Baltic States commit their biggest joint rail project

At the end of January, prime ministers of Estonia, Lithuania and Latvia signed the intergovernmental agreement on the implementation of Rail Baltica taking one of the important steps in the project development. Moreover, several financing agreements have been signed and tenders have been announced in the past months.

Known as a key project of the European railway infrastructure, Rail Baltica will provide direct connection between the Baltic States, Poland and Finland to Central and Western Europe through the standard-gauge railway. With a planned length of 1,390 km, the railway project has an estimated cost of EUR 5 billion. After a series of declarations, either conflicting or supporting, followed by consultations and agreements signed at different levels, on 31 January, Lithuania’s Prime Minister Saulius Skvernelis, with his counterparts from Latvia, Maris Kucinskis, and Estonia, Jüri Ratas, signed the intergovernmental agreement that represents the foundation upon which the project will be developed.
“I would like to emphasise the importance of Baltic cooperation: while all countries benefit from it, it is also sending a strong message of our unity and cooperation to the rest of the world. Together we are stronger, and in these turbulent times that is a value in itself,” said Estonian PM Jüri Ratas.
The agreement sets the development principles of the future railway and includes details on the route, technical, financing and ownership problems, as well as the role of RB Rail As joint venture and cooperation with Poland and Finland. The ratification of the agreement by the parliaments of each country will ensure the long-term sustainability of the project and will create the legal and economic framework for developers, partners and investors.
“I am pleased to note that substantial progress has been made recently to develop this project – agreements on the framework for organizing and supervising procurements of the project have been reached and put into practice, as well as there is an agreement at national level on tracking and border crossing points. They have to be put into practice immediately,” Latvian PM said.
The agreement confirms the commitment of the Baltic States to develop the project before 2025 and commission it in 2026 and also stresses the importance of European financing and application of documents for obtaining it, with a EU support of 85% of total costs.
“The agreement sends a very important message to European Union partners: the Baltic countries have come together to make a clear commitment as regards this strategically important project. What is important now is to ensure adequate European support for the project in the next post-2020 financial perspective,” Lithuanian PM said.

The Vilnius connection

According to the agreement, the railway will have a connection through Vilnius (Lithuania) as integrated part of Rail Baltica. The declaration of transport ministers (of June 2016) considers the construction of the standard-gauge, double, electrified railway on the route Tallinn (Estonia) – Pärnu (Estonia)- Riga (Latvia)- Panevezys (Lithuania)- Kaunas (Lithuania), to the border between Lithuania and Poland, as proposed in the AECOM Study (2014) with Vilnius-Kaunas connection, as part of the railway route. Since the launch of the project idea, the Vilnius connection has been widely debated since there have been arguments for and against including the Vilnius connection. Thus, the study stipulates the construction of a section between Kaunas Airport Station (as transfer point with Rail Baltica) to Vilnius Central Station. The project includes the construction of a section that would provide connection between the south of Vilnius and the north of Kaunas through a standard-gauge railway, with the necessary construction of four stations (Vilnius City Centre, Vilnius Airport, Kaunas Airport, Kaunas City Centre). The total cost of this section of the project has been estimated at EUR 867 million of which EUR 21.4 million is the cost for the procurement of necessary trains and the rest of EUR 845.5 million is the cost of necessary works for the development of the railway branch.
The section that will provide rail connection between Kaunas and Vilnius airports will attract a passenger flow of 10,662/day, 71% of the total number of passengers travelling between the regions of the two cities.
Also, in Estonia the project would include new stations (stops) on Rail Baltica route, elements that are currently considered, said Estonia project coordinator, Kristjan Kaunissaare. The new stations could be financed either through the EU Cohesion Fund, or through the country’s national budget. At the moment, the project includes only three stops, in Tallinn, Rapla and Parnu. Estonia county governors proposed the construction of 8 additional stops on the route, said Kristjan Kaunissaare. According to the Estonian Prime Minister, Juri Ratas, “the maximum number of stops on the country’s territory is 11, so another 8 could be added. This also means higher costs, since around EUR 10 million is necessary for a single rail station”.

