Latvia cannot seem to rid itself of funding problems for Rail Baltica. The issue has reached a new breaking point: If Riga cannot find an additional 9 million euros by Thursday, “Latvia is effectively withdrawing from the Rail Baltica project and is also halting the implementation of the project in Estonia and Lithuania”, says the transport ministry.
Even if the 9 million euros in question pale in comparison with the total projected cost of 4,5 billion euros in Latvia, the relatively small sum may prove to be a significant obstacle for the railway’s construction.
The joint venture responsible for implementing the project, RB Rail, will stop any project that could incur further supply costs if it does not receive the money by Thursday 30 January. The suspension would be in effect for at least a month, until the next board meeting of RB Rail. The 9 million euros demanded that RB Rail needs is supposed to cover administrative, project management and design work costs.
Priority tasks
The stop would include a suspension of priority tasks endorsed by the Latvian government: The European gauge mainline connecting Lithuania and Estonia, completion of works around Riga airport and the central railway station, further integration of the airport into the existing railway network and military mobility hubs.
Latvia’s transport ministry warns that the country may be digging a deeper and deeper hole for itself. Last year, it failed to pay a million euros in the common project fund, which meant that workers were paid with Estonian and Lithuanian money instead. Lawsuits could make Latvia incur even more costs and a loss of reputation.
Reimbursement of European funding
Perhaps an even bigger problem is the failure to fulfill the obligations set out in the EU’s Connecting Europe Facility funding agreements – if Latvia fails to comply with those, it will need to pay the funds back to CINEA, which allocates the money. The ministry also says that it may then need to pay compensation to Estonia and Lithuania.
Were it to come to that point, a timely and qualitatively sufficient completion of Rail Baltica would be even more difficult to achieve in Latvia. But in the short term, the most pressing issue seems to be the possible temporary exit of Latvia from Rail Baltica. “… since Latvia does not fulfill its obligations to co-finance RB Rail cross-border activities, Latvia is effectively withdrawing from the Rail Baltica project and is also halting the implementation of the project in Estonia and Lithuania”, the transport ministry says.