The cost of the high-speed railway link Rail Baltica will run significantly over budget and its economic viability is in doubt, according to the European Court of Auditors (ECA).
The EU watchdog inspected eight multi-billion-euro transport projects, including the railway link connecting Lithuania, Latvia and Estonia due to be completed by 2026.
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However, the construction may drag on until 2030, ECA member Mikhail Kozlov told reporters on Tuesday.
The report also warns that the project may end up costing 7 billion euros, significantly more than the original budget of 4.65 billion which has so far been revised up to 5.8 billion.
The auditors also warn that Rail Baltica may not be economically viable once it is completed, because the north-south traffic is not intense enough and a proper survey on potential passenger and freight demand was not conducted.
During an online briefing, the court’s Oskar Herics explained that “the expected number of passengers of 4.6 million a year falls significantly short of the benchmark of 9 million passengers a year when comparing to high-speed standards”.
Moreover, as of June 2019, the three Baltic states had not agreed on a common management system for the rail link when it is up and running.
The level of co-financing offered by the EU in Rail Baltica’s case means that taxpayers could be on the hook for 6 billion euros, according to current estimates, a senior auditor told reporters.
Read more: Rail Baltica to be completed on time, says Lithuanian transport minister
Best among audited projects
Rail Baltica is performing better than the other European transport projects assessed by the European Court of Auditors (ECA), the Lithuanian ECA member noted on Wednesday.
According to Rimantas Šadžius, the eight transport infrastructure projects audited by the ECA are similar in value, 5 to 7 billion euros each, and therefore can be compared with each other.
“Among these projects, Rail Baltica looks probably the best in terms of maturity, progress and prospects,” he said.
A key finding of the audit concerns Rail Baltica's economic sustainability assessed in terms of potential passenger and freight traffic.
“The population living within a 60-minute catchment area along the Rail Baltica railway is too small,” the ECA member said. “We don't see, at least now, any steady traffic from north to south and back.”
The railway link also faces strong competition for its planned freight traffic from road and sea transport, he added.
Šadžius noted, however, that the finding does not mean that the Rail Baltica project is economically unviable, as freight and passenger traffic may grow in the future.
Running over budget is not unique to the Rail Baltica, project, Šadžius said, adding that the increase is largely due to additional costs for the Kaunas-Vilnius link, a spur to Riga Airport and a tram line in Tallinn.
To be completed on time
Meanwhile Lithuania's Vice Transport Minister Gytis Mažeika has insisted that the railway link will be completed by its planned deadline of 2026.
“I want to reaffirm that Lithuania is ready to implement the project by 2026,” he commented to BNS, adding that “in order to achieve this target, Lithuania does not need to carry out any substantial project management reforms”.
According to the official, Lithuania plans to select a contractor for the Rail Baltica section from Kaunas to the Latvian border this year and to start actual construction next year. For that purpose, Lithuania has already submitted an application for 328 million euros in funding.
The ECA report has identified the key problems with the project, Mažeika noted, adding that long-term funding for Rail Baltic should be raised in EU budget talks.
“Together with our partners, we are making every effort to manage the costs of the project, both by controlling costly technical solutions and by increasing the return [on investment],” the vice minister said.
“For example, the Kaunas-Vilnius spur significantly increases the socio-economic return of the entire project,” he added.
The European standard 1,435 mm gauge electrified railway for passenger and freight transport will stretch 870 kilometres from Tallinn in Estonia to the Lithuanian–Polish border.
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