Construction, EU – Baltic States, Financial Services, Railways, Transport
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Wednesday, 01.05.2024, 23:16
Cost of Rail Baltica project has increased to EUR 7 bn - European Court of Auditors
"According to the European Court of Auditors, the
current real cost is not the initially projected EUR 4.648 bn, or the revised
projection of EUR 5.8 bn currently allocated to the project, but EUR 7 bn, and
there is a risk that these costs will increase in the future," said
T'Joen.
He added that the European Court of Auditors' audit also
found that the economic sustainability of the Rail Baltica project was unclear,
as north-south traffic was insignificant and road and sea transport were
predominant.
"For the project to be economically sustainable, it has
to be a mixed passenger-cargo line. For the project to pay off in the long run,
the traffic density needs to be higher,'' he said.
He also pointed out that the European Court of Auditors
considered that there were risks to the project being completed on time and
that no decisions had yet been taken on how to manage the project in the long
term. Also, the Rail Baltica project still does not have a plan to connect it
to the existing railway lines of different gauges, nor has a connection with
Poland been discussed.
Mihails Kozlovs, a representative of the European
Court of Auditors, added that the audit assessed the work of the European
Commission in a total of eight different transport connections in different
regions of Europe.
''Compared to other projects, Rail Baltica is not lagging
behind and even looks better. It is likely that the construction of the railway
line will be completed by 2030 with a possible time reserve. Three years is the
smallest delay among the evaluated projects, "said Kozlovs.
He also pointed to the increase in costs, explaining that
there are risks of artificially increased costs. To date, EUR 800 mln has been
allocated to the project from the European Union and EUR 80 mln has been
disbursed.
Kozlovs also emphasized that the European Court of Auditors
considered that there were risks of project delays due to disagreements between
project participants. The European Court of Auditors considers that the
European Commission should require project participants to provide a better
quality cost analysis.
"The audit did not provide assurance on freight and
passenger flow forecasts. The region covering Rail Baltica has a very small
population that will not be able to provide the required number of passengers.
It is unclear whether the expected freight flow will compensate for the
shortage of passengers. The European Court of Auditors does not deny that
freight can compensate the shortage of passengers to make the line sustainable,
but we have not yet seen measures to make this happen," said Kozlovs.
Meanwhile, Kozlovs also admitted that cooperation between
the European Commission and the project participants on the implementation of
the project is one of the best which was assessed.
Deputy State Secretary of the Ministry of Transport Dins
Merirands pointed out to the participants of the joint sitting of the
Saeima committees that the comparison of Rail Baltica with other projects is
"relatively good and gratifying".
"There are disagreements and discussions, but we find
opportunities to move forward. The funding allocated so far and the work done
on it go hand in hand. However, the increase in price is nothing unique to this
project, as the initial costs estimates were made years ago and there have been
price corrections since," said Merirands.
Meanwhile, Andris Kuznieks, acting head of the European Commission Representation in Latvia, explained to the MPs that the increase in costs was caused by the integration of the city of Riga into the project and the Kaunas-Vilnius connection, which were not initially included in the project.
At the same time, Kuznieks emphasized that the official cost of the project is still EUR 5.8 bn and that the EUR 7 bn mentioned in the audit of the European Court of Auditors has not been officially approved.
Roberts Zile (National Alliance), Member of the
European Parliament, emphasized that the European Court of Auditors have
analyzed the Rail Baltica project only from an economic point of view.
"If all the investments of the European Union were
evaluated only from the point of view of economic returns, then the Baltic
states would not receive any investments at all, because there would not enough
of a return, and that all Europeans are living in a triangle between Berlin,
Paris and Luxembourg," Zile said.
He also pointed out that it was not clear how the European
Court of Auditors had come to the final figure of seven bn. Zile also
emphasized that the cargo flow on the Via Baltica Highway already several years
ago amounted to 20 mln tons per year, thus, by reorienting the cargo to the
railway, the necessary cargo flow will be ensured.
"All project participants believe that it is realistic
to implement the project by 2026. The European Court of Auditors also points
out that the project is not particularly endangered and can be completed by
2030," Zile added.
Rail Baltica is a double track, European standard 1,435 mm
gauge electrified railway for passenger and freight transport to be built from
Tallinn to the Lithuanian-Polish border. The overall length of the railway will
be 870 kilometers.
The initial cost of the project was estimated at EUR 5.8 bn,
with a portion of the costs being financed through EU funds. The project was
expected to be completed and open for traffic in 2026.
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