Ilona Bērziņa, BNN
“The Rail Baltica project has not been managed effectively so far. There are numerous indications about the project being left unattended or, better yet, trusting in a higher power instead,” this conclusion from the State Audit’s 2020 report may as well describe Rail Baltica’s progress in 2023.
If we are prepared to suffer a dug up centre of Riga in the name of a bright future, the news about the project’s costs quadrupling (eight billion instead of two) and the announcement from Turkish companies to sue Latvia for their exclusion from Rail Baltica procurement should serve as reason for serious concerns.
The topic of the project’s costs potentially going up has been discussion basically from the start. In 2017 then the head of RB Rail – the joint company of the three Baltic States – Baiba Rubesa warned: one of the main factors contributing to the growth could be the massive economic changes, which have come to pass because of geopolitical factors and which severely affect the entire business environment.
However, it cannot cause a severe inflation of project costs. Yes, costs are up. And the growth is considerable. While three years ago it was estimated that the 870 km-long railway line from Tallinn to Lithuania and the Polish border would cost EUR 5.79 billion, now Europe’s long-term budget
already includes EUR 9 billion for Rail Baltica’s needs for the next five years.
However, this funding is intended for all three Baltic States together. This begs the question – where did the Ministry of Transport get the EUR 8 billion they unexpectedly announced?
Five days before Evika Siliņa’s government was approved, then the potential Minister of Transport Kaspars Briškens mentioned in an interview to LTV programme: “We definitely cannot assume someone is working in some golden castle, that it would be unnecessary and that it should be dropped. The project is not being managed efficiently and that the costs are up is definitely a fact.”
Briškens, who was once both a member of RB Rail council and the strategic and development manager, refrained from discussing the project’s growing costs. All he said that he does not want to speculate with any specific numbers.
If the minister’s statement to LTV programme Rīta panorāma of the 28th of September is to be believed “the initial estimates were lowered – they did not reflect the necessary investment amount even at that time.”
If this is the case, then where and at what point did Briškens sound the warnings about the lowered estimates, especially considering he was involved in the implementation of the project? No less interesting is the question as to why the biggest infrastructure project in the Baltic region was not put under direct supervision of those countries’ prime ministers from the start.
Ex-Prime Minister and now Minister of Foreign Affairs Krišjānis Kariņš promised at the meeting of Latvian, Lithuanian and Estonian prime ministers in Riga in 2019: “[…] we are committed – to get involved to the point that we will regularly monitor what issues may prevent us from moving forward and do everything in our power to push it [Rail Baltica] forward”.
However, this commitment has resulted in near constant complains about insufficient funding and the project’s financing dynamic. As it turns out, the inability of the Ministry of Transport to properly draw up a financing request for the EU Military Mobility Fund has also ruined the dream for the provision of EUR 100 million…
Reading news about Rail Baltica’s progress, information about the millions and tens of millions needed flows like a river. Perhaps this is why information about the EUR 8 billion for the project instead of the initially reported EUR 2 billion was accepted by residents relatively calmly.
Maybe people simply don’t perceive such enormous amounts.
However, I will mention here that in 2016, for example, all of Latvia’s state budget expenditures were planned at a little over EUR 7 686 000 000. Only in 2017 did the state budget expenditures exceed the EUR 8 billion threshold by a little more than EUR 327 million. Not that long ago EUR 8 billion was enough to cover all of the country’s security, healthcare, education, social, state governance and other needs.
Looking at it from this point of view – doesn’t the poorly-defined need for EUR 8 billion for Rail Baltica look a bit too much?
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If we’re used to throwing around millions, perhaps it would be a good idea to look for areas in which we can hopefully save some money? It would be interesting to learn about the reasons as to why the Turkish companies (IC Içtaş Inşaat Sanayi Ve Ticaret A.Ş. and Doğuş İnşaat Ve Ticaret A.Ş.) were barred from Rail Baltica procurement at the very end.
If the offer from the Turkish companies was half a billion euros (EUR 536 415 263.64) cheaper than the offer of the other contender and that access to confidential information was even provided to assist with the offer’s preparation, we have to ask – how serious were the reasons for this contender to be excluded in the end?
Especially because that the Turkish companies claim that the winner of the procurement E.R.B Rail Baltica JV turned against them with similar accusations. This dispute will need to be resolved by a court of law. This means the work worth EUR 3.7 billion will be delayed again.
If someone things half a billion euros is some minor issue, it should be mentioned that a slightly smaller amount is already intended for three priorities of Latvia’s budget for 2024 – security, education and healthcare. If we want to be precise, additional financing for the country’s external and domestic security is EUR 91.9 million, for education it is EUR 119.5 million and for healthcare it is EUR 275 million.
This amounts to EUR 486.4 million.
Of course, we could says that the lion’s share of financing for Rail Baltica (85%) comes from European taxpayers’ wallets, and Latvia’s contribution is the remaining 15%. However, the fact that the reason for excluding the Turkish companies from the procurement was a recommendation from the State Security Service does not mean this case will not be in focus during decision-making in regards to further financing Rail Baltica project.
We would very much like to hope Rail Baltica project will be open for traffic by 2030, when it is planned to complete the creation of the European transport line. We would also like to hope there won’t be a quadruple cost increase and Latvia will not have to suffer a major blunder in the implementation of such a massive project.
Also read: Latvia’s former Minister of Finance sharply criticises Rail Baltica management
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