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Rail Baltica costs in Rīga have soared by 90 million euros

A little more than three years have passed since the construction of the central hub of "Rail Baltica" in Riga began, making a major impact on the city landscape. Both the client and the contractor do not hide the fact that the project is far more expensive than originally thought, and the costs could increase further before completion.

The estimated cost of constructing the new station and sections of line for the Rail Baltica project has risen by 90 million euros so far, Latvian Television reported on December 5.

The new Central Station is taking shape in Riga. The building will have three floors, and the best view will be on the third floor, where you will be abe to look at the Latvian capital's church spires while waiting for the train.

The RB Rail joint venture of Estonia, Latvia and Lithuania is the company in overall charge of the project, however on Latvian soil the company responsible is Eiropas Dzelzceļa līnijas (European Railway Lines) –which revealed that the costs have increased by more than 90 million euros since the signing of the contracts for construction of the crucial Rīga hub. Therefore, the cost of construction of the central hub of Riga currently stands at 523 million euros.

Funding for construction is received in installments, subject to meeting specific criteria, and is currently deemed sufficient.

"The amount of the contract has been amended several times. We have received several new requirements that had to be included, and this increased the amount of the contract. We cannot predict how inflation will change by 2027. The terms of our contract require the builder to also cover the increase caused by inflation indexation," said Einars Jaunzems, Director of the Project Implementation Department of European Railway Lines.

Missing deadlines

As well as soaring costs, works are falling further and further behind schedule – though at least some of the reasons for this are clear and might be looked at with a degree of sympathy. 

"The delay over many years, through the pandemic, through the war, when planning the largest construction object in Latvia, is not remarkable. But here it should be added that our completion capacity does not depend only on how strongly our builder is able to work, but more on how the European Commission can give us funding quickly," said Jaunzems.

When the construction site opened at the end of 2020, the planned handover deadline was 2026. Now it is clear that only a part of the station project will be completed by then.

"It is important for us to start train movements here so that we free up space on the northern side. Then we can start work on that side. This will probably happen in 2026. In 2030, when the entire Rail Baltica track should start functioning, by then for sure," said the executive director of the construction company BeReRix, Guntis Āboltiņš-Āboliņš.

In October, the government allocated more than 18 million euros to complete the design of the Rail Baltica railway line in four stages in Latvia, and additional funding is still needed for the design of several more stages.

In order to absorb the already allocated EC funding in full, the design works must be completed by December 31, 2024. Likewise, the completion of design works is an essential prerequisite for attracting further EISI funding for the Rail Baltica project and for the continuation of construction works on the main line, according to the Transport Ministry.

Originally budgeted at 5,8 billion euros, the current estimate for the total cost of Rail Baltica is 7.8 billion euros – though given current trends it would not e surprising if the figure is revised upwards again in the future. 85% of the funding is supposed to come from the European Commission with the Baltic states each contributing an additional 5%.

Meanwhile, Prime Minister Evika Siliņa (New Unity) said in an interview with LTV Tuesday evening that the Implementation of the Raila Baltica railway project by 2030 and, accordingly, the Baltic States' railway connection with Europe is a challenge.

She is currently awaiting a report from the Ministry of Transport to address the issue of project implementation and funding.

“It's clear that only one funding model from European Union funds will not be the only way we can move forward. We need to be creative and find other solutions as well,” the prime minister said.

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