May 16, 2018

Rail Baltica moves into the design phase

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The Rail Baltica project to connect the three Baltic state capitals with Poland by a standard-gauge high-speed rail link is gaining momentum. However, as David Briginshaw reports from the Estonian capital Tallinn, the ambitious scheme still faces a number of challenges.

THE mood was definitely more positive at the second Rail Baltica Global Forum staged in Tallinn, Estonia, on April 10-11 compared with the first event held in Riga, Latvia, a year ago. This is not altogether surprising as RB Rail, the Rail Baltica joint venture responsible for developing the €5.8bn standard-gauge high-speed line which is due to open in 2026, is making real headway.

Rail baltic riga“Last year all three Baltic countries confirmed their long-term commitment to the Rail Baltica project development, and now the project has entered its next phase - the design phase,” says Ms Baiba Rubesa, CEO of RB Rail. “Between all the stakeholders, the project has traction, is on-track, and will materialise. The project has become a reality.”

“2018 will be a benchmark year for Rail Baltica,” Rubesa continues. “At the end of the year, our shareholders will have to agree on what the project will really look like. We need to complete the tendering process for contracts to carry out the majority of the detailed technical design required in each country as well as the feasibility study for the upgrade to the link from Kaunus to the Polish border.”

Rail Baltica is designed to overcome the deficiencies of the existing 1520km-gauge network serving the three Baltic states of Estonia, Latvia and Lithuania which became members of the European Union (EU) in 2004, the same year that they joined Nato. The existing rail network is mainly oriented east-west, reflecting the time when the three states were part of the former Soviet Union.

There are currently no passenger rail services linking the three countries, save for one connecting service which operates daily between Riga and Tallinn, but only at weekends in the reverse direction, unless passengers are prepared to wait for three hours at the border station for a connection to Riga.

Rail Baltica will run from Tallinn and the nearby port of Muuga (with a sea link across the Baltic to Finland) south via Pärnu to the east of Riga - the Latvian capital and Riga Airport will be served by a 56.6km loop, and on to Panevezys and Kaunus in Lithuania where the line will split, with one branch serving Vilnius and the other providing a connection to Poland and the European standard-gauge network.

“Rail Baltica will establish a new economic corridor,” says Estonia’s prime minister, Mr Jüri Ratas. “I expect the Baltic countries will be better integrated into the European economy. In 2026, we will have a fast and eco-friendly connection to Europe. This is the first time the three Baltic states have undertaken such a large project together.

“In Estonia we have already completed a lot,” Ratas continues. “We have determined the most feasible route for the railway, completed the environmental impact assessment and preliminary design, and the detailed technical design is currently in the tender process.”

Rail Baltica has very strong EU backing, as the transport commissioner Mrs Violeta Bulc confirmed to delegates: “Rail Baltica is of strategic importance to the Baltic states and the EU. It bridges a missing link and will strengthen EU connectivity. Rail Baltica remains one of the EU’s key priorities and is a project of historic significance. I am with you.”

The EU favours Rail Baltica because it will form part of the EU’s North Sea - Baltic TEN-T corridor and the EU sees socio-economic benefits worth e16.2bn flowing from the new line. This is the first and only EU cross-border rail project connecting more than two member states, which is a challenge in itself. As one speaker pointed out, it is hard enough to implement a cross-border project involving two countries, such as the Brenner Base Tunnel linking Austria and Italy, let alone one involving four, or five if you count Finland.

Poland and Finland have observer status in RB Rail and can participate in board meetings, and there were calls by several speakers for the two countries to become full members. Poland, which has already started upgrading the line from Warsaw via Bialystok to the Lithuanian border, is vital to the success of Rail Baltica, while Finland is pushing for a rail tunnel under the Baltic to Estonia, as well as a new line north to the Norwegian Arctic port of Kirkenes, to end its relative isolation from the rest of the EU. “The project is not only for the three Baltic states,” Mr Rokas Masiulis, Lithuania’s transport and communications minister, told delegates in Tallinn. “Without Poland on board, it will not realise its full potential, and Finland will bring additional potential. We need better cooperation, and cooperation will grow with better trust.”

