85%.
The SM is aware that the total amount of EU funding for cross-border transport projects is insufficient, however, despite this, believes that “such a change in the rules of the game with regard to the previously eligible activities of Rail Baltica is obviously ill-considered”.
The MoU states that financing these activities in full from the state budget creates an unexpected burden on the budget.
The MoU urges the government, together with the EC, to look for more sustainable financing solutions in order to move forward with the “Rail Baltica” project.
It has already been reported that in the third call of the EU financial period from 2021 to 2027, CINEA has approved funding in the amount of 346.1 million euros for the implementation of the “Rail Baltica” project in Latvia.
The Memorandum of Understanding states that this is an important EU support to continue the implementation of the “Rail Baltica” project in Latvia and promote the construction of the main line.
The financing is intended for the implementation of priority “Rail Baltica” activities in Latvia. From the total allocation for the implementation of the project in Latvia, 252 million euros have been allocated for the construction of the southern section (Misa-Lithuanian border) main track and 38 million euros for the Skulte construction site, which will serve as a construction logistics base for the northern section of the Latvian main track in the direction of Estonia.
It was also announced that according to the research report on the situation of the “Rail Baltica” project carried out by the highest audit institutions of the Baltic States, there is currently no clarity about the operation and management model of the “Rail Baltica” railway line.
According to the data of the latest analysis of the costs and benefits of “Rail Baltica”, the total costs of the railway line in the Baltics can reach 23.8 billion euros, including the costs of the first stage of the project in the Baltics could be 15.3 billion euros, of which 6.4 billion euros in Latvia. In the previous cost-benefit analysis in 2017, it was estimated that the project would cost a total of 5.8 billion euros.
In Latvia, the construction of the main line of “Rail Baltica” is planned to start in 2024.
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 would 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 railway line of European gauge (1,435 millimeters) with a maximum train speed of 240 kilometers per hour.
2024-08-19 14:01:48