Rail Baltica line, the feasibility study is just completed

Interview with Uldis Augulis, Latvian Minister of Transport

In his interview for our magazine, Latvia’s Minister of Transport, Uldis Augulis, spoke about the strategy to increase the passenger rail transport attractiveness, as well as about the newest projects to be launched in this sector, from advertising campaigns to procurement of rolling stock. Likewise, the Minister explained the challenges faced in the stimulation of the growth in passenger and freight rail traffic, although the freight rail transport share exceeds 50%. Nevertheless, Latvia consolidates its position as a border state between EU and non-EU states. For the rail infrastructure, Latvia has network electrification projects, GSM-R and ETCS system implementation projects and in terms of national programme, the fitting with ERTMS system for which the feasibility studies have already been completed.  As far as the new Rail Baltica line is concerned, the feasibility study has been completed and Latvia, Estonia and Lithuania will have to make common decisions.

Railway Pro: All European countries are preparing for the next financial period 2014-2020. What are the financing priorities for the transport segment that Latvia will jointly approach with the European Union? What are the most important projects to be initiated according in the financial period 2007-2013?

Uldis Augulis: We have started the work on the new Latvian Transport Development Guidelines for years 2014-2020, the trends and challenges mentioned in the EU Transport White Paper as well the Latvian-specific needs and particularities will be considered.
For Latvia the most important challenges are- the expected decrease of the population, the low population density and the associated problems of infrastructure accessibility and maintenance. Looking in the context of the Commission’s vision of a competitive and sustainable transport system, it should be noted that the reduction of emissions at the growing traffic volumes are closely linked to the Latvian railway network electrification plans. The most important infrastructure projects in the railway sector we are looking for the next planning period on the existing 1520 mm railway network are electrification of the main freight routes and construction of the GSM-R wireless communications system as the first step for implementation of the appropriate level of ETCS and as a part of the national ERTMS implementation plan. For both of them there are feasibility studies completed.
Also, development Rail Baltica railway’s corridor, the infrastructure development of the largest Latvian ports in the TEN-T framework and TEN-T roads reconstruction. Of course, we should not forget the new standard gauge Rail Baltica project. However, according to the feasibility study that had been just finalized the main part of expenditure related to its construction may occur after 2020. If the Baltic countries agree to proceed with the project, it is envisaged that until 2020 all the design works should be accomplished and the land property issues solved.

Railway Pro: What is Latvia’s strategy for promoting the railway transport at national and international level ?

Uldis Augulis: Latvia is in different situation than it is mostly in other European countries where they are trying to overcome 4% share of railway transport. In Latvia share of railway transport in freight sector is even more than half. Therefore our strategy is not about shifting share form roads to railway. For us it is important to increase volumes and especially those which cross our country using our ports. From governmental side we do our best in order to facilitate infrastructure development, increase its capacity and safety. Because of available EU financial support we can make significant investments in railway infrastructure. In international area we are working to maintain good relations with our neighboring countries Russia, Belarus and further on Kazakhstan, Uzbekistan, Turkmenistan, Azerbaijan, Ukraine, Turkey, China, Japan and many others to whom we can offer our transit services and to attract their import and export goods to our transit corridors. We actively participate at different international organizations in EU, UN and others drawing and facilitating different transit corridors between East and West.

Railway Pro: What is the development stage of the Rail Baltica project on Latvia’s territory and what can you tell us about the project as regards the other countries involved? What can you tell us about the stage of the Riga-Moscow line project? Is is priority compared to the other railway projects? What funds are required?

