The pandemic and now war in Ukraine have caused problems with supply chains and prices. The largest infrastructure project in the Baltic states right now is Rail Baltica railway line, with the European-gauge tracks, heading from Tallinn to Warsaw and further on. Agnis Driksna, executive director and chairman of the board of Baltic joint venture RB Rail, who is in charge of the project, said in an interview with LETA that fixed prices should be forgotten in procurements right now because no delivery company or builder will undertake such liabilities. Still, he is confident that there will be no delays with Rail Baltica project. If ten years ago we spoke that it would be good if there was such Rail Baltica line, later we spoke that we need it, now it has been underscored on the European level that it is the duty of the Baltic states to build such a transport connection.

How has Rail Baltica been project affected by the war in Ukraine and the following sanctions?

We have not yet comprehended how Covid-19 has affected us, when we found ourselves in the situation of the war in Ukraine. It is clear that there is a short-term and long-term impact. Short-term challenges are the same as in other industries - prices, inflation, supply problems. For example, 90 percent of metals were imported from Russia, but now other supply channels should be found. In a long term, we should understand that any crisis comes with opportunities. For example, Rail Baltica earlier had been assessed mostly as the economic corridor, but there were no talks about its military importance. Now it has become important that its parameters meet military needs. Thus, the philosophy changes as well. The Baltic states are not only the EU, but also NATO external border. If also Finland joins NATO, then the Baltic states will be in the middle of this external border. This requires efficient transportation system.

If compliance of the infrastructure for military needs has a new importance, does Rail Baltica meet these goals or is there any re-designing necessary?

Compliance of Rail Baltica with military needs has already been planned in 2016, in relation to load capacity, bridges, axes, etc. Now we also have to consider additional aspects - connections. In Latvia, connections possibly are necessary not only with Adazi and the airport, but in other directions as well. Also, from the point of view of military mobility, there is a short-term and long-term strategy. It is clear that Rail Baltica cannot be included in a short-term strategy, in a short term Lithuania, Latvia and Estonia are primarily viewing roads and the existing railway infrastructure, but Rail Baltica can be included in a medium-term strategy.

What is the current situation with connectvity of Finland with Rail Baltica?

Finland does not have the so-called European-gauge tracks. At present, Rail Baltica tracks end at the Tallinn port, which means that cargos, including military cargos, can arrive to Tallinn by sea, loaded on trains and transported to any place in Europe. In a long-term there is a plan that Estonia and Finland can be connected with a tunnel. This would be the longest tunnel in Europe if not in the world. Of course, this is a very challenging project.

In relation to short-term challenges - there are problems with supplies of metal previously imported from Russua. How will this affect procurement of tracks for Rail Baltica?

This does not have huge impact right now. First, this will be a procurement for the whole 870 kilometers of Rail Baltica route. The countries or builders will not purchase tracks for each separate section. Currently, there is the first stage of the tender - assessment of the qualification of the bidders. Second, from the point of view of procurement, we should now forget one fixed price. There will be no producer, builder of company who will undertake liabilities for a fixed price for the next ten years. It is not possible. We should agree on an indexation principle.

If we had to purchase tracks today, I assume it would be very expensive. However, we will need the tracks in some two or three years, and there is a time for the market to regulate itself. It is not so that there is no metal anywhere else in the world apart from Russia. Time is needed to form new logistics channels. The same refers to prices. If metal costs three to four times more, it cannot be used as a material. Therefore, it is clear that the prices should stabilize in a long term.

What is happening in construction stages where tenders have already been completed? Is it not so that the builders say that they cannot build anything for the agreed prices?

It is not that bad in Latvia.

Of course, everybody is following what is happening with prices, supplies of materials may also be delayed. If the inflation is huge due to the geopolitical situation, customers and contractors cannot be left alone. Indexation of costs, helping everybody steer through the inflation growth, will be necessary on the national and European levels. Rail Baltica cannot be separated from any other construction project in the Baltic states.

What about Rail Baltica project deadline?

It is planned that different stages of the project will be completed between 2026 and 2030. It is hard to tell right now that it will be completed on this or that date or whether there will be any delays.

It is clear that both on the national and European level, completion of this project is a duty. Thus, it has the highest strategic importance.

What do you see in the current tenders? What do bidders say?

First, there is a situation when tenders were announced before February 24. Lithuania has just signed an agreement on construction of the longest bridge in Rail Baltica project. The agreement has been signed, work should be launched. We will see whether the construction works can be done for the sum signed in the agreement.

Second, there is a situation with future procurements. We should forget about fixed sums in agreements. Especially in relation with works that have to be completed in five years, for example, electrification. Nobody will guarantee the same sum in the coming five years.

Third, the size of procurements. Every builder should not buy two or three kilometers of rail tracks. Procurement of materials should be made jointly.

At the same time, it is clear that inflation is not a short-term situation that will disappear in two months. Have there been talks with the European Commission that funding for Rail Baltica, most likely, has to be increased?

