Train delays could result in EU money loss: LTV's De Facto

This week, Škoda Group representatives came to report on the progress of the new passenger train project in Riga. The delivery schedule is already delayed by more than half a year, and Latvia will lose co-financing of the EU if the trains will not be delivered on time, Latvian Television's De Facto reported on August 20.

Both the Covid-19 pandemic and the Russian invasion of Ukraine have disrupted the production and delivery of electric trains to Latvia, according to the Škoda representatives. Last May, Škoda agreed with the Latvian company Passenger Train (PV) to amend the contract, allowing trains to be delivered later than initially promised. According to the new schedule, 23 out of 32 trains had to be delivered by now, not just the arrival of trains to Latvia, but also the entry into service. No trains are in service yet.

“Škoda will have to be responsible for delays, of course, but we have to take into account that this timetable takes into account only the effects of Covid. The impact of the war on this project is a discussion for the time being,” said Rodžers Jānis Grigulis, Chairman of the Board of Passenger Train. 

The maximum penalty for delaying the delivery of each train shall be 10% of the train price. LTV estimates show that, following the current timetable, the Passenger Train would have the right to ask Škoda to pay a penalty of more than €16 million.

Grigulis pointed out that the penalty would be demanded, but the amount would depend on how the two companies agreed to “measure” the impact of the war.

Representatives of Škoda said this week that 15 trains had been assembled and train type certification is coming to an end. The tests have been completed successfully. It is only left to arrange papers with the European Railway Agency, which, according to Škoda's forecasts, will take place at the end of August. The obtained certificate will then be shown to the Latvian State Railway Technical Inspectorate, which will decide on the permits to place trains on the market.

The State Railway Technical Inspectorate will have to give an answer for placing on the market within four months, but the head of the inspection, Andris Dunskis, pointed out that this can be done well earlier: “It all depends on the quality of the documents submitted and whether all tests have been performed and the parameters checked. If it is done, it should not take a long time.” Meanwhile, Škoda's representatives estimate that all procedures to operate the first trains will be completed in October.

More delays can be costly for Latvia, because there is a risk of losing European Union funding. Latvia anticipated money for the purchase of trains from the previous fund planning period, where projects should be completed by the end of 2023. Otherwise, the money remains unspent and funding must either be searched for in the budgets or reallocated from the European programs of the next period. 23 train deliveries were expected to spend 114 million fund money.

Transport Minister Jānis Vitenbergs (National Alliance) said that the ministry is aware of the risks of losing funding: “Of course, risks remain, because one is to produce and deliver trains, the other is to certify these trains. Both of these aspects have to be taken into account. On the ministry's side, of course, we are talking to the Ministry of Finance, looking for a variety of options to be prepared for a scenario if the promised and contractual deadline for deliveries by the end of the year is not fulfilled."

Increase in re-construction of staging points, risk of missing 15 million

The director of the Central Finance and Contracting Agency (CFLA) Department of Infrastructure Development, Solita Dombrovska, said that following news of the end of train certification, concerns for the agency about the project have abated. In turn, the higher risk of losing funding at the Agency's discretion is the project for adjusting platforms for trains carried out by “Latvian Railways”, which must also be completed by the end of the year. On Jelgava's line, the works are coming to an end, but elsewhere they have barely started.

“We have already identified, in cooperation with the Latvian Railways, the amount of funding that will not be exhausted, and this could be nearly EUR 15 million which will not be spent during this planning period. In addition to these projects, there have also been cost increases” said CFLA spokeswoman Dombrovska.

The increase was not only due to war and inflation but also due to the fact that the agreements changed additional jobs which were not planned at the outset. For example, platforms were originally designed in such a way that they did not meet the accessibility requirements for people with disabilities. Rinalds Pļavnieks, Chairman of the Latvian Railways Board, however, denies that this is a reason for the delay and, as a result, for the risk of losing European Union funding, the consequences of the war are much greater.

Pļavnieks also said that the assumption of no €15 million was a very cautious forecast. The aim remains to complete timely works, or at least the main part of them.

“Latvian Railways” should also complete a rail-speed project with a total cost of €58 million by the end of the year, of which EU funding is €50 million. The CFLA has also included it in the high-risk category, but the Head of Latvian Railway points out that in this case, the risks of not completing the project by the end of the year are well lower.

The Chairman of the board of Passenger Train Grigulis said at the same time that new trains will also be used on lines where the redevelopment of platforms is delayed.

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