Image: Latvian Railways

Latvia’s electrification scheme cancelled

A large-scale project to electrify the railway network of Latvia has been cancelled due a continuing drop in rail freight volumes. The national railway company Latvijas Dzelzcels took this decision this week. The electrification project was worth 441 million euros and supported by EU funds, as the Latvian railway network forms part of the TEN-T core network.

This was reported by the Latvian Information Agency. Latvijas Dzelzcels (LDz) said that this week that it had revised its possibilities to implement its planned and ongoing projects co-financed by the European Union’s (EU) structural funds. The main arguments of the company are the drop in rail freight volumes, which started already in the first half of 2019, continues, and the inability of LDz to balance its finances in 2020 without additional funding from the government budget.

Geopolitical situation

Board Chairman Maris Kleinbergs explained that these projects were planned and prepared at a time when 45 to 55 million tonnes of freight were carried by the rail infrastructure annually. Now, the situation has substantially changed, and the changes to rail freight volumes and freight segments, brought about by the geopolitical situation, require corrections also to railway investment projects.

“Taking into consideration the work invested in the preparation of the electrification project, as well as the fact that a gradual transition to environmentally friendly railway infrastructure is taking place all over the world, the revision of the LDz investment projects is not an easy decision, but it is necessary to ensure that in the current situation the state does not undertake an additional burden that could impede Latvia’s economic recovery from the current recession,” Kleinbergs said.

Not grounded

Kleinbergs added that the current and projected situation in the transport and transit sector, including cargo transportation trends in the visible future, suggest that in the present situation implementation of such large-scale railway infrastructure project will not be economically grounded because there might not be sufficient demand for new railway infrastructure, and railway infrastructure users will not be able to cover the costs of maintenance of the infrastructure without support from the government budget.

LDz management board last week made the decision to suspend Latvian railway electrification project, and LDz supervisory board supported this decision on March 23.

Other projects

The electrification of the Latvian railways was initiated early in 2017 by the Ministry of Transport and LDz. The ambition was to make the Latvian transport corridor more competitive by enabling faster transport of goods in a timely manner and achieve significant financial savings, which would have a long-term positive impact on the industry.

LDz plans to redistribute the available EU Cohesion Fund financing to alternative and less financed projects that are aimed at achieving climate goals in transport and development of multimodal passenger transportation system. LDz has started consultations with the Transport Ministry on possibilities to implement alternative projects.

Also read: 

Electrification scheme boosts Latvia’s TEN-T status

Author: Majorie van Leijen

Majorie van Leijen is editor of RailFreight.com, online magazine for rail freight professionals.

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