The basic principles have not changed. Rail Baltica is a strategic project, and Europe supports it more than ever. Of the total costs, 85 percent are funded from the EU and 15 percent from national budgets. EUR 1.2 billion have already been allocated. We are going forward step by step. There are no questions anymore whether we need this railway line. It is clear that we live in a different world after February 24. The support is sizable, stable and growing.

EUR 5.8 billion is the sum mentioned as costs of Rail Baltica project? How has this changed?

I will not speculate with any sums right now.

First, we have to see how the situation turns because of the war. When the designing process in all Baltic states is completed, we will conduct a new analysis. Then we will see what technical solutions are necessary, how much they cost, forecasts about cargo and passenger flows will be updated.

What is the progress of Rail Baltica project in each of the Baltic states?

If we start with Estonia, there is a design stage ongoing at full length of the route - from Tallinn to the Latvian border. Construction of bypasses and wildlife crossings have been started. There is an active tender on construction of the train station in Tallinn.

In Latvia, the design stage is ongoing at full length of 265 kilometers. Construction works have been started in both international train stations - Riga Central Train Terminal and International Airport Riga. These objects are complicated and will require most time.

Lithuania already has European-gauge tracks between Kaunas and the border with Poland which were built before the unified technical parameters for Rail Baltica were adopted. Therefore this stretch has to be adapted to the new requirements.Design stage will be launched in this stretch and between Kaunas and Vilnius this year, while design stage is ongoing in the stretch between Kaunas and the border with Latvia. Construction works have been launched around Kaunas.

Is it clear what is happening in Poland as it is important to ensure connectivity of Rail Baltica with other railway lines in Europe?

Poland is actively developing the corridor between Warsaw and the border with Lithuania. They plan to complete works in 2026-2030. Cooperation on technical matters will strengthen. There is also stronger cooperation within the North Sea - Baltic Sea corridor.

People are always interested - when will the trains will start running?

The goal was to complete the line between 2026 and 2030. Construction is held in stages. The first transborder stage that might be completed is Riga airport - Kaunas. This might happen around 2027.

And train from Tallinn to Riga will be ready later?

Yes. We have to ensure its functionality in full by 2030.

Will there be a tender for transportation services on the route? Will there be several tenders - for international and regional transportation?

This line can be used for different kinds of transport. There will be international fast trains, connecting the large cities, and regional trains. There will be regional train across countries who will be slower than the fast train and will have more stops. There will be local trains that will make the route from Bauska to Salacgriva.

The pandemic and war in Ukraine have seriously affected supply chains. Is there interest of cargo owners in Rail Baltica? If we remember discussions at the very start of the project, it was mostly said that this is a passenger project and there will not be any serious cargo flows in the north-south direction.

There is and will be a cargo flow in the north-south direction. We can see how many trucks are traveling every day in this direction. The cargo flow will develop, and there are now discussions not only about the Baltic corridor, but also about the North Sea. The necessity of such a corridor is even growing in the current geopolitical situation because we cannot rely on the eastern direction any more.

Earlier estimates show that cargo flow might be 16 million tons a year. It is clear that, even though cargos from Russia are decreasing right now, in a long term the geography will not change and sooner or later they will return. We are not building the infrastructure for a couple of years, but for generations. Thus, we will see a growing dynamic in terms of cargos and passengers.

Is it clear who will be the operator of Rail Baltica infrastructure? Has a compromise been reached among the Baltic states?

I think that there is an agreement that this is one route. Therefore, we should ensure unified regulations in all the three countries. There should be a unified tariff policy, maintenance, etc. We have to ensure that Rail Baltica is operated as one route.

How is cooperation going among the three Baltic states?

It is normal that each country has its own interests. So far, we even have been competing about transit cargos, ports and everything else. Now, however, we see that such a competition is not viable in a long term. Besides, this refers not only to Latvia and the Baltic states, but the whole Europe. The large European ports are strengthening cooperation even on transborder level, seeing that together they can better respond to the demand and the new market situation. There is synergy not only among countries but also among different kinds of transport, fundamentally changing the approach. Transportation service is not a separate island, but integration communication, ensuring transport corridors. There is no need to establish three identical logistics parks in three countries which are competing.

How is cooperation going with other stakeholders - municipalities, residents?

Interesting and challenging. Rail Baltica is a huge project and there is cooperation with many structures who have their own organization, regulations, experience and knowledge. Therefore, some time is needed to harmonize all that. But it is our everyday work - to achieve an efficient and sensible solution in cooperation with local governments and other infrastructure holders.

On the one hand, the project is unique because in some places we are building tracks on an empty field - where there has never been railway. On the other hand, construction in cities should be coordinated with local governments, NGOs so that everybody is satisfied.

There were some complaints from Tuja municipality earlier that their train station is located far from the town of Tuja. Previously, local governments and residents were against construction of Rail Baltica route, mostly objecting that the train could go "across their cabbage field", but now it seems the opposite direction has been taken - there are more complaints that trains stations will be far away.

It is so to a certain extent. Ten years ago nobody believed that the railway will be built actually. Now, when the reality sets in, the opinions are different. We should understand that years can pass re-designing the route, changing solutions, moving the line and stations. This could go on forever. But if we really want to start the construction, a full stop should be put at some point in the discussions and we should move on.