Uldis Augulis: First, I would like to stress that in Latvia we have two separate activities with the same name to develop Rail Baltica corridor. First, one  project concerns the upgrading of the existing (1520 mm) gauge line in order to ensure 120 km/h speed along the line between Tallinn – Tartu – Valmiera – Riga – Sauliai – Kaunas.  Second, the project of construction of a new Europe standard (1435 mm) gauge railway line.
Reconstruction of Latvian section of Rail Baltica existing railway infrastructure has been planned with a considerable amount of national co-financing – 77%. Following the positive decision by the government of Latvia on April 26th to grant the national financing, we continue to upgrade the existing 1520 mm gauge railway line trough Latvia from Lithuanian border to Estonia. These works will be finished by 2014 at the latest. It is generally perceived to be the first stage of Rail Baltica project, and this improved line would serve as a regional connection to the new European gauge line.
Concerning the new Rail Baltica line, the feasibility study is just completed.  Latvia, Estonia and Lithuania – will have to make a common decision, either, it is justified to move to the next stage, detailed technical studies. Now it is an issue of the political will, which in a large extent depends on the available EU co-funding. The study indicated that the relevant participation of the EU in amount of 56% of the total project investment or more than 2 billion Euros is needed in order to justify the national investment. It is obvious that the EU decision regarding its financing shall play significant role in this project.  Using the words of the draft revised TEN-T guidelines this is an obvious “missing link” of the European transport network, therefore we believe the project should constitute a community policy priority and due to its size and importance deserves special treatment from the EU side.
Regarding Riga – Moscow line there are preliminary assessments made. The idea of a new high speed passenger line that would allow cutting the travel time down to 4  hours at the moment seems not economically viable. The distance between Riga and Moscow exceeds 900 km that implies high investment and operational costs. Now we started to upgrade the passenger service on the existing railway line to the maximum speed of 140 km/h due to infrastructure development and custom procedures the traveling time would be cut to 11 hours.
The Rail Baltica passenger traffic developments plans for the corridor Riga to Moscow should not be viewed as excluding each other, but rather as complementary for building a well planned, comprehensive transport network.

Railway Pro: Which are the methods to be implemented in order to increase the attractiveness of the railway passenger transport?

Uldis Augulis: Rail transport in Latvia has been identified as a priority for public transport. To ensure the availability the public transport system is being improved, by reviewing all regional and intercity rail and a parallel bus routes making reorientation of such bus routes to deliver passengers to the railway stations, and respectively adjusting them.
The company regularly carries out surveys. According to the survey made in cooperation with students,  WI-FI(wireless Internet) access was introduced in trains, as well first-class for long-distance travelers.  Also, to attract more passengers, so-called step interval will be soon introduced, which is most convenient schedules for the train to Riga region to travel as often as possible.
Joint-stock company “Passenger Train” inherited rolling stock from the Soviet Union; however this rolling stock has not been a long time competitive with other modes of transport (road services).  Therefore, we are looking forward to purchase of the new passenger rolling stock of 34 EMUs and 7 DMUs. Also, improvements of passenger rail infrastructure, in order to provide accessibility for the persons with reduced mobility. For this purpose a national standard on passenger platforms have been developed and adopted and this standard is mandatory for newly built or reconstructed passenger facilities.
Domestic rail passenger traffic is positioned as a fast, convenient, eco-vehicle. For comfort of passengers there is a ticket pricing system, where groups of up to 10 people tickets are cheaper, which is positioned in the monthly ticket, a seven-day, five working day tickets and weekend tickets.
Advertising campaigns and promotions transportation will be present;
I believe in close future there will be more discussions in Europe how to improve public transportation services and how to finance it considering more the environment. For example,  either to give state budget money to bus transportation, which is less environmentally friendly transportation.

Railway Pro: What can you tell us about the regional railway transport market considering the fact that the problem of monopole is already present in several countries? What strategy is required for this situation to no longer affect the liberalisation process?

