Rail Baltica Project Faces Scrutiny Over Rising Costs and Delays
Latvia’s ambitious Rail Baltica project, aimed at connecting the Baltic States to the wider European rail network, is facing mounting criticism over escalating costs and potential delays. A parliamentary inquiry commission has released a damning report highlighting concerns about the project’s financial management and transparency.
The commission found that the Ministry of Transport (MoT) downplayed the true cost increases by recalculating figures using 2016 prices. This, they argue, obscured the severity of the financial burden. The report revealed discrepancies between the initially presented cost of €3.4 billion and a later figure of €5.3 billion, both excluding inflation. “In total, the commission’s final report contains 29 conclusions, 16 proposals, and names 18 individuals who, in the commission’s opinion, made mistakes, threatened the project’s implementation, and did not take a sufficiently active position in this project,” the report states.
Adding to the concerns, the commission expressed doubts about the project’s ability to meet the 2030 completion target. While optimistic projections suggest completion between 2030 and 2032 assuming sufficient funding, more realistic scenarios based on predicted funding restrictions point to a phased completion, wiht the final stages extending into 2040.
The commission also criticized the lack of involvement from the Ministry of Finance, citing insufficient risk management and cost control prior to 2023. Additionally, state budget documents were deemed incomplete, failing to reflect detailed information about approved and planned funding, as well as long-term commitments related to EU Connecting Europe facility (CEF) contracts.
Further compounding the issues, the report pointed out frequent mid-design and construction phase changes, leading to budget overruns and construction delays. It also highlighted a failure to conduct proper comparative cost analyses with other European rail projects during the initial planning stages.
The commission’s final report includes 16 proposals aimed at addressing these shortcomings. Key recommendations include the formation of a Saeima (Latvian parliament) subcommittee to oversee the project, ensuring legislative control and public transparency. The commission also calls for amendments to regulatory laws, clarifying the State Chancellery’s role in auditing classified documents and urging the declassification of Cabinet of Ministers’ decisions related to Rail Baltica.
Furthermore, the commission urged the government to clearly define ministerial responsibilities, establish precise project deadlines and funding sources for the Rail Baltica project, and mandate quarterly progress reports to the Saeima. The commission also called for the Ministry of Finance to be designated as a co-responsible supervisory body for the CEF funding allocated to the project.
The future of the Rail Baltica project hangs in the balance as Latvian authorities grapple with these pressing challenges. Achieving a balance between ambition, fiscal obligation, and timely execution will be crucial to the project’s success.