The Ministry of Transport has kept the Cabinet of Ministers in the dark as the real growth of costs of Rail Baltica, reviewing them in prices of 2016 to make the growth of prices to not seem as big, as mentioned in the final report of Latvian Saeima’s parliamentary Rail Baltica inquiry committee.
In it, the committee also invites the Saeima to compose a special committee to monitor the project’s implementation.
The inquiry committee has found that in its 2021 report, the Ministry of Transport presented Rail Baltica costs at EUR 3.4 billion. In autumn 2021 the ministry was informed Rail Baltica’s costs reach EUR 5.3 billion without inflation.
In total, the committee’s report lists 29 conclusions, 16 proposals, as well as a list of 18 people the committee’s member believe to be responsible for mistakes, put the project at risk and failed to take a sufficiently active position in this project’s implementation.
The committee also concluded that, looking at the speed at which the Latvian government makes decisions and the available financing for the project, there are doubts Rail Baltica’s first stage will be completed by 2030, because the planned completion depends on available financing.
It is expected that, without funding restrictions, the first stage of the project will be completed from 2030 to 2032. With the projected funding restrictions, it is expected that the project will be built in stages, the first phase will be completed in 2030 and the rest will be completed in about 2040, the committee concluded.
The committee also found that the involvement from the Ministry of Finance in Rail Baltica was insufficient,
i.e. risk management and cost control was absent until up to 2023. On top of that, the state budget document packages do not reflect complete information about the project’s approved and annually planned funding, as well as the budget’s long-term commitments, as concluded in signed and not yet completed contracts of the Connecting Europe Facility (CEF).
Also, the committee points out that changes to the project were made both during the design process and already in the active construction phase, which not only increases the total volume and cost of the project, but also significantly postpones the start of construction work.
The committee also found that neither RB Latvija, Ernst&Young Baltic, RB Rail, European Railway Lines nor officials of the Ministry of Transport had performed appropriate cost comparison with other railway projects in Europe.
The commission has also included 16 proposals in its final report, including calling on the Saeima to establish a sub-committee that will supervise the implementation of the Rail Baltica project, controlling this project at the legislative level, while providing comprehensive information about what is happening in the project to the public and the media.
The committee also proposing a task for the State Chancellery to evaluate and declassify all government decisions on the Rail Baltica project by carrying out an audit of the relevant documents in the responsible ministries.
The committee also invites the government to urgently amend the policy planning documents of the Cabinet of Ministers, determining the sectoral ministries responsible for the implementation of the Rail Baltica project, the exact deadlines and sources of finance of the project, as well as to instruct the Cabinet of Ministers to report to the Saeima at least once a quarter on the progress of the implementation of the Rail Baltica project.
It is also proposed to instruct the Cabinet of Ministers to prepare an informative report on the optimal economically responsible use of the territories adjacent to the Rail Baltica main line, involving local governments and non-governmental organisations in this process in order to ensure all opportunities to develop commercial activities in them.
The committee also calls for the immediate definition of a finalised version of the first phase track, a decision to be taken and the cost of the Rail Baltica project to be approved, as well as a realistic deadline for implementation.
The final report names individuals by their level of responsibility. Red marks those persons who, in the opinion of the majority of the committee, made significant mistakes, orange – persons who had to act appropriately in the implementation of the project, but they did not, and in yellow – persons who did not take a sufficiently active position in the implementation of this project.
The “red section” includes Ex-Prime Minister of Latvia Krišjānis Kariņš, former RB Rail strategic director and current Minister of Transport Kaspars Briškens and former Minister of Transport Tālis Linkaits.
An “action plan” is also added next to each person listed in the report.
According to the report, Kariņš, leading the work of the government from 2019 to 2023, did not go into the implementation of the Rail Baltica project in essence. He did not create the necessary monitoring and institutional management system for this project, as was recommended by the State Audit Office. According to the committee, he did not fully assume responsibility for the implementation of the project at the level of the head of government. The committee also concluded that he, being aware of the increase in project costs, did not take any action to save them and attract additional funding.
The current Minister of Transport, who is mentioned in red, Kaspars Briškens (P), served as strategic director of “RB Rail” from 2016 to 2022, was responsible for the cost-benefit analysis of the 2017 Rail Baltica project, which included its ordering, evaluation and acceptance, which, as a result, contained significant errors and did not correspond to reality, the report says.
It is stressed in the report that Briškens headed the department at RB Rail, which was responsible for most of the Rail Baltica research,
but the research publications did not indicate the need to comply with the project budget, which led to a significant uncontrolled increase in costs as a result of changes in technical requirements. He also led the study of alternative sources of financing, which was concluded in 2021, but has not made any contribution to attracting such funding, the report states.
Briškens also delayed the integration of AirToRail research solutions into the Rail Baltica project guidelines, which are binding on all three Baltic States, allowing for the fact that the design at the Riga Central Station (RCS) and the Riga International Airport has already been completed and construction has begun for RCS.
As a result, the project has been reworked and delayed by 1.5 years, downtime has occurred and unnecessary cost of the project has occurred, with no commercial/application justification, the commission concluded.
Meanwhile, the third responsible person on the red list, from 2019 to 2022, former Minister of Transport Tālis Linkaits (JKP) did not provide the government with objective information about the real costs of the Rail Baltica project, including by not controlling the investment and operating costs of the project, contributing to the fact that the increase in project costs was supported without their proper assessment, the report emphasizes.
The report also stresses that Linkaits had ignored recommendations from the State Audit,
and he had also allowed the costs of Rail Baltica sites to be changed by including 17 regional stations in the project framework without sufficient justification.
The former minister also conceded that new requirements were to be filled with new requirements for the design and construction of “point structures”. He also conceded that without cabinet approval in the Ministry of Transport, in the absence of funding, another station was added to 16 regional stations.
Also important is the fact that he allowed Ministry of Transport official Ligita Austrupe to combine positions in the context of the project, which the audit authority of the Ministry of Finance assessed in last year’s report as a “systemic conflict of interest”.
The “orange” block includes Agnis Driksna, former Chairman of the Board and CEO of RB Rail; Anrijs Matīss, former Minister of Transport; Minister of Finance Arvils Ašeradens (JV); State Secretary of the Ministry of Finance Baiba Bāne; former Head of RB Rail Baiba Rubesa; former Deputy State Secretary of the Ministry of Transport, current Chairman of the Board of the Road Transport Administration Dins Merirands; former State Secretary of the Ministry of Transport Ilonda Stepanova; former State Secretary of the Ministry of Transport Kaspars Ozoliņš; former Acting State Secretary of the Ministry of Transport and Chairman of the Council of RB Rail Ligita Austrupe; former Deputy Director of the Railway Policy and Infrastructure Department of the Ministry of Transport Olita Bērziņa, as well as former Minister of Transport, now Minister of Welfare Uldis Augulis (ZZS).
In turn, the “yellow” section includes the former Minister of Finance, now Member of the Saeima Jānis Reirs (JV), former Chairman of the Board of “European Railway Lines” Kaspars Vingris, and former PMs Laimdota Straujuma and Māris Kučinskis (ZZS).