“DG Move has already given funds for the Polish sections,” Rubesa points out. “The question is whether Poland and Finland should become shareholders and what the conditions would be. It is clear there will be no Finland-Estonia tunnel if there is no Rail Baltica. From our side, we would like to have Finland on board sooner rather than later, but we have involved stakeholders in both countries so they are active already.”

Masiulis also pointed out the military significance of Rail Baltica. “We live in difficult times,” he said. “Military mobility is of utmost importance, and the project has to include the potential for fast military mobility.”

The EU intends to fund 85% of Rail Baltica. However, funding is not guaranteed because the project straddles more than one EU funding period. Rubesa says €810m has been allocated by the EU to the project so far. The EU’s current Multiannual Financial Framework (MMF) covers the 2014-2020 period. This month, the European Commission (EC) will present its plans for the next MMF post 2020. “There is no certainty about funding,” Mr Petri Sarvamaa, vice-chair of the European Parliament’s budget committee, points out. “The context for the negotiations is very complicated, with many challenges. Rail Baltica was originally supposed to be finished by 2020, but now it is 2026. The EU will rethink its commitment to Rail Baltica if the Baltic states fail to agree on the rest of the outstanding issues. We are not looking at building short legs one-by-one from a national perspective. Rail Baltica will not be completed in the current MMF, so it is vital to give it support in the next MMF.”

However, Mr Peter Berkowitz, head of DG Regio’s smart and sustainable growth unit, says he is confident that the EU’s focus on less-economically-developed member states will continue.

Nevertheless, Rubesa is not complacent. “We need to ensure that Rail Baltica is in a strong position for funding in the next round of MMF financing,” she told IRJ.

The Rail Baltica budget does not include complete design and construction of station and terminal buildings, and any alterations needed to their surrounding roads and connecting services. These aspects will be funded by the national governments and municipalities, and Rubesa says each country has a different approach.

Labour market

One of the challenges for the Rail Baltica project will be the difficult labour market in the three countries. “We are losing about 1% of the labour force each year and immigration policies are very restricted,” explains Mr Toomas Tamsar, chairman of the Estonian Employers’ Confederation.

Ms Baiba Fromane, head of the Latvian Construction Entrepreneur Partnership, outlines the situation in her country: “We are already importing labour from Belarus and Ukraine, and we won’t be able to take people from the other Baltic states because we will be working on Rail Baltica simultaneously in all three countries. The main challenge is to speak openly about immigration - all three countries have to look at the problem together.”

RB Rail’s COO and board member, Mr Kaspars Rokens, says Rail Baltica will need a workforce of around 13,000 people. “We would like to cut this number down to 7500-8000,” he says. “If you have a crazy idea for innovation, then come to us. GPS-aided earth-moving machines are one example of a possible innovation.”

Another challenge for the project will be which technologies to adopt, and recognising those that turn out to be a passing fad. “What is important for us is to see which technologies we can bring to the railway,” Rubesa explained. “Can we build in the flexibility needed to cope with technical changes? There are very innovative ways of building railways these days, but which technologies will survive? I would prefer to look at alternative ways to produce electricity, as they have done in the Netherlands. Our vision is for a zero-impact railway, but we need to be very clear about what this should be.

“We believe capex is just as important as operating costs. The EC has said this will not be a low-cost railway, but it won’t be a luxury railway either.”

Rubesa says her next priority is to get a decision on the infrastructure manager. “There are all kinds of possibilities,” she says. “Will there be one, two or three? The three states need to make a decision by the end of the year. The EC is also pushing for an operator to be involved early.

“We need a hard agreement on the organisation structure and governance that cannot be changed in the future. The EU would save resources and money, and be able to accelerate projects by deciding these things early in the game, but it is hard to achieve it.”

Rubesa ended the first day of the conference by explaining her four “Ps” for implementing a project successfully:

  • people - having the right people in the right place at the right time
  • being professional
  • precision, and
  • passion.

“Passion is the one thing that makes a project not good, but really great,” Rubesa says.