The deal was signed in Tallinn by representatives of the RB Rail trilateral joint venture, which is responsible for co-ordinating implementation of the project, together with the European Commission Directorate-General for Mobility and Transport (DG Move), the EU's Innovation and Networks Agency (Inea) and the transport ministries of the three countries.

The funding, which is being drawn from the first round of grants from the Connecting Europe Facility, will support technical studies, land acquisition, preliminary construction, project management, and public consultation.

In Estonia the funds will be used to carry out environmental impact assessments and detailed design along the whole route including Tallinn and Pärnu stations, an intermodal terminal, and rolling stock maintenance facilities.

In Latvia the CEF funding will support design and construction works at Riga Central, and a new station at Riga International Airport. The grant will enable Lithuania to develop plans for the extension of standard-gauge infrastructure north from the Kaunas area towards Panevėžys and the Latvian border.

The line will be electrified with a maximum speed of 240km/h for passenger trains and 120km/h for freight.

The first phase of Rail Baltica, which extended standard-gauge track from Šeštokai on Lithuania's Polish border to Marijampole and Kaunas was inaugurated in October.