It is still unclear how to divide Rail Baltica into sections and how to finance it, as the Ministry of Transport is not willing to move forward with the information report without the approval of the Ministry of Finance.
LTV's "De Facto" program reports that due to late payments to the builders of Riga Airport and Riga Central stations, the Ministry of Transport's (MoT) company "Eiropas Dzelzceļa līnijas" (EDzL) may have to file for insolvency.
EDzL is the MoT company responsible for implementing the Rail Baltica high-speed train project in Latvia. It concludes contracts for construction works and supervises their implementation. Construction work is currently underway at Central and Airport stations. A total of around €260 million has been spent on the works. But costs are rising, both because of the many changes to the project and because of inflation.
€39 million needed to cover inflation interest is not in the budget. De Facto reports that EDzL's previous board informed the Ministry of Transport about the foreseeable problem several times, regularly since March last year, and the last correspondence was in April this year.
Guntis Āboltiņš-Āboliņš, CEO of the construction company Bererix, told the program, "The situation is far from optimal, but at the same time an active dialogue with the project promoters is taking place in order to resolve the payment issues as soon as possible. Legal constructs such as insolvency applications are not being considered at the moment."
However, even if the builders do not file for insolvency, the failure to pay invoices on time would oblige EDzL to file for insolvency as early as June 5.
The Ministry of Transport is preparing an information report for the government and has launched an internal investigation, says Minister Kaspars Briškens (Progressives). He first blames the previous management of EDzL, as well as the previous ministers of transport.
Work has stopped at Riga Central Station. To continue, more than €100 million must be found to complete the building.
There is no money available from the Connecting Europe Facility (CEF), which is the biggest funder of Rail Baltica. The Ministry of Transport is now hoping to find money in the Recovery Fund, reallocated from other projects.
"We cannot leave this construction as a half-finished ghost and not redirect additional funding, even though, of course, costs have increased. (...) If we compare different types of projects, including projects that have been launched in the past and the Rail Baltica project, in our opinion the Rail Baltica project has a higher priority," Briškens said.
Delays in design are one of the problems at the moment. And it is expected to cause Latvia to lose around €4 million of the already allocated CEF money.
Last summer, when additional millions were also requested for the design, the Ministry of Transport commissioned an audit of the management of the RB Rail joint venture responsible for the projects. However, the audit was canceled following a change of ministers. Now there will be a new procurement, but in the meantime, a year has passed.
The MoT's information report is still being coordinated and should outline both Latvia's position - what will be built in the first phase by 2030, and where the money will come from.
Decisions should be taken soon. "So the European Commission has indeed now said that they are primarily ready to finance the straight corridor from their side - the whole route from Lithuania to Estonia via Salaspils. And we, as a joint venture with the European railways, with the Ministry of Transport, with the Cabinet of Ministers, have to understand what will be the mechanism where we can really find a source of funding, primarily to the airport, and then connecting Rīga, because we need both solutions," says Kitija Gruškeviča, Member of the Board, Sustainability Director of RB Rail.
The Transport Minister accuses the Ministry of Finance of being stuck with the report because of its objections. But it points out that important questions remain unanswered. Moreover, the Ministry of Transport can, if it wishes, put the report on the government's desk without consulting the Ministry of Finance.
"What are the concrete proposals - well, it got more expensive, please, Ministry of Finance, find the money? Are these proposals? I think not! Because it is clear that we are discussing these issues with the European Commission and trying to understand how to proceed," says Finance Minister Arvils Ašeradens (New Unity).
The Finance Minister does not elaborate on the objections, as the content of the report has been restricted by the Ministry of Transport, which in his view is not justified. The Transport Minister denies responsibility for the secrecy, saying that this has been the tradition for such reports.
Time is running out, as the Baltic prime ministers are due to sign an agreement on the implementation phases of Rail Baltica in June. But before then, the State Audit Office's report on the management of the project is also expected.
