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Government accepts the proposed funding option for the railway electrification project

Tuesday, 5 December, Cabinet of Ministers reviewed a report by the Ministry of Transport on implementation of the Latvian railway network electrification project that provides implementation of the first phase in line with the planned scope and direction without impacting the state budget. It is planned that for the implementation of the project, funding of the Cohesion Fund of the European Union and co-financing of VAS “Latvijas dzelzceļš” (LDz) will be used.

This solution was achieved because as a result of the technological development LDz has managed to reduce the total expenses of the first phase from 519 million euros to 441 million euros, thereby the company was able to attract the necessary co-financing without any investment of the state. Negotiations have been started with the European Investment Bank.

Cabinet of Ministers has instructed the Central Finance and Contracting Agency to extend the project submission deadline to 28 February 2018.

The Minister of Transport, Uldis Augulis, emphasised that the project would provide numerous economic benefits in the next 30 years, including, the carriers will be able to provide cheaper transportation services and competitive prices to their clients. Therefore, our transit corridor will obtain opportunities to attract more cargo and thereby generate more revenues from exports and, of course, revenues for the state budget. Moreover, cost-efficiency created by the electrification would serve as motivation to transfer domestic cargo transportation from road to railway traffic, as a result the road surface would be damaged less.

“The financial contribution of the project is of importance, as more than 300 million euros of the total project expenses will be invested in Latgale region, creating direct and indirect effect, including development of different service indurties in the territory of construction works,” said Augulis.

President of LDz Edvīns Bērziņš commented: “Considering developments in the global logistics market, increasing of railway efficiency and competitiveness is especially important, as Latvia’s goal is to develop operations in the transit and logistics industry. Gradual electrification of railway network is one of the development directions. It provides more efficient and cheaper tractive power for carriers and creating pre-conditions for transportation of heavier and longer stock. The decision made by the government allows implementation of the project, providing that until 2023 one full transit corridor functionality would be equipped with electrical tractive power.”

Bērziņš emphasised that railway electrification is a long-term investment from which the next generations will benefit in the transit and logistics business, the same as today’s infrastructure used by the industry to provide exports services has been developed for several decades.

Latvian railway electrification as a significant transport industry development project has been included in the National Development Plan 2014–2020 and Transport Development Guidelines for the same period. During the first project phase, it is planned to electrify railway network from Daugavpils and Rēzekne to Riga, performing electrification with 25 kV AC technology.

LDz will implement the first phase of railway network electrification within the framework of the specific support goal “To ensure competitive and environmentally friendly TEN-T railway network, facilitating its safety, quality, and capacity”, employing the available funding of 346,639,348 euros provided by the Cohesion Fund.


VAS “Latvijas dzelzceļš” is the manager of public railway infrastructure and dominant company of the “Latvijas dzelzceļš” Group. The Group includes six subsidiaries: AS “LatRailNet” that determines infrastructure fee and division of railway infrastructure capacity, SIA “LDZ CARGO” that provides railway cargo transport and international passenger transport, SIA “LDZ infrastruktūra” involved in construction and maintenance of infrastructure, SIA “LDZ ritošā sastāva serviss” responsible for repairs and maintenance of rolling stock, SIA “LDZ apsardze” engaged in guarding services, as well as logistics company SIA “LDZ Loģistika”.