Land acquisition for Rail Baltic is five years behind schedule, a new report by the National Audit Office (NAO) shows. So far, only a quarter of the land needed has been purchased by the state.
Only 6% of land has been acquired in Harju County, the most populated. The report said this was “worrying” in terms of schedule and budget because real estate cost more in Harju than elsewhere and it was harder for the state to buy.
Additionally, data from the Land Board show the price of land transactions along the planned railway in Parnu, Rapla and Harju County has increased by more than 50% since 2014 when the budget was planned.
Only 28% of all known immovables – land – have been acquired. There is a budget of EUR 29.1 million, but only 11% has been used so far.
The report, an interim review of Estonia’s project implementation, said it took an average of 13 months for the state to purchase a piece of land.
The audit office said the delay in the master design had pushed back the final deadline and budgets had now “changed significantly”.
Due to the delay in the master plan, it is not entirely clear how many and which plots of land need to be acquired.
The Ministry of Economic Affairs and Communications does not have a complete overview and this depends on the designer and RB Rail AS. Parnu County’s preliminary design is also being reworked and will not be ready until 2023.
There are also problems with the budget.
As the budget for the Estonian section of Rail Baltica has not been planned in the years running up to the completion of the project, “it is also not possible to assess whether or not the budget has been exceeded”, the review said.
“The budget has been inflated by the expansion of project activities and the general price increase,” the audit said.
For example, local stations increase the cost by an estimated EUR 16 million and the expansion of Parnu and Ulemiste passenger terminals are expected to increase the cost by EUR 49 million.
However, the Ministry of Economic Affairs and Communications pointed out savings have been made in other areas.
The NAO said: “Since the Ministry of Economic Affairs and Communications is not updating the budget of the Rail Baltica project as information about the project is specified, it is difficult to foresee if and when there will be a need to receive additional funds from the state budget.”
Minister of Economic Affairs and Infrastructure Taavi Aas (Center) estimated the budget deficit for the Estonian section of the project might be EUR 300-500 million until the year 2030.
The NAO recommended the minister to update the budget of Rail Baltica in respect of the railway section in Estonia until the likely completion of construction.
The minister said the new revised cost estimate was be prepared only until 2026, although it was clear that the project would not be completed until then.
The NAO said the whole project’s schedule for Estonia needed to be reviewed.
The purpose of the audit “Interim review of the implementation of Rail Baltica” was to assess:
– If the state has acquired the right immovables;
– If the costs have been determined;
– The implementation of the project, schedule and budget;
– To examine the activities undertaken since the last report in 2019.
Rail Baltica is the largest infrastructure project in the Republic of Estonia since the restoration of independence, both in terms of cost and scale.
The total length of the railway running from Tallinn to the Lithuanian-Polish border is planned to be 870 kilometers. Of this, 213 kilometers will be in Estonia.
Nearly 1,000 immovables need to be allocated for the construction of Rail Baltica in Estonia, 863 of which are private or municipal property.
The implementation of the Rail Baltica project costs EUR 5.79 billion according to the cost-benefit analysis prepared in 2017.
According to the data of 2018, EUR 1.58 billion will be spent on building the railway in Estonia.
In 2017, the three Baltic States signed an agreement committing to complete the Rail Baltica railway until 2025 and ensure its serviceability until 2026.
Up to 85% of the project is financed by the European Union, the rest must be paid by Estonia, Latvia and Lithuania. (ERR/Business World Magazine)
