EU – Baltic States, Financial Services, Latvia, Legislation, Railways, Transport

"Now is the right time to make the choice," emphasizes the expert.

However, the question of funding for the railroad electrification project has not been settled yet. It is unclear how much money the European Union will allot for the project, but the total amount is very large – about EUR 500 million. "The EU will not allot this entire amount, but given that the EU has declared railroads and a priority and an environmental-friendly transport mode, we do hope that the EU funds will support the project," emphasizes Simmermann.

The government has also named the project a priority, therefore the company is also hoping for the government's support as Latvijas dzelzcels does not make that much money to implement the project on its own.

At the moment, Latvijas dzelzcels is working on finding the best technical solution for the project. Preparation will continue in 2014, and the project could be implemented by 2020 at the earliest, says Simmermann.

A similar project in Estonia commenced in 2011 and was completed this year, notes Simmermann. However, Latvia's project is on a much larger scale, but Estonia's experience may nevertheless come in handy.

Simmermann offers several reasons why Latvijas dzelzcels should switch to electric trains: they are much more powerful, the company will not be as dependent on diesel fuel prices as now, electric trains are less expensive to maintain and do not malfunction as often, and electric power is cheaper. "I cannot say for sure that transport will become less expensive, although it is one of our goals. We will have to return the investment, and the project will cost something. Whether rail transport will become less expensive depends on whether we can secure funding for the project, and how much," explains Simmermann.

The total cost of railroad electrification project is estimated at EUR 549 million, and the project envisages modernization of the existing power lines and electrification of new railroad sections from Daugavpils and Rezekne to Krustpils, Krustpils to Jelgava and Jelgava to Ventspils. Latvijas dzelzcels hopes that part of the project cost could be covered by EU funds during the 2014-2020 financial period.