Latvia Allocates €61 Million for Rail Baltica Construction: What This Means for the Project

The Latvian government has decided to allocate an additional €61.032 million in national co-financing for the Rail Baltica project, which is supported by the European Commission, this is reported by the railway transport news portal Railway Supply.

This decision, approved on August 27, aims to continue construction work on the project within the country.

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Under the Connecting Europe Facility (CEF) program, total funding of €345.817 million is planned, with €61.032 million to be covered by Latvia’s state budget.

These funds will be used for various construction activities, including technical supervision and support, as well as VAT payments, which will eventually be returned to the state’s budget.

However, the Rail Baltica project faces financial challenges. The European Commission has reduced funding for certain activities, requiring an increase in national budget contributions by €33.792 million.

These funds will be used for construction supervision and other related tasks.

The government has instructed Latvia’s Ministry of Transport to prepare additional funding proposals for rejected activities and to review the expenses of the joint venture RB Rail in cooperation with Lithuania and Estonia.

The Ministry of Transport expressed concern about the reduced funding and the shift in funding proportions between the European Commission and the national budget.

According to Kristīne Malnača, Deputy Secretary of State for Rail Baltica, the government fundamentally supports co-financing despite uncertainty regarding the necessary amount for further construction.

Previously, the European Commission did not allocate funds for some important activities, such as land acquisition, quality control, and global project coordination. This poses significant risks to project implementation, especially with reduced EU funding.

The Rail Baltica project is a large-scale cross-border construction of a European-standard railway connecting Tallinn with the Lithuanian-Polish border.

The route will span 870 kilometers. Latvia is set to begin construction of the main line in 2024, requiring substantial financial investment and international coordination.

If Latvia fails to provide the necessary co-financing, the project’s implementation in Lithuania and Estonia may be at risk.

Furthermore, the lack of co-financing for crucial activities, such as construction supervision and land acquisition, underscores the need for a revised funding strategy.

The Ministry of Transport of Latvia emphasizes the need for adequate funding for the project’s successful completion and warns of potential risks to its further progress.

Latvia, Lithuania, and Estonia are working together to overcome these challenges and continue the construction of this critical transport artery, important for the entire Baltic region.

Photo: View of the construction site of the “Rail Baltica” Rīga Central hub and Rīgas Satiksmes buses.

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