Uldis Augulis: Latvia initially – since Railway Act of 1998 – didn’t provide in its legislation any market restrictions, so we can say that our railway is open since that time. We are at the European forefront of liberalization of the national rail freight market with more than 20% of the market share for the new private operators. This is good result; taking in account that market share doesn’t depend only on institutional structure. Latvia is too small to have significant domestic freight for rail transport – freight volumes and distances are more suitable for road transportation. International freight, which plays a great role for all transport sector of Latvia and its economy in general, comes mostly from countries located to East of Latvia.  Also, as a Ministry of Transport we try to facilitate this process, for example, the new draft bilateral railway agreement with Russia we have provided equal rights for any railway undertaking, and Russia has accepted such approach.
In passenger services situation is different. Since these services are unprofitable, only possible services are those, which are performed under state order. In such situation we simply have not any interested railway undertakings. Besides the state owned passenger carrier, a small railway undertaking, established by local governments and individuals operates on local bases, for example, between towns of Gulbene and Alūksne, north-east Latvia.
However, it needs to be recognized that liberalization is good when it serves the right target. In other words, it should be rather a means than an objective itself. Looking from economic perspective, there are costs associated with the benefits of liberalization. In our situation, each step to open up our market internationally needs to be very carefully assessed in order to avoid the situation when most of the benefits are obtained by our non-EU neighbors, while the majority of costs stay with us. It is of the major importance to ensure that the market liberalization does not endanger the infrastructure sustainability.

Railway Pro: In the future, the road transport will no longer be a solution for the transport of goods on distances longer than 300 km. What strategy is required to meet this situation from the point of view of the freight transport services and what is the role of terminals in increasing railway transport attractiveness?

Uldis Augulis: Here we are  talking about  containerized  freight  as bulk freight   is   already  by its  vast  majority  by-passing roads. On the existing east west corridor our ports have sufficient capacity and there are also significant development projects. For the eastwards traffic it is important to ensure proper last mile delivery service, and transport companies are working hard to improve it.
I would like to mention that Latvia already has significant experience in organizing container train services. In the East – West direction at this moment there are two container trains: Baltica-Transit, between the Baltic Sea Region and Central Asia, transporting cargoes in containers from Latvia ports to Kazahstan, Uzbekistan, Turkmenistan, Tajikistan and Kirgiztan and „Riga – Express”, which transports cargoes between Riga-Moscow. And in the North-South direction container train ZUBR, established in cooperation between Latvian, Estonian, Belarusian and Ukraininan railways in order to develop container flows from the Black Sea region to the Baltic Sea including Scandinavia.
Additionally, it is important that professionalism of Latvia transit sector companies has been highly appreciated by USA decisions to use Latvia transport infrastructure for transporting non-military goods.
However, one of the main advantages of the road transport in Latvia currently is better traceability and predictability. For this reason, nowadays, when the value of time is increasing, the development of internationally connected information systems supported by the necessary adjustments in rail freight processing technologies should serve as a major change agent. To make the most of it our transport companies are looking forward to internationally recognized electronic signature that releases them for the necessity to carry over the borders documents that are to be checked and verified multiple times.

Railway Pro: Currently, more and more companies choose to transport their goods on railways and for this logistics plays an important part. In which way could logistics performance and port capacity be developed?

Uldis Augulis: Due to the fact that in countries such as Russia and China new industrial areas are being developed far from the sea ports, cargo transportation by rail becomes more and more important. In this case transportation logistics require complex solutions such as Multimodal transportation including sea, rail and road transport, warehousing facilities for cargo storage and distribution, simplified procedure for customs formalities and border crossing. Also, the availability of the rolling-stock is of importance in order to offer the shortest transit time possible. All this require good transport infrastructure, high-skilled staff and sufficient cooperation between the transport companies and public authorities. The port terminals should ensure handling of different types of cargo, sufficient storage areas and effective manpower distribution in order to provide quick cargo delivery to the final destination.
In Latvia there are three main ports Riga, Ventspils and Liepaja and seven smaller ports. For ports to develop it is necessary to understand the competitive advantage for each. For example, port of Latvia western side, Ventspils does not freeze in winter time and knowing the high importance for manufacturing companies to work without bottle necks, it is the competitive advantage of this port. However, all three biggest Latvia ports have well developed links with railway and road infrastructure. For the region to be competitive should understand the strength and weaknesses of each port in the region.
Modern technology can serve as a major element in those locations where physical infrastructure is difficult or impossible. More active introduction of electronic information and electronic document exchange in transport services may increase the competitiveness of transport. Therefore, Latvia is closely following the European Commission initiatives related to advance technologies, such as e-customs, e-cargo, e-maritime, Intelligent Transport Systems (ITS) Action Plan.

