AN updated cost:benefit analysis of the Rail Baltica project says that building the first phase of the new 1435mm-gauge railway to connect Estonia, Latvia and Lithuania with the European rail network will now cost €15.3bn rather than the previous estimate of €5.8bn.

In updating the initial cost:benefit analysis produced in 2017, project delivery company RB Rail has taken into consideration the inflation rate of 40% in the Baltic states between 2017 and 2022.

RB Rail says that 51% of the cost increase can be attributed to more accurate cost data emerging as project design advanced from the value engineering stage to master design.

It adds that 31% was due to increased project scope, including additional regional connections, changes in technical standards through the introduction of unified design guidelines, and enhancements in safety and performance.

Additional external factors accounted for 18%, including third-party requirements and compliance with European Technical Specifications for Interoperability (TSIs).

RB Rail now estimates the cost of construction at €26m per km. It says that this compares with an average cost of €24m per km for similar high-speed projects in Europe, which can reach €35m per km.

Economic benefits

The viable Rail Baltica project is expected to produce direct net economic benefits of €6.6bn. It is forecast to generate GDP growth of 0.5 to 0.7 percentage points a year, contributing between €15.5bn and €23.5bn to the economies of the Baltic states.

As well as stimulating property values, tourism, new business development, productivity, competitiveness and urban development, Rail Baltica’s broader benefits include reducing carbon emissions, improving fuel security by moving away from fossils fuels, a positive impact on the supply chain and making it easier to move troops and military equipment.

The updated cost:benefit analysis estimates that passenger services will generate 80% of benefits, with environmental improvements accounting for 14% and freight 5%. Rail Baltica is expected to handle 51.7 million passenger-journeys and 10.9 million tonnes of freight a year by 2046.

RB Rail stresses that delivering Rail Baltica in full is essential to delivering the wider socio-economic benefits of the project at European Union (EU), Baltic and national level.

Following a successful application to the Connecting Europe Facility (CEF) call in 2023, Rail Baltica has now secured 85% of its current funding worth €2.7bn from EU sources. The governments of Estonia, Latvia and Lithuania are contributing the remaining 15%. RB Rail applied for over €2bn under the CEF 10 call at the start of this year and says that further EU funding will largely depend the outcome of negotiations over the next EU budget.

In order meet the increased project costs, RB Rail says that it is now working with its partners to explore alternative sources of funding and reduce its reliance on EU funding and national budgets.

All those involved in the project are seeking to implement the optimum solution for completing Rail Baltica “most cost-efficiently, meeting all agreed interoperability parameters, and in the shortest possible timeframe,” RB Rail says.


Meanwhile, 15% of the Rail Baltica main line is due to be under construction by the end of this year. In Estonia, construction is underway on 21km, procurement is nearing completion for 50km and procurement for a further 30km is due to be launched in 2024.

In Estonia, work is also underway on the first stage of building Rail Baltica’s Ülemiste passenger terminal in Tallinn, under a €45m contract awarded to Merko Ehitus Eesti and KMG Infra. The new station has been designed by Zaha Hadid Architects and Esplan.

A ceremony held on May 21 marked the start of work on the 230km of Rail Baltica main line in Latvia, which is expected to cost a total of €3.7bn. The specific cost for each section will be determined following completion of the design review phase by construction contractor ERB Rail, a joint venture of Eiffage Génie Civil, Budimex and Rizzani de Eccher.

In Lithuania, construction of 29km of the main line is in progress, due to increase to 70km by the end of this year. RB Rail says that tendering for its two largest contracts, covering electrification and control-command and signalling systems, is proceeding on schedule.

“This year, over 150km of the Rail Baltica main line will be under construction,” says RB Rail interim chair, Mr Marko Kivila.

“While many milestones remain to be achieved and challenges to be faced, the success of the next phases will hinge on collaboration between the project partners and contractors.”

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