Transport Ministry needs another 33 million euros for Rail Baltica stations in Latvia

Latvia's Ministry of Transport (SM) plans to ask for 33 million euros (excluding VAT) from state funds to fulfill obligations to the builders of the two international stations of the Rail Baltica railway project, according to the text of a Memorandum of Understanding (MoU) on the matter, reported the LETa newswire June 25. 

The money is required for the Riga Central and Riga Airport rail stations according to the Memorandum of Understanding (MoU) which proposes the redistribution of financial resources within the framework of the 2024 budget, respectively redistributing 2.995 million euros and 2.533 million euros to the budget sub-programme "European transport infrastructure projects ("Rail Baltica")" to ensure the payment of construction cost indexation invoices.

EUR 261,000 is planned to be drawn from the savings of the Connecting Europe Facility (CEF1) financing agreement.

At the same time, the MoU will encourage the government to support the allocation of additional state budget funds to cover VAT in the amount of EUR 7.619 million from the budget program "Undistributed financing for the implementation of projects and measures co-financed by EU policy instruments and other foreign financial assistance".

The Memorandum of Understanding explains that, taking into account the rules for acquiring the allocated funds specified in the CEF contracts, in the event that an opportunity is not found to cover the fulfillment of the existing obligations to the tune of 39.095 million euros it total, the goals of the activities specified in the CEF contracts will not be achieved and the state will be obliged to repay the European Innovation and Networks Executive Agency (CINEA ) funds that have been received so far for the relevant activities which would result in a bill of nearly 190 million euros.

In addition to that sum, the state would have to pay fines for late invoices to the executors, and if it is decided to temporarily suspend any of the construction contracts, it will also have to cover, for example, contract suspension and/or termination costs for both the builders and the engineers.

The report states that the accepted contract price of the Riga Central Railway Station in May this year was EUR 566.597 million (without VAT). The ministry paid out 192.356 million euros from CEF funding in May.

Over at the Airport, the total amount of the Riga Airport railway station is 249.759 million euros without VAT. 108.897 million euros have been provided with CEF financing.

Meanwhile in the June 25 cabinet meeting, the government was working its way through a lengthy list of properties along the proposed route of the new rail link that have yet to be expropriated by the state.

As recently reported by LSM, the Rail Baltica project has come under steadily increasing criticism recently for spiralling costs and lengthy delays.

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