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Completion of Rail Baltica by the set deadline depends on the ability of the three Baltic States to cooperate efficiently and co-ordinately

Authored by journalist Ain Alvela.

The construction of the Rail Baltica high-speed railway, designed to connect Estonia, Latvia, and Lithuania with Europe, has entered the construction phase across all three Baltic states – though with varying progress. However, the project is increasingly mired in controversies and scandals. High-ranking officials are increasingly voicing concerns that trains may not be operational on Rail Baltica by the current official deadline of 2030.

Dubbed the “construction project of the century,” the idea for Rail Baltica first surfaced in the late 20th century. However, it was not until March 2006 that the project gained real momentum, when Rail Baltica’s European coordinator, Pavel Telička, and ministers from Poland, Lithuania, Latvia, Estonia, and Finland signed a joint declaration to move forward with the railway’s development.

Since its inception, the Rail Baltica project has faced disagreements, controversial assessments, environmental concerns, legal battles, accusations, and the staunch opposition of certain interest groups. In hindsight, these challenges can be summarized in two words: total disarray. This was the conclusion reached by the national audit offices of the three Baltic states in a report published earlier this summer.

While the construction of the main Rail Baltica route has begun in Estonia, there is still significant uncertainty regarding the completion deadline for the project. Photo: Rail Baltic Estonia

Construction of Rail Baltica facing ongoing delays and escalating costs

One of the most contentious issues surrounding Rail Baltica is the project’s escalating costs, which have surged dramatically over the past decade. In 2015, the joint venture involving Estonia, Latvia, and Lithuania secured €540 million from the European Union to launch the project’s initial phase. Estonia’s share amounted to over €175 million. This funding was specifically allocated for developing the Rail Baltica route connecting Tallinn, Pärnu, Riga, Panevėžys, Kaunas, and the Lithuanian-Polish border. However, construction costs have continued to rise, with the projected cost for Estonia’s section alone ballooning from an estimated €1 billion in the early 2010s to €3 billion today. Uncertainty still looms over the primary source of funding required to complete the railway and its associated infrastructure.

Another major issue is the delays in planning, securing necessary approvals, organizing procurements, and the overall construction process. As a result, the project is now at least five years behind the timeline set in 2017. Back then, the deadline for completing construction and having the railway ready for use was set for the end of 2025.

Due to the increasing confusion surrounding the railway’s construction, the national audit offices of Estonia, Latvia, and Lithuania began investigating the project last year. By the summer of this year, they reached a unanimous conclusion: the progress of the Rail Baltica project is at risk. Over the past seven years, its estimated cost has skyrocketed, and now it remains unclear where the missing funds should come from. According to the national audit offices of the three Baltic countries, an additional €19 billion is needed to complete the Rail Baltica project beyond the funds already spent or allocated. In Estonia, the funding shortfall amounts to €2.7 billion, while Latvia requires €7.6 billion and Lithuania €8.7 billion to finish the project.

It is well known that the current EU funding period ends in 2027, and it remains uncertain whether and how much funding will be allocated to Rail Baltica from the Connecting Europe Facility (CEF) during the new funding period starting in 2028. However, the most substantial construction work on the rail line is planned for the years 2027-2029. According to the state audit offices, delays could lead to exceeding the usage deadline for funds allocated by the CEF, resulting in the loss of those funds. There are concerns that Estonia could forfeit €8 million, Latvia €4 million, and Lithuania as much as €71.5 million if these amounts are not invested within the eligibility period. In Latvia, there is a risk that the money already spent on design work will need to be repaid, as the projects are expected to be completed later than the allowed deadline.

In addition, the audit by the state audit offices raised doubts about the management competence of Rail Baltica, both at the level of the joint venture AS RB Rail and the individual companies established in each Baltic country. Over the past decade, the leadership of these companies has changed repeatedly, making it unclear at times who is ultimately responsible for specific decisions and actions.

The Rail Baltica project has been put on a cost-saving regime

Estonia has now adopted a new cost-saving construction concept, which involves building only a single track pair over the majority of the route. Local stops will either be built later or with minimal functionality, and several associated facilities and other elements will initially be left out. According to the reduced budget, rail traffic management will be scaled back to 80% and electrification to 70% of the original plan. The construction of ten viaducts will be cancelled, local stops will be smaller in scope, the Ülemiste and Pärnu passenger terminals may be downsized, and the Pärnu cargo terminal will not be built using Rail Baltica funds.

This is what the planned Ülemiste passenger terminal will look like. Photo: Rail Baltic Estonia

The estimated cost of completing the first phase of the railway construction in Estonia, extending the railway to the Latvian border, is 3.1 billion euros. To date, 1.35 billion euros have been allocated, and it is hoped that about 1.3 billion euros will be received from the new funding period. However, the key issue currently revolves around 350–400 million euros needed for construction during the gap between funding periods, from 2026 to 2028, which was also pointed out by the national audit office. This money is not available at the moment.