Railway Pro: How could railway infrastructure investments be correlated with investments in ports to permit a greater accessibility to ports?

Uldis Augulis: In order to use the transportation infrastructure efficiently, as well as to ensure most smooth transit via Latvia, the international freight logistics and port information system (SKLOIS) is in process of implementation.  It will facilitate electronic information and electronic document exchange processes of cargo transportation process, as well reduce the administrative burden.
Port and railway infrastructure development projects are normally long term and investment intensive. Of course, they could be coordinated administratively by aligning the long term strategic plans, especially when both the port authorities and the railway infrastructure manager belong to the state.
However, it could be more efficient to leave the task for market to resolve as this is mainly about finding the right size and timing of the railway connection. Under such a framework connections to port facilities, perhaps, also including the relevant stations and shunting yards, could be developed as the partnership projects between the railway infrastructure manager and the private terminal owners who, as the most interested to have the balanced railway capacity, should be able to deliver the most accurate demand forecasts and also to share the associated financial risks. In practice Latvian Railway before preparing its investment needs cooperate with terminal operators in ports and makes their plans based on forecasts of ports. If private operators in ports are planning new investments and have new cargo volumes expected railway also should be able to fulfill all new needs. Latvian  board  of  ports  chaired  by  Prime Minister is also an excellent format to coordinate investment development plans.

Railway Pro:
Latvia is a frontier country between EU and non-EU countries. What are the challenges for encouraging the growth of freight and passenger traffic in this region?

Uldis Augulis: Latvia has expressed its support for the Trans-European Transport Network (TEN-T) review in support of two-level approach to create a European transport network – the comprehensive and the core network. It should be emphasized that the White Paper talks about the need for the TEN-T network connections with neighboring countries, as well as the cross-border missing links. This fact is important for Latvia as an EU external border country. In the TEN-T core network is necessary to ensure Latvian transport links both with Russia and Belarus. Besides that, in order to ensure regional accessibility, it is essential for development of the comprehensive network. Latvia is currently working actively to ensure that the TEN-T network setting will have European level added value and at the same time ensure the specific needs of Latvia.
Concerning railways, Latvia is on the border of two railway systems. Being a legal part of EU railway system, therefore implementing all EU legal requirements, physically Latvia is a part of huge 1520 mm gauge railway network, which exists in former USSR countries and laying up to far East. This system has its own technical particularities, and for Latvia, as a small part of this system, is impossible to change it. On the other hand – this rail system is a big market with good opportunities. In this context Latvia is finding the balance and activities already have resulted in dialogue between Organisations for Co-operation of Railways (OSJD), maintaining regulations for 1520 mm network and European Railway Agency (ERA), which is responsible for railway technical harmonisation in the EU. Similar situation is concerning legal regimes of railway services, where Latvia should follow both SMGS and SMPS rules for Eastward services on one hand, and COTIF rules in relations with the West on the other hand. Our experts are actively participating in harmonisation processes, including activities, such as, CIM-SMGS consignment note, harmonisation of dangerous goods transportation rules as well as new UN ECE initiative to create unified railway law.

Railway Pro: The attention of the international business community is directed towards building transport relations between the Far East and Western Europe. What is the role of Baltic States in building such projects?

Uldis Augulis: As regards the external dimension of transport development to ensure harmonious development of transport in the world, for Latvia is important to use its geographical location advantages. Ministry of Transport is actively promoting opportunities of Latvia in transport, transit and logistics sector, both within and especially outside the EU. Latvia in transit sector has essential partners and experience in the CIS countries. We are working to attract freight from the Asia and Far East regions to the northern part of EU especially Baltic States and Scandinavia. Latvia is an attractive place due to logistics and distribution services. When cargo arrives from Far East to Latvia we provide distribution services for goods to any particular shop on the request within 24 hours in Baltic States and even up to Helsinki, Stockholm or Warsaw. We can cover all Scandinavia within 48 hours. Latvian government seriously recognizes importance of such logistic business and does its best to make most attractive customs and taxation regimes for logistic operations in the region.

[ by Pamela Luică ]
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