Audit office criticism not enough to derail Rail Baltic

The Rail Baltic agreement between countries that has been sent to the Riigikogu for ratification provides no answers in terms of the volume of the financial obligation Estonia will adopt, sources of financing, and the state's activities in case of considerable changes to the project, the audit office reported.

Leading politicians of the ruling Center Party and opposition leader the Reform Party voiced their intent to move forward with Rail Baltic without delays after interpreting the audit office's positions rather as support for the major project. The votes of the two parties would suffice to ratify the agreement.

„Nothing can be changed in the Rail Baltic agreement; it will remain what it is,“ said member of the Riigikogu Economic Affairs Committee Erki Savisaar (Center) „I will not rule out a domestic implementing act to be introduced at a later date, while I do rule out the addition of a qualifying preamble for example.“

Because the Riigikogu is not in charge of constructing the railroad but will task the government with it, it is up to executive power to address the weak points highlighted by the National Audit Office. „Rail Baltic needs to be taken forward,“ Savisaar added.

The committee was aware of the agency's criticism prior to its publication, while it included items that cannot be answered. „It is impossible to forecast how much the railroad will cost exactly,“ said deputy chairman of the committee Toomas Kivimägi (Reform). „The government recently allocated additional sums for the construction of the Arvo Pärt Center, even though it is a much smaller object that will be completed much sooner.“

Kivimägi also characterized as wishful thinking the possibility of guarantees for EU financing. „There is no certainty in terms of continued financing for any European Union project that stretches into the next financing period,“ he explained.

Kivimägi said that he perceives failure to ratify the agreement as potentially a lot more damaging to the Estonian economy as it might result in the country having to return sums already made available. „The parliament needs to keep a close eye on construction of Rail Baltic; however, right now I feel a certain desire for the executive power's shoes,“ Kivimägi says. „I am categorically opposed to attaching a preamble to the agreement as the one IRL demanded go with the Estonia-Russia border agreement managed to sink the latter.“

Adding a preamble to the Rail Baltic agreement was raised by chairman of the economic affairs committee Aivar Kokk (IRL), according to whom the agreement might not even reach the final vote due to discrepancies. „We awaited explanations to the problems highlighted by the audit office from the economy ministry even before the first reading; however, we didn't get them,“ Kokk said. „Provided we will not be given capable answers now, the ratification decision might meet the fate of a lot of other bills that do not make it past the first reading.“

Kokk maintains that the agreement needs to be complemented with a preamble that would, in addition to addressing the shortcomings in the audit office's report, specify the order in which various stages of the project will be constructed.

„We must follow the example of Latvians, who will use EU funds to first construct the objects they need and only then start work on the route,“ Kokk explained. „Our priorities include terminals in Ülemiste and Muuga and connections to the airport.“

The National Audit Office recommended the Riigikogu put together an international agreements implementation regulation. „Risks, especially concerning major projects sporting multiple variables and unknown aspects, can never be eliminated altogether; however, they can be rendered bearable,“ wrote Auditor General Alar Karis in his summary.

The government should ask the Riigikogu for permission before taking on or planning additional obligations. The government must also be obligated to regularly notify the parliament of the project's status. The government must present to the Riigikogu an analysis and activity plan for an eventuality where Estonia's financing increases as a result of falling EU co-financing, increased cost of the project, or Rail Baltic's economic effects not aligning with forecasts.

Ratification of the Rail Baltic rail connection agreement between Estonia, Latvia, and Lithuania would obligate the former to construct a new European track-gauge railroad that could facilitate speeds of up to 240 km/h by 2025.

The cost of the entire project is estimated at €5.79 billion, with the stretch of railroad in Estonia costing €1.35 billion. The co-financing from the European Union would currently amount to 85 percent or €1.07 billion, with Estonia expected to come up with at least €268 million. Estonia's contribution might grow should the volume of EU financing fall or the project prove more expensive than anticipated.