Costs of Rail Baltica have more than doubled from the initial 2017 estimation (EUR 5.8 billion), reaching EUR 15.3 billion, the updated cost-benefit analysis presented on June 10, 2024 says.
This new estimation considers the costs of Rail Baltica for the first phase, which aims to build an operational railway corridor across the three Baltic states connecting to Poland by 2030.
The findings of the updated cost-benefit analysis suggest that Rail Baltica is economically viable and expected to generate GDP growth from 0,5 to 0,7% contributing EUR 15.5 billion to EUR 23.5 billion to GDP of the Baltic states, which is considered indirect benefits, and it will also additionally have a direct economic net benefits value of EUR 6.6 billion. The related broader economic benefits include military mobility, environmental sustainability, social equality, corridor synergies, and supply chain impacts.
The analysis values from 2017 were adjusted for inflation between 2017 and 2022, considering an inflation rate of 40% in the Baltic States during this period. The rise in cost is also attributed to the following factors:
- 31% of the increase resulted from higher cost predictions due to scope project increase between 2017 and 2023, which included additional regional mobility connections, changes in technical standards according to unified design guidelines, and enhancements in safety and performance;
- 51% of the increase was due to more accurate data for costs due to design advancement from value engineering level to master design;
- 18% was due to additional external requirements and factors such as third-party requirements, various institutional technical regulations, interoperability technical specifications, and other changes.
- Taking 40% inflation into account, the cost drivers would respectively add 19% for scope changes, 30% for contingencies and design advancement, and 11% for additional external requirements.
According to the cost-benefit analysis study, Rail Baltica’s cost is estimated at EUR 26 million per kilometer. Studies have shown that for similar high-speed rail projects in Europe, the average cost per kilometer is EUR 24 million and might reach up to EUR 35 million per kilometer.
Following the successful application to the latest Connecting Europe Facility (CEF) call in 2023, the project has secured a joint financial commitment, with 85% of funding provided by EU funds totalling EUR 2.7 billion, supplemented by state budgets contributing up to 15%. RB Rail AS has applied for over EUR 2 billion in the CEF 10 call at the beginning of 2024. EU financing beyond these sources will largely depend on negotiations for the next EU budget.
The key findings of the study estimate that passenger transport is expected to generate 80% of Rail Baltica’s benefits, with environmental improvements accounting for 14%, and freight transport contributing 5%. The project will integrate the Baltic region into the European railway network, boosting GDP growth by 0.5-0.7 percentage points annually. Key growth contributors include land value appreciation, tourism, new business development, labor productivity, competitiveness, and urban development. It is estimated that Rail Baltica will handle 51.7 million passenger trips and 10.9 million tons of cargo by 2046.
Share on:
