Rail Baltic – Autumn up-date

(This is an English language summary of recent Finnish language Rail Baltic monitoring comments and analysis from Baltirail website.)
Rail Baltic – Autumn up-date

(Esa Nurkka, 15.10.2014)

Baltic countries were supposed to launch the RB Rail joint company on 23rd of August in Riga, as a part of Baltic Way 25th anniversary celebration. Unfortunately the signing ceremony had to be called off. Since then the schedule for establishing the Baltic joint company has been adjusted a few times, and further readjustments might be on the way.

Adjustments to Rail Baltic’s schedule

23.8.2014 The Baltic joint company was not established, but the Lithuanian Minister of Transport Rimantas Sinkevicius stated that the delay was only due to technicalities, according to him “the shareholders’ agreement had been prepared and the talks were over.” At the time, Mr Sinkevicius believed that the joint company could be launched already in September, as soon as the Estonians had established their national Rail Baltic company.

3.10.2014 Estonian Minister of Transport, Ms. Urve Palo announced the establishment of Rail Baltic Estonia OÜ, and appointed Mr. Indrek Orav as the head of the company. Already on October the 4th Transport Minister of Latvia Anrijs Matijss stated that the Baltic joint company would be established in Riga already in mid-October.

13.10.2014 Latvian Transport Minister Matiss readjusted the date of the signing ceremony, it was now scheduled to Tuesday 28.10.2014. Depending on the source, the shareholders’ agreement “will be signed” or “is planned to be signed” on October the 28th.

According to Baltic News Service, even Estonian Economic Ministry’s adviser Rasmus Ruuda had confirmed that Estonia was indeed ready to sign the shareholders’ agreement. Unfortunately we do not know the exact background of Mr. Ruuda’s comment. He may have answered to a question like “Now that Rail Baltic Estonia OÜ has finally been established, do you have the technical ability to sign RB Rail’s shareholders’ agreement?” or maybe even “Has Estonia agreed with Latvia and Lithuania on the exact wording of the shareholders’ agreement, and is thus ready to sign?

14.10.2014 Lithuanian Rail Baltic Statyba's CEO Dainius Budrys visited Panevezys municipality to discuss Rail Baltic's impact to Panevezys area. Nothing wrong with that, but according to local newspaper article, Mr Budrys had told that the financing application for EU funds would be submitted only in 2016. Hopefully that does not present the official view of the Lithuanian Rail Baltic team.

The Lithuanian views

Lithuania has been actively spreading its own views on Rail Baltic and rail transportation. Here are some recent examples:

8.10.2014 Lithuania released a 40 minutes long Youtube video, showing a helicopter view of 101 kilometers of Rail Baltic track and construction sites between Kaunas and Polish border. According to Lithuanian Railways, more than 50 % of the work has already been done:

Maybe the purpose of this video was to demonstrate that the 373 million euros of EU and NIB funding are being well spent. As an interesting side note, the Lithuanian Railways’ fully owned infra subsidiary UAB Geležinkelio Tiesimo Centras generated record profits in 2013, driven by strong revenue growth from Rail Baltic projects. That is a shrewd way to cover a part of internal funding that is required in EU projects.

9.10.2014 Vice-Minister of Transport and Communications of the Republic of Lithuania Arijandas Šliupas stated, that Lithuania embraces EU’s aim to optimize management of rail infrastructure as well as preserve its competitiveness. However, Lithuania wants to hang on to a model, where one state-owned company can manage both infrastructure and passenger and freight transportation without competition also in the future. This might become a problem, when the management issues of Rail Baltic are negotiated. 

13.10.2014 Ministry of Transport and Communications of the Republic of Lithuania published a “feasibility study” on Kaunas-Vilnius connection‘s affect to Rail Baltica project. The project was prepared by AECOM, and it found “great potential” in connecting Vilnius and Kaunas city centers as well as Vilnius and Kaunas airports with a 1435 mm railway. The cost of the connection was estimated at 850 million euros, and according to Minister of Transport and Communications in Lithuania Rimantas Sinkevicius “we shall submit the application [for EU’s structural funds] now, but it is difficult to expect funding in this [2014-2020] period”. Mr. Sinkevicius did not clarify, whether “we” in his comment referred to Lithuania or the Baltic joint company. 

How about Latvia?

Latvian Railways is not interested in Rail Baltic. Latvijas Dzelzcelss (LDz) CEO Ugis Magonis stated in August, that Rail Baltic might be financially feasible for Estonia, but not for Latvia. In September Magonis reiterated his view at Globālās transporta kustības vīzija 2050 seminar, where he stated that for LDz only the east-west -direction is meaningful and “Russia is the market”. Latvian Ministry of Transport seems to be of the same view, at least at the above-mentioned seminar a Transport Ministry spokesman very carefully avoided committing too keenly on Rail Baltic.

In order to get the Rail Baltic train finally moving…

There are only four months to set up the RB Rail company in Riga, prepare the common finance application and submit it to CEF. Estonia, Latvia and Lithuania should now prioritize the “original” Rail Baltic 2 railway, the one that leads from Tallinn via Riga and Kaunas to Polish border.

If Kaunas-Vilnius -connection cannot be set aside for a while, it should be handled as a completely separate issue. Call it Rail Baltic 3, or whatever. Although Kaunas-Vilnius connection with its airport loops is purely Lithuania’s internal project, Estonia and Latvia are free to support its applications for EU funding as much as they want to. However, Estonia and Latvia are ever-never going to commit themselves to obtaining a positive financing decision for Kaunas-Vilnius connection from Brussels. If Lithuania does not recognize this, the whole process is a waste of time and money.

If it becomes obvious that the shareholders’ agreement cannot be signed by the end of October, the Baltic countries should not start blaming each other for the situation. Maybe European Commission officials could take a stronger role in the negotiations, and help the Baltic countries understand what can be done and what cannot be done.

Although the views presented in this article are not very optimistic, and at times they might even be cynical, I still do hope that RB Rail will be established during 2014 and one common finance application will be submitted to CEF in January 2015. Missing the current financing window would paralyze or possibly even kill the whole project, and that would mark a truly bad start for Lithuania as a new euro country.

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