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Rail Baltica costs quadruple in Latvia, Raising concerns over project timeline

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The cost of constructing the Latvian segment of Rail Baltica has surged fourfold, from 2 billion euros to 8 billion euros, casting doubts on the project’s target of becoming operational by 2030.

The tender for the Latvian section of Rail Baltica was awarded to the joint French-Polish-Italian venture E.R.B. Rail Baltica JV, which had initially offered to complete the work for 3.7 billion euros. However, several critical nuances need to be considered.

1. Scope of Work: Firstly, the 3.7 billion euros include only the construction of railway tracks and related infrastructure. Additional expenses will be incurred for electrification, signaling systems, stations, freight terminals, and other essential components of the project.

2. Limited Funding: Secondly, only 160 million euros are currently available for the construction of the main part of the track. Over the next two years, a 13-kilometer section from Iecava to Bauska is planned for construction.

3. Funding Gap: Thirdly, the long-term budget allocated by the EU for Rail Baltica over the next five years amounts to 9 billion euros for all three Baltic countries. However, Latvia alone requires 8 billion euros for its portion of the project, a sum it currently lacks.

The future government under the leadership of Evika Silina faces uncertainty regarding the project, as no detailed report has yet been received to clarify the current situation.

In light of these challenges, Baltic nations are increasingly allocating resources towards military expenditures rather than infrastructure development. This trend raises concerns about the inevitable postponement of the Rail Baltica project’s completion timeline.

The ballooning costs and financial constraints in Latvia underscore the complexity of large-scale infrastructure projects and the need for careful financial planning and resource allocation. The fate of Rail Baltica, a vital transportation initiative in the Baltic region, remains uncertain as stakeholders grapple with the funding shortfall and the growing urgency of the project’s completion.

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