New steps

For the project implementation, RB Rail AS, a JV including the three Baltic countries, was registered in Latvia and divisions in Lithuania were established in December 2016 (RB Rail AS Lietuvos filialas) and Estonia (RB Rail AS Eesti filiaal). The establishment of the divisions in both countries occurred based on the Agreement on Rail Baltic/Rail Baltica Contracting scheme (signed in October 2016), defining the role of RB Rail AS regarding the acquisitions and the national implementation authorities in the three countries.
At the beginning of February, RB Rail AS announced the open tender for upgrading the feasibility study for the Polish/Lithuanian state border–Kaunas–RRT Palemonas section. The deadline for the proposals was March 2017 and the feasibility study is to be completed this autumn. The objective of the study is to analyse the feasibility and measures necessary to the modernisation of the existing standard-gauge railway from the Polish/Lithuanian border to Kaunas and RRT Palemonas and, also, in order to be aligned to both the definition of Global Rail Baltica project, specified by the agreement of the RB Rail shareholders and the technical parameters – by analysing relevant options and supplying the best solution on ERTMS deployment. In 2015, Lithuania finalised the standard-gauge section between the Polish border and Kaunas and the technical parameters vary from those established within the Global Rail Baltica project, namely a new double electrified conventional European-gauge railway equipped with ERTMS to allow speeds of 240 km/h. For example, the railway specifications allow trains to run at 120 km/h, compared to 240 km/h, there is one simple railway compared to the specifications of the double railway or there are one-level crossings versus two-level crossings.
As RB Rail is appointed to lead the acquisition and installation of ERTMS on the whole railway, the JV is responsible for checking if the Lithuanian European-gauge section (Polish/Lithuanian state border–Kaunas–RRT Palemonas) observes the global project parameters before continuing with the procurements. The ERTMS signalling solution on the whole Rail Baltica railway should be procured and implemented by RB Rail in order to ensure cross-border interoperability and cost economies by means of the scale economies generated by consolidating the acquisition of elements of this vital system.
Another tender launched in January 2017 by RB Rail AS refers to the “Design Guidelines for Rail Baltic/Rail Baltica Railway” which could be financed through CEF. The purpose of the services is to provide engineers a standardized approach to Rail Baltica design. Moreover, in December, DG Mobility and Transport (MOVE) launched the tender for a services contract for the elaboration of a case study on Rail Baltica project and the establishment of a business network (within the project) in Estonia, Latvia, Lithuania, Poland and Finland. This requirement will support the business case and the future use of Rail Baltica through the connection with Poland and Finland.
Regarding financing, in November 2016, the Innovation and Networks Executive Agency (INEA), RB Rail AS, Lithuania’s Ministry of Transport and relevant ministries from Latvia and Estonia signed a financing agreement of EUR 180 million (using EU funds) to develop the works of Rail Baltica project in Lithuania. The sum covers 85% of total costs and will be used for Kaunas section – Latvia border. The 55-km railway section will be fitted with a road bed and related infrastructure elements: viaducts, underbridges, cattle creeps, bridges. In addition, there is the plan to carry out a feasibility study on expanding the European railway gauge built in the section between the Poland-Lithuania border and Kaunas. Based on the results of the feasibility study, the ERTMS, signalling and other systems will be installed.
This is the third financing of Rail Baltica; around EUR 710 million of CEF will be allocated for its completion, of which EUR 310 million to Lithuania.
In December, the European Investment Bank (EIB) has extended a EUR 175 million loan to Polish railway company PKP PLK for the modernisation of over 100 km of railway line within the Rail Baltica project. The two sides signed the loan agreement for investment projects on two sections of Rail Baltica – Sadowne – Czyżew and Czyżew – Bialystok, which were also approved under the CEF for 2014-2020. The total project value is over PLN 2.7 billion (EUR 626 million).
The works on the two sections (Sadowne – Czyżew and Czyżew – Białystok) involve the modernisation of 106 km of railway line, the construction of a new double-track bridge over the Bug River and an extra track on the Prostyń Bug – Małkinia section. This will eliminate the only single-track section currently in existence between Warsaw and Białystok and make the entire line between these two cities double-track.
Also, in February, RB Rail announced that documents were applied for CEF financing. The Baltic States received two grants for the construction of the railway. The agreements amounted to EUR 765 million of which the CEF financing of 85% was of EUR 633 million. The main objectives of the additional financing (submitted in February 2017) focus on carrying on with the construction works in the three countries, completing design of all elements of the global project, identifying infrastructure components, elaborating the evaluations on the best procurement and installation strategies, as well as preparing the documents for the infrastructure manager. Financing will be used for actions, evaluations, studies, technical design, construction works, supervision and support measures for implementing the project.
Financing (supported by both grant agreements) will be allocated to cover the costs of the activities for preparing works and launching preparations for Phase I works.

by Pamela Luica

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