Baltic, Construction, Cooperation, EU – Baltic States, Good for Business, Railways, Transport

The Latvian Transport Ministry reported that the meeting was a turning point in cooperation among the Baltic states to continue work on the project. The representatives discussed centralized RB Rail procurements and national procurements supervised by RB Rail.

Latvian Transport Minister Uldis Augulis voiced confidence that Latvia's performance in the project so far had been excellent. "Implementation of Rail Baltica project will be new and valuable experience as so far there have not been similar cooperation projects, therefore the beginning has not been easy. I believe that all three countries are interested in receiving and investing financing in the future, growth and development. This, undoubtedly, is a challenge, but also a huge opportunity," the minister said.

The Baltic states decided to divide all procurements in three groups – procurements organized by the joint venture only, consolidated procurements implemented by the joint venture, and procurements implemented by national companies under supervision of the joint venture.

During the meeting the parties agreed that RB Rail will be the central manager of public procurements in areas related with the joint project standards, marketing and business research, etc.

The supervisory council agreed to sign an agreement on the Model for Rail Baltica project financing and implementation model project by September 30.

The parties also agreed to start a tender for professional board members in the Baltics in a month.

As reported, Michael Cramer, chairman of the European Parliament's Committee on Transport and Tourism, warned in an interview with Lithuania's 15min.lt news website last week that the Baltic states risk losing EU funding for Rail Baltica if they prove unable to reach common ground on the project's implementation.

"The Baltic states must work together. A final decision is necessary, and it is not in place yet. I know they are lacking a political decision, which should be made by the Ministry of Transport of Lithuania," he said.

The Baltic states have reportedly failed to agree on the distribution of Rail Baltica money. Lithuania feared that, with all orders conducted by the Latvia-registered company RB Rail, VAT would remain in Latvia. Lithuania has always wanted the VAT for the work done in Lithuania to stay in the country's territory. In July, ministers of Lithuania, Latvia and Estonia agreed on VAT distribution, however, the countries are still at odds over the final financing scheme.

The three countries have still failed to agree on the appointment of RB Rail board members.

Rail Baltica project coordinator Catherine Trautmann has also warned about the Baltic states possibly losing the support in case of failure to agree on project implementation.

Last year, EC granted EUR 106 mln for project implementation in Lithuania, in addition to nearly EUR 191 mln earmarked this year.

LETA also reported, the Rail Baltica project deals with construction of a new 1,435 millimeter standard-gauge railroad in the Baltic countries. The European Commission has allotted Latvia EUR 238 mln for the first round of the project.

By 2020, the three Baltic states will receive a total of EUR 442.2 mln (co-funding of 81.83%) for this project.

The Rail Baltica project seeks to re-establish a direct connection between the Baltic states and the European railway network. The project is expected to facilitate regional integration by means of a railway link from Helsinki that would link Tallinn, Riga, Kaunas, Warsaw and Berlin and might potentially be extended to Venice.