The Ministry of Economic Affairs and Communications announced that the total cost of the Estonian part of the high-speed railway link Rail Baltica is EUR 1.31 billion, exclusive VAT, of which Estonia would have to contribute EUR 197-574 million.
The total cost includes outlays on all the necessary studies, technical designing of the railrrailway line, estimated cost of building, cost of passenger, maintenance and goods terminals, electricity connections and acquisition of land, Minister of Economic Affairs and Infrastructure Kristen Michal said in a letter to the finance minister.
According to Michal different EU aid rates can be applied to the total cost of the Estonian part of the Rail Baltica route basing on which the size of potential support varies. According to one scenario the maximum possible but rather unlikely 85 percent rate could be used which would cover 81 percent at the most of the total cost of construction exclusive of VAT, he said.
A second scenario puts the size of potential EU support between EUR 739 -EUR 1.1 billion provided there is enough money for projects like Rail Baltica in EU funds for the 2014-2020 budget period and the next one starting in 2021 and that all Rail Baltica funding applications are granted. In this case Estonia would have to put up EUR 197-574 million, Michal said.
Estonia aims to make the maximum possible use of EU resources and any delay with the project reduces the possibilities to apply for EU support, Michal said. The EU has approved financing in the amount of EUR 442 million for the first stage of construction of Rail Baltica of which Estonia’s share is EUR 213 million. If the railway does not materialize the unused money will have to be returned to the European Commission and there will be no opportunity to apply for more funds. Stalling of the project would be damaging for the Estonian economy and deprive the country of a strategic rail link, the minister explained.
Michal at the same time sees need for further analysis of the Rail Baltica financing scheme and viability. He said an additional analysis will be completed by next September and on its basis possible own financing scenarios will be determined.
Construction of the European gauge railway is expected to start in 2018 and the railway is expected to be completed in 2024–2025.
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