News

2020.01.07 13:00

Rail Baltic audit reveals risks of budget overruns, delays

LRT.lt2020.01.07 13:00

An audit into Rail Baltic has revealed risks of budget overruns and failing to complete the project connecting the three Baltic states and Poland on time by 2026.

Project’s contractors have failed to keep on schedule and on budget, and the separate construction stages are falling behind by 1.5 years on average, according to ELTA.

The Supreme Audit Institutions (SAIs) of Estonia, Latvia and Lithuania have revealed that the grant-funded budget for the first phase will overrun by 59.3 million euros. Although the funding model does not run counter to the Baltic states’ laws and there are no conflict of interests between grantees and contractors, there is no mechanism to ensure common funding and vision after the project is completed.

The countries also lack national instruments to ensure funding in case of cost overruns or decreasing EU support.

However, the auditors did say that the roles, responsibilities and procedures for managing the Rail Baltica project were mostly in place.

Read more: Rail Baltica to halve travel time between Vilnius and Kaunas

“While the audit highlights both scheduling and budget risks, the implementation of Rail Baltica by 2026 remains our target.” Agnis Driksna, interim CEO and Chairman of the Management Board of RB Rail AS, said in a statement.

“We have identified the key preconditions necessary to meet this target, including improved decision making during the design and construction phases and timely availability of funding. If these preconditions are met effectively, Rail Baltica can be delivered on time,” says Driksna.

“The Rail Baltica costs for all countries will be updated after the conclusion of the detailed technical design in 2021 and further studies on estimated passenger and cargo flows,” said Ignas Degutis, RB Rail AS Chief Financial Officer

Rail Baltica will connect Warsaw, Kaunas (and Vilnius), Riga, Tallinn and, indirectly, Finnland. The project is due to be completed in 2026.

In the 2014-2020 budget period, the Rail Baltica is 85-percent funded by the EU.

The total cost of the project is estimated at around 5.788 billion euros, including 2.474 billion euros in Lithuania.

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