In the 2025 state budget, Estonia has allocated 294 million euros for the construction of Rail Baltica. So far, 730 million euros have been funded in total by the EU budget for the construction of Rail Baltica in Estonia, with an additional 450 million euros provided by the Estonian government.

In Latvia, the Rail Baltica development plan, compiled by Latvia’s Ministry of Transport, also outlines significant cost-saving measures, but funding remains a major issue for its implementation. Additionally, there are disagreements within the Latvian Parliament regarding the railway’s construction. A unified understanding is lacking on where to find financial resources to continue the project, and there is ongoing debate about whether and how to build a connection to the city centre of Riga. The desire to extend the main line to include a rail branch into downtown Riga has become one of the biggest obstacles to the project’s progress in Latvia. This branch will require Latvia to secure its own funding, as the EU only provides financial support for the construction of the main rail line. The decision-making authority rests with the Latvian parliament.

The governments of the three Baltic countries have announced that the second phase of the project will be implemented once trains start operating on the rail line and freight volumes increase. However, the timeline for this phase has not yet been established.

The Latvian special committee has expressed doubts about the completion of the railway by 2030

In early November, Andris Kulbergs, the head of the Rail Baltica investigation commission established by the Latvian parliament, presented a report on the project to the Estonian Parliament. According to Kulbergs, it is impossible for the railway to be completed by the set deadline. He proposed the creation of a cross-border oversight commission for the Baltic States and suggested that the countries jointly approach the European Commission to request funding for the railway under the pretext of security concerns. Kulbergs believes that, under the current funding model, the railway will not be completed on time.

“The technical conditions and the project scope have been a subject of constant change,“
Andris Kulbergs. Photo: lv.wikipedia.org

In his opinion, the governments of Estonia, Latvia, and Lithuania must adhere strictly to three rules for the success of the project: the route must be fixed and not altered, a strict yet credible budget must be approved and not exceeded, and finally, a deadline must be set and adhered to. “Our committee’s opinion is that these three things have not been done,” says Andris Kulbergs. “I believe that all three Baltic states are to be blamed here for never defining the project’s budget and each country’s share in it at the correct time. While the technical conditions and the entire project scope have been a subject of constant change.”

Anastassia Kovalenko-Kõlvart, the chairwoman of the Anti-Corruption Select Committee of the Estonian Parliament, expresses doubts about the railway being completed on time, particularly regarding the current plan that envisions trains operating by 2031. This scepticism arises from the fact that the procurement for acquiring the trains is only planned to be announced in 2025. “We are being told that the trains will start running in 2031, but to conduct a procurement and then test the trains, it will take ten years,” said Kovalenko-Kõlvart. “If this process only starts next year, we will already be behind the schedule.”

“At the moment, there is no clear knowledge of when trains could start running on Rail Baltica,“ Vladimir Svet. Photo: linkedin.com/in/vladimir-svet

Estonian Minister of Infrastructure Vladimir Svet believes that the cost overruns of the Rail Baltica project are primarily due to delays in the planning process in Estonia, Latvia, and Lithuania, largely resulting from the inability to make political decisions. In Svet’s view, construction should have started much earlier. “At the moment, there is no clear knowledge of when trains could start running on Rail Baltica, and the first concrete information will come in April next year, when it becomes clear what will happen with the procurements currently announced,” said Vladimir Svet.

The construction of the Ülemiste railway infrastructure also started with some delays, as the results of the first procurement were contested. Photo: Rail Baltic Estonia

The head of Rail Baltica Estonia is confident – the railway will be built

In recent weeks, the current head of Rail Baltic Estonia, Anvar Salomets, has given numerous interviews to the Estonian media, in which he has sought to address the growing doubts surrounding the railway’s completion, its launch, and its future profitability. Salomets assures that funding sources will be found, the railway will be completed by 2030, the projected freight volumes are realistic, and the entire project will be profitable between 2040 and 2050. According to him, efforts are currently underway to secure funding for the intensive construction period between 2026 and 2028.

In addition to the railway and infrastructure construction, new trains will also require funding. According to Salomets, the cost of a single train set could range from 13 to 15 million euros, and for servicing regional lines, Estonia would need four to five such train sets.

“Today, we are on schedule in Estonia. The decisions made next year will either confirm this or prove otherwise,“ Anvar Salomets. Photo: Rail Baltic Estonia

Salomets acknowledges that the railway construction schedule is extremely tight. “All preconditions must succeed 100%,” he said. “Today, we are on schedule in Estonia. The decisions made next year will either confirm this or prove otherwise.” At the same time, he believes that Rail Baltica will be an economically viable, with potential cargo volumes that make this forecast possible. “This means that every euro invested does not have to come back immediately to the same account, but it will return through some broader impact,” Anvar Salomets told to Estonian Public Broadcasting. “Whether it is through additional jobs, businesses, tourism, expanded mobility, or better access to services.” According to him, the freight that will travel by rail mainly comes from Scandinavia and is already currently being transported on the Via Baltica highway – around 1,500 trucks a day, 40,000 to 50,000 per month, which, when converted to tons, could mean several million tons.

