What does Latvia’s new per-kilometre ceiling change about Rail Baltica’s scope, cost control and contracting approach?
A ceiling for the railway’s operating core
Latvia’s government has decided that the core route of Rail Baltica must not exceed €20 million per kilometre, according to Prime Minister Andris Kulbergs after an extraordinary government meeting. The limit is based on research by an independent consultant. It covers the elements needed for a train to move along the main route: track, electrification and signalling. It excludes “large structures” and does not include trains. Kulbergs said costs had previously ranged from €28 million to €32 million per kilometre. The decision therefore establishes a cost benchmark for the infrastructure package, while leaving the treatment of excluded structures and the final project scope to further work.
The next step is a minimum functional scenario
The Transport Ministry is expected to prepare a minimum project scenario by December with the help of consultants. The government has also backed a first-phase scope based on an embankment for one track, with the possibility of adding a second track in future, and no more than four regional stations. This is a scope-led approach to cost control: officials first define the smallest infrastructure needed for a functioning railway, then use the €20 million ceiling to test the resulting costs and delivery timetable. Transport Minister Rihards Kozlovskis said the target should allow costs and the time required for implementation to be estimated more precisely.
Scope and contract structure are central to the dispute
The government’s decision comes amid criticism of the core-route contract Latvia signed with E.R.B. Rail JV in December 2023. Kulbergs described the agreement as unfavourable, saying compensation, standby costs and continuing cost escalation apply while construction is not taking place. He said the contract had produced an additional €450 million cost in meeting commitments linked to CEF funding. Kozlovskis said Latvia lacked sufficient grounds to cover all the obligations because several positions appeared disproportionate or inconsistent with the real situation. These are statements by government ministers, not established findings. The prime minister also alleged that technical specifications had changed and that state interests had not been adequately represented; no wrongdoing has been proven.
A possible move towards more segmented competition
Kulbergs contrasted Latvia’s arrangement with the approach he said Estonia and Lithuania used, in which contracts were divided into sections of the core route and local builders were allowed to compete. He said competition produced the lowest price in those cases. The comparison points to a procurement choice with wider relevance: a single large contract can consolidate delivery, while smaller route sections may create more opportunities for separate bids and price comparison, provided the interfaces between packages can be managed. Latvia’s government has not announced a replacement contracting model. It says the Baltic states have agreed to pursue the technically minimum solution and are negotiating how to reduce the project’s costs.
IN NUMBERS
The €20 million ceiling is now the reference point for defining Rail Baltica’s minimum functional first phase. Its practical effect will depend on the scenario prepared by the Transport Ministry, the handling of the existing contract and any future decision on how the route is divided for procurement.
Reported from pmo.ee, 2026-10-01. The Tender Wire is published by Otnox.
