In the first stage of the project (2019-2023), it is planned to electrify railway lines in the direction of Daugavpils-Krustpils and Rezekne-Krustpils further in the direction of Ventpils. The total costs of this stage of the project are estimated at EUR 660 million. In the second stage of the project (2020-2025), it is planned to electrify railway lines in the direction of Krustpils-Skirotava and Daugavpils-Indra in the direction of Riga. The total costs of this stage of the project are estimated at EUR 519 million.
After 2023, it is planned to electrify the section of the railway headed from Jelgava to Liepaja. It is also planned to reconstruct the already electrified railway sections in Pieriga. The total costs of the entire railway electrification project are estimated at EUR 1.3 billion.
The cost-benefit analysis of the project compiled by Ernst & Young Baltic states that influence of electrification of the railway on GDP is estimated at EUR 256 million (38% of investments to be recovered locally), corporate income tax revenue is estimated at EUR 38 million and indirect benefits caused by the project are estimated at EUR 220 million.
The project’s assistance in helping save up energy costs is estimated at EUR 405 million. The money to be saved on rolling stock maintenance costs is estimated at EUR 242 million.
At the same time, the project is expected to have a positive impact on the environment, reducing the volume of harmful emissions and their impact on climate change, healthcare and other costs. It will also help reduce the risk of oil, diesel fuel and other substances, as well as reduce the level of noise produced by trains.
There are negative factors to consider as well. For example, it has been calculated that Excise Tax revenue for diesel fuel will decline as a result of electrification of railway lines by more than EUR 300 million. Nevertheless, the overall effect from the project will be positive.
LDz Chairman Edvins Berzins added that the main benefits from the project include positive impact on the environment and national economy, especially in Latgale, where it is planned to invest approximately EUR 340 million. On top of that, Latvia’s national economy will recover all finances invested in the first stage of the project.
According to him, Latvia’s transit corridor will become cheaper in its electrified section by EUR 1 per ton. At the same time, Lithuania plans to have electrified the railway line from the border with Belarus to Klaipeda port by 2030. Because of that, the matter is related to the competitiveness of Latvia’s transit corridor in the region.
At the same time, he added that this project has been discussed with the largest business organizations, including Latvenergo and Augstsprieguma tīkls.
The choice in favour of Ventspils and not Riga was made, considering fewer unknown factors from a technical perspective, less congested transport connectivity, less impact on prices of Pasažieru vilciens services and the possible synergy with Rail Baltica.
At the same time, Berzins denied any kind of political pressure to ensure the choice in favour of Ventspils.
Once the route towards Liepaja has been electrified, it will be possible to apply Green Corridor status to it. Hydrogen-powered train mechanism is currently in the stage of research. LDz also considers fitting trains with gas-powered engines and secure such transport services in Liepaja’s direction.
Realizing the project’s initial phase will cost the state and LDz approximately EUR 300 million. This funding will become necessary starting from 2019. It can be secured by increasing the base capital of LDz, attracting a loan as by securing state co-financing. A technical project will be developed by 2019.
Berzins emphasized that even if the government does not support the project, ‘nothing bad will happen’ and LDz will continue its work. Nevertheless, this is a unique opportunity for Latvia to realize this project using co-financing from the European Union.
There is co-financing of EUR 347 million currently available to Latvia in the 2014-2020 planning period of the European Union Cohesion Fund.
The final decision about this project will be made by the government on 25 October.