If passenger trains were to start operating right now, Salomets estimates that the ticket price for a high-speed train between Tallinn and Riga would range from 30 to 50 euros. For comparison, using discount offers, a bus ride from Tallinn to Riga currently costs 8 euros, while a one-way flight ticket averages 40 euros.

SCHEME: Cross-section of the railway track

WHAT IS Rail Baltica?

  • Rail Baltica is an 870 km long railway line from Tallinn to the Lithuania-Poland border.
  • To date, the main funding source for the project has been the EU’s Connecting Europe Facility (CEF), with a co-financing rate of up to 85%.
  • The beneficiaries of the Rail Baltica project funding are the ministries of the countries responsible for the implementation of the project.
  • To implement the project, a joint venture RB Rail has been established, along with three national implementing companies in each Baltic state – Rail Baltic Estonia OÜ in Estonia, Eiropas dzelzceļa līnijas SIA in Latvia, and LTG Infra in Lithuania.

TIMELINE: Significant events in the construction of Rail Baltica

  • 2014 – The Estonian holding company Rail Baltic Estonia OÜ was established to coordinate the Rail Baltica project.
  • 2014 October 28 – Representatives of Estonia, Latvia, and Lithuania sign the founding documents of the joint venture RB Rail AS.
  • 2015 July – EU member states approved the European Commission’s transport infrastructure support package totalling €11.93 billion, with a portion of the funding also allocated to the Rail Baltica project.
  • 2015 November – The first funding agreement with the Connecting Europe Facility (CEF) was signed for the development of Rail Baltica along the Tallinn-Pärnu-Riga-Panevezys-Kaunas-Lithuania-Poland route.
  • 2016 September – The Contracting Scheme with agreements on contracting, work division, procurement procedures, and obligations, was signed between all parties involved in the Rail Baltica project.
  • 2016 – Construction of the tram line between Ülemiste passenger terminal and Tallinn Airport, as part of the Rail Baltica project, began and was completed in August 2017.
  • 2017 January 31 – The prime ministers of the three Baltic states signed an intergovernmental agreement on Rail Baltica, which outlined the countries’ commitments necessary for establishing a railway connection between the Baltic States and Central Europe. The agreement defined the general technical parameters of Rail Baltica, its route, and the construction timeline.
  • 2017 April 24 – The research company Ernst & Young presented a cost-benefit analysis of the Rail Baltica project, which concluded that the project is primarily beneficial from a societal perspective, as the social and economic benefits outweigh the project’s costs.
  • 2018 February 13 and 14 – The necessary regional planning for Harju, Pärnu, and Rapla counties for the planning of Rail Baltica was established.
  • 2018 October 11 – The preliminary project for the Estonian section of Rail Baltica was completed, detailing the expected workload and budget for the railway connection in Estonia. The preliminary project estimated the cost of the Estonian section of Rail Baltica at 1.6 billion euros, which is 18% more than initially projected in the concept design from 2015. The co-financing for the Estonian part was projected at 318 million euros at that time.
  • 2019 March 29 – The first main design contract for Rail Baltica’s Estonian section was signed with the Spanish company IDOM Consulting, Engineering, Architecture. The first section to be designed was a 71-kilometer stretch from the border of Rapla County to Tootsi in Pärnu County. The contract amount, excluding VAT, was 6.8 million euros.
  • 2019 November 28 – A cornerstone to the first structure of the Rail Baltica main route, the Saustinõmme viaduct, was laid. This event also marks the beginning of the construction of the high-speed rail connection for Rail Baltica.
  • 2023 – Construction of the Ülemiste passenger terminal begins in Tallinn, with the consruction expected to be completed by 2028.
  • 2024 – Construction works begin on various sections of the main railway line.

Source: Rail Baltic Estonia

The change in the track corridor caused a delay in the construction of the railway in Pärnu County. In Pärnu County, the route of the track had to be changed for nature conservation reasons. The red line marks the location of the original track corridor. The planning change is now in its final stages, and construction may begin in the spring of 2025.
The plans for railway tracks within Tallinn. Source: Rail Baltic Estonia

1 COMMENT

  1. Impresionante mega proyecto en beneficio y desarrollo de los países Bálticos yo estoy trabajando en Literatura y para my es un orgullo participar en este proyecto
    De gran envergadura los beneficios será enormes
    Para el transporte de cargas y el turismo de estos países Bálticos tan hermosos

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