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EU funding for Rail Baltica in jeopardy

Rail Baltica project is at risk of losing the allocated EU funding due to disputes between the three Baltic in regarding the organization of tenders. Latvia, Lithuania and Estonia have not yet agreed on the project financing and implementation scheme. The three countries established in 2014,  in Riga, RB Rail SA, a joint venture company responsible for the design, construction and marketing of Rail Baltica.  Lithuania insists on organising separate contracting tenders rather than via RB Rail and wants the VAT for the work done in Lithuania to stay in the country’s territory. In July, ministers of Lithuania, Latvia and Estonia agreed on VAT distribution, however, the countries are still at odds over the final financing scheme.

In an interview for 15min.lt news portal,  Michael Cramer, chairman of the European Parliament’s Committee on Transport and Tourism, stated that he could not understand the Lithuanian position and strife of holding separate contracting tenders.

“We should all understand that the bulk of the money is granted by the European Union, which has a clear principle of use it or loose it. If the Baltic states don’t use the money, it will go to Germany, Austria or France. Politicians of all countries should have a clear understanding of the situation. Yes, there are differences between Lithuania, Latvia and Estonia, however, the project can only implemented together. Poland’s participation is also crucial here,” Cramer told 15min.lt.

In his words, agreement on project implementation is only possible with Lithuania’s approval: “The Baltic states must work together. A final decision is necessary, and it is not in place yet. I know they are lacking a political decision, which should be made by the Ministry of Transport of Lithuania.”

Rail Baltica project coordinator Catherine Trautmann has also warned about the Baltic states possibly losing the support in case of failure to agree on project implementation.

Last year, EC granted 106 million euros for project implementation in Lithuania, in addition to nearly 191 million euros earmarked this year. 

The aim of the Global Project “Rail Baltic/Rail Baltica” (Tallinn-Riga-Kaunas-Warsaw axis) is to develop a new, EU gauge double-track electrified railway line to eliminate the technical bottleneck due to the gauge differences (1520 mm vs. EU 1,435 mm). The project was allocated EUR 442 million EU funding under CEF second call

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