Based on project calculations, Rail Baltica will cost 5.8 billion EUR to implement.
The largest portion of the investment, 2.474 billion EUR, will fall on Lithuania. However, the direct investment of our country will be significantly lower because up to 85% of the project’s expenses are to be financed by the Connecting Europe Facility (CEF). Similar EU financing percentages are also to be seen in Latvia and Estonia, thus realistically, the Baltic States’ contribution to the railway, which will connect to Western Europe, will not exceed 900 million EUR.
Profits from 2021
“While this is a significant sum, this largest railway infrastructure installed during the period of restored independence will lead to revenue is not the tens, but the hundreds and thousands of million EUR. After evaluating indirect benefits, tens of thousands of jobs created, environmental and public health benefits, we are talking about benefits in the billions of EUR,” AB Lietuvos Geležinkelių Infrastruktūra CEO Karolis Sankovski says.
Lithuania looks to be counting profits from the European gauge railway already next year. In late 2020, when works conclude at the Kaunas railway hub and the European rail connects the Kaunas Intermodal Terminal (KIT) with the EU’s railway systems, it is expected that cargo flows on the North-South corridor are to grow tens of times because Kaunas will be the most distant point that can be reached from the South by the European standard 1435 mm gauge railway. Onward toward Riga and Belarus there lies the wide-standard 1520 mm gauge railway; thus KIT will be the location, where goods can be quickly transferred to wagons adapted to different gauge railways.
In 2021, it is planned to launch the Amber Train, which will be a part of the Adriatic-Scandinavian cargo route. This will facilitate the carrying of cargo to and from Western Europe through Kaunas for Latvia, Estonia and the Scandinavian countries. We are also a convenient location for transit cargo from Belarus, China, Kazakhstan and other countries.
It is expected that from 2021, the amount of such cargo will grow tens of times until it reaches project capacity – 100 thousand TEU per year.
Cargo volumes to rise from 2 to 20 million tonnes
An analysis by Ernst & Young shows that the manager of the railway line infrastructure will become financially sustainable after five years of exploitation. At this point, it will reach operations indicators, which will generate profits.
“What the financial gains from carrying cargo will be is not specified in the analysis because it is rather difficult to predict future prices due to inflation, changing operating expenses, various other processes, however, the numbers are truly impressive. The analysts believe that in 2026, Rail Baltica will carry around 2 million tonnes, in 2030 – 13.7 million tonnes and in 2055 – around 20 million tonnes of cargo,” K. Sankovski says.
It is expected that the largest segment of cargo (57%) will be comprised of transit cargo (e.g. CIS to/from Poland, Germany and the rest of Europe – approximately 31%); while import/export (Baltic States) will be 43% (Estonia – 10%, Latvia – 10%, Lithuania – 23%).
Railway – competitive transport
The analysts also noted competitive advantages, which will encourage businesses to choose namely rail transportation. Firstly due to speed – carrying cargo between the Baltic States and Central European locations would take less than two days, while road transportation takes up to four days for the same route. It was calculated that cargo transport time savings would contribute 2.9 billion EUR.
There is also an appeal that rail transportation is very reliable. It has regular schedules, is resistant to weather conditions and very rarely experiences accidents.
Compared to road transportation, rail transportation expenses in medium to long-distance transportation are lower, which will expand the Baltic States and Finland’s geographical reach in foreign trade and available trading markets, allowing to transport goods for the same price from and to more distant locations.
Benefits not only with cargo
With a convenient railway route appearing, not only increased tourist flows are expected, but also changes in the citizens’ travel habits – some may choose to swap car or bus travel to trains because it will be a faster means of transportation. Ernst & Young calculates that such time savings will bring 2.4 billion EUR in benefits.
The three Baltic States will also receive vast benefits in terms of jobs created. It is calculated that during the Rail Baltica project construction works, around 13,000 jobs will be created and more than 24,000 jobs will emerge in indirectly related or incentivised branches of industry.
It is also worth mentioning other indirect benefits, which the ecological electric-powered train line Rail Baltica will bring. It has been calculated that Rail Baltica, as a safer mode of transportation, will save around 400 human lives, the benefits of this being valued at an average 30 million EUR per year.
The project will also reduce CO2 emissions, the benefits of which were calculated to reach 3 billion EUR, while also further reducing air pollution indicators, which is valued at 3.3 billion EUR.
Rail Baltica is the largest railway infrastructure construction project in the Baltic States’ history. In its implementation, across the entire Rail Baltica route, an electrified 1435 mm two-way gauge railway will be laid down. The construction works for the project, valued at around 5.8 billion EUR, are the largest investment, aimed at improving mobility and travel opportunities, develop business, tourism and goods exchange in the region.
The combined length of Rail Baltica across the three Baltic States is 870km: 392 in Lithuania, 265 in Latvia and 213 in Estonia. In Lithuania, the European rail travels from the Polish-Lithuanian border through Kaunas and Panevėžys, passing through Riga in Latvia, Pärnu and Tallinn in Estonia. The Kaunas-Vilnius stretch is an integral part of the Rail Baltica project.
Lithuania completed the first stage of the Rail Baltica project in 2015 – a European gauge railway line was laid down from the Polish-Lithuanian border to Kaunas. During this stage, 123km of European standard international rail was laid down, over which passenger trains travel between Kaunas and Bialystok. In the future, this stretch is to be modernised so that passenger trains can travel at a maximum speed of 249 km/h as in the rest of Rail Baltica.
Currently, construction works for Rail Baltica are ongoing in the Kaunas railway hub. Upon their completion, freight trains will be able to travel from Kaunas to Poland and onward to Western Europe.
AB Lietuvos Geležinkelių Infrastruktūra is the implementer of the Rail Baltica project in Lithuania, responsible for the construction of European rail infrastructure in the country.
