At the moment, it is even difficult to predict when the first trip by train to Europe could take place, and this is also confirmed by the informative report of the Ministry of Transport made in September, which was published on September 27 on the Legal Acts portal.
It found that there are already substantial delays in the design phase – 32 months on the main route through Riga, 34 months on the Vangaži – Salaspils – Misa section, while -17 months on other sections. The main culprit is the Spanish company “Idom”, which is also blamed for submitting the design at an unreasonably low cost.
At the same time, the delay has also been caused by difficulties with obtaining approvals from the relevant municipalities, as well as the expropriation of the land areas necessary for the construction.
This expropriation must be carried out either by buying back the property, or if a reasonable price cannot be agreed with the owner, then it must be expropriated by a special vote of the Saeima. It has been established that out of 1,700 properties to be expropriated, the process has been carried out in only about 200 cases.
The price increase is also quite substantial. If in 2017 it was still estimated that the total costs of the Latvian part of the project would be 1.9 billion euros, then in 2021 they already reached 4.6 billion euros. In 2022, however, the projected costs increased to 7.5 billion, but then it was talked about 8.6 billion euros.
The report does not provide information on future projected costs, but it is mentioned that they can only be calculated after a special analysis at the end of 2024. Taking into account inflation and other factors, an increase in costs to 10 billion no longer seems impossible.
Although the report states that the railway line “Rail Baltica” is planned to be opened in stages between 2028 and 2030, this deadline may still be delayed by possible legal proceedings related to the tender for the construction of the main railway track.
The disqualified applicant contests the decision
Several associations of builders, including from China, Spain, Turkey, Italy and Latvia, were invited to participate in the second round of the tender worth 3.7 billion.
It is true, however, that 3.7 billion is intended only for the construction of the track, so building the necessary infrastructure may make it much more expensive. Two applicants made it to the finish line – the Association of Turkish Companies, which represents two companies of this country, and a joint venture with the representation of Italy, France and Poland.
As a result, however, the Association of Turkish Companies was excluded from further participation in the tender by the decision of the Procurement Supervision Bureau (IUB), based on the recommendations of the State Security Service. True, more detailed information about specific risks related to the Turkish company was not revealed.
As a result, Turkish businessmen have appealed to the Administrative Court in Riga with a request to cancel the decision on their exclusion from the tender and the introduction of temporary regulation. They believe that this happened without sufficient justification, and the Turkish businessmen’s offer was said to be economically more advantageous and cheaper by 536 million euros.
In the statement published in the media, the Turkish side emphasizes that “the recommendation of the VDD on the association of suppliers from Turkey should be considered a political assessment of the role of Turkey as a country in relations with Russia, and not real violations by the companies themselves, which could pose a threat to Latvian national interests”.
In addition, the company representing the second applicant, “ERB Rail Baltica JV”, the Italian company “Rizzani de Eccher SPA”, continues to work on the territory of Russia. The French company “Eiffiage Genie Civil SAS” has also done this and in 2022, it has even increased its profit on the Russian market by 254%.
What VDD considers a project security threat
“jauns.lv” has learned from sources close to the state security authorities that the public communication of Murad Bayar, the CEO of IC Holding, the parent company of IC Ictas, and the company’s cooperation with the Russian state company could have become a “stumbling block” for the Turkish association. Rosatom”.
In May of this year in Istanbul, Bayar met with the director of the St. Petersburg International Economic Forum, Aleksey Volkov, after which he highlighted the company’s long-term relations with Russia, which resulted in the construction of the Akkuyu nuclear power plant.
Also, Bayar has indicated in public communication that negotiations between “IC Holding” and Russia about further investments in the region’s infrastructure are still ongoing. Volkov, on the other hand, admitted that energy and infrastructure construction companies from Turkey are a priority in building Russia’s economic relations with Turkey.
In addition, discussions regarding the inclusion of this company in the EU sanctions list have been ongoing for a long time in the European Union in connection with the cooperation partner of IC Holding, Rosatom. If this were to happen, the implementation of the “Rail Baltic” project would be exposed to significant risk.
The other contender is not without sin either
The mentioned French and Italian companies have indeed operated in Russia, but in August of this year, the US news agency “Bloomberg” informed that the Italian company “Rizzani de Eccher SPA” had fallen into financial difficulties in Russia due to the war and had left the country’s market.
This is also confirmed by information from Russian sources – it shows that on December 14, 2022, the company “TD Elektrotehmontazh” applied to the Moscow Arbitration Court with a request to declare the said Italian company bankrupt. Namely, the branch of the Italian company is no longer able to fulfill its obligations when the parent company ceases to operate in Russia.
On the other hand, the French government’s loyal attitude towards the operation of this country’s companies in Russia is generally known, and the main rule is non-cooperation with sanctioned partners.
Despite this, the reputation of the Eiffage SA company in Europe is considered high enough, and as recently as February of this year, the company, together with other entrepreneurs in Brussels, was entrusted with the construction of the main base of the Belgian armed forces on the site of the old NATO base, which is located right next to the new headquarters of the transatlantic organization. .
The company also has experience in railway construction – back in 2012, it built a 180-kilometer long line in Brittany as part of a private partnership agreement.
The battle for the right to build “Rail Baltica” may turn out to be quite intense, but currently the deadline for the case to be considered in court is not yet known.