TWO consortia of European companies have signed contracts worth a total of €726m for construction of the Rail Baltica standard gauge railway in Estonia. The parties are committed to finishing the work by 2030, though the prospects that Latvia and Lithuania will keep up with this schedule look increasingly uncertain.
Delivery of the new agreements signed on May 18 is paramount to meet the original construction deadline for the 870km 249km/h line that will connect the Baltic States by the end of the decade, Estonian officials emphasised.
The contracts are described as the largest in the history of Estonia and options to procure track infrastructure could increase their total value to more than €930m. The agreements cover the Tallinn Ülemiste - Tootsi - Pärnu and Pärnu - Ikla sections of the 213km stretch of the new railway in Estonia, all of which is now contracted for construction.
The first alliance contract includes the superstructure works for the Tallinn Ülemiste - Pärnu section and the substructure and superstructure works for the stretch between Tootsi and Pärnu. The estimated value of the contract is €394m. The leading partner in this alliance is GRK Suomi working alongside GRK Eesti, Merko Ehitus Eesti, NGE Contracting, Sweco Finland, Sweco Sverige, and TSO SAS.
A second contract worth €332m covers the full design and construction of the Pärnu - Ikla section The lead partner in the alliance is Bouygues Travaux Publics working alongside Budimex, Ingerop Conseil et Ingenierie (ICI), KMG Infra, and WSP Finland.
“These contracts mark a new stage in the implementation of Rail Baltica - not just the beginning of a phase, but a turning point for the entire construction effort,” says Anvar Salomets, CEO and chairman of the management board of Rail Baltic Estonia. “The entire Estonian section of the passenger mainline is now under contract and under construction. This is the moment when the vision on paper becomes a continuous construction line.”
Risk of delays
Estonia is pushing ahead with its portion of the project despite the risks of delays of two to three years to the Latvian (265km) and Lithuanian (392km) sections.
The project came under significant scrutiny after it was revealed in June 2024 that the estimated construction cost of the first phase had increased from €5.8bn to €15.3bn. High inflation and changes to the project scope were cited for the cost hike and it has prompted the exploration of using a public-private partnership financing model for the project.
Assessments are underway to see how the expected delay could further impact the cost of construction, says Arenijus Jackus, chair of Rail Baltica supervisory board, hinting that the Latvian section might not open until 2035. However, there is optimism that the signing of the Estonian contracts and its commitment to delivering the project on schedule will encourage Latvian and Lithuanian officials to increase efforts to deliver the project to schedule, local policymakers believe.
In recent years, the construction of Rail Baltica has also gained new importance as a project promising to bolster the Baltic States’ defence capabilities, the Latvian Infrastructure Ministry outlined in a report presented to the national parliament on April 10.
In the event of military conflict in the region, the railway could be used to transport 100,000 people or 55,000 tonnes of freight per day, the ministry says.
Growing resistance
However, the Estonian government is experiencing rising pressure from the opposition to put the Rail Baltica project on hold.
"It is completely irresponsible to spend taxpayers' money on the Tallinn - Warsaw railway, when it is already obvious that in the best case, we will only make it to Häädemeeste [an Estonian town on a border with Latvia]," Lauri Laats, chairman of the Centre Party faction in the Estonian Parliament said in a statement on his social media channels on May 18.
“Estonia has railways that need investment… It cannot be said that there is nowhere else to spend money.
"We should not be afraid of the decision to temporarily freeze the Rail Baltica project - it may turn out to be a much more sensible solution than completing the construction of the Estonian section.”
