Rail Baltica is considering a new financing model: how will it affect the project?
20.08.2024
Rail Baltica is exploring the introduction of a public-private partnership (PPP) model following the successful funding of the Connecting Europe Facility (CEF) project, this is reported by the railway transport news portal Railway Supply.
This move aims to improve financial conditions and reduce the burden on state budgets.
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The initiative is examining the experience of the Porto-Lisbon high-speed railway, which received a record €813 million from CEF, setting a significant precedent for European railway projects.
The Porto-Lisbon project demonstrated how combining CEF funding with a PPP model can effectively address financial gaps in major infrastructure initiatives.
Examples of successful projects, such as Lyon-Turin and the Brenner Base Tunnel, show that PPPs can attract private investments and accelerate the implementation of cross-border infrastructure projects in the EU.
Pēteris Celms from RB Rail AS noted that the Rail Baltica team is investigating which parts of the project would be most suitable for a PPP. This will help maximize the benefits of private involvement and achieve the project’s strategic goals.
Initial talks with potential investors have shown high interest in the PPP model, indicating its viability.
PPPs align with modern trends in European infrastructure and highlight Rail Baltica’s commitment to completing this important project.
Collaboration between the state and private investors involves innovative financial solutions, which will help make progress while minimizing risks.
Implementing PPPs in the Baltic states faces specific challenges, such as adapting to regulatory environments, risk allocation, and attracting international financiers.
Despite the challenges, using PPPs remains a promising approach for infrastructure development in Europe.
In the latest CEF funding round, Rail Baltica received an additional €1.2 billion for construction in the three Baltic countries, including €346 million for Latvia.
The total investment in the project has reached €4 billion, with expected direct benefits amounting to €6.6 billion.
The project is also expected to boost GDP growth by 0.5-0.7% in Estonia, Latvia, and Lithuania, with indirect benefits ranging from €15.5 to €23.5 billion.
The first phase of Rail Baltica is expected to be completed by 2030, with a total cost of €15.3 billion.
Photo: Rail Baltica
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