Updated October 22, 2025- Rail Baltica which is Europe’s flagship cross-border rail project has received a €295.5 million grant from the European Union. This funding will be used to advance construction across Estonia, Latvia, and Lithuania. The grant agreement was signed by RB Rail AS, the project’s central coordinator, during a high-level meeting in Vilnius on 21–22 October with representatives of the European Climate, Infrastructure and Environment Executive Agency (CINEA).
Furthermore, the funding supports continued implementation of key sections and technical activities across all three countries, with approximately €47.1 million allocated to Estonia, €153.5 million to Latvia, and €94.9 million to Lithuania, including RB Rail AS’s share as joint project coordinator.
How the Funding will be Utilized
In Estonia, the funding will be used to complete the mainline that runs from Tallinn to the Estonia–Latvia border. This includes 10.2 km of embankment and double-track substructure in the Rapla–Pärnu section.
Additionally, in Latvia works will focus on constructing railway embankments in four southern sections of the mainline, covering 13.3 km, and include access and maintenance roads, water drainage systems, and other necessary infrastructure. Also, funding will support construction supervision, technical design of the Rail Baltica electrification project in the Upeslejas–Latvia/Lithuania border section, and project implementation measures including FIDIC engineer services.
Lastly, in Lithuania, the grant covers construction of key structures. These structures include overpasses and railway crossings in the Kaunas Urban Node section. Additionally, the technical studies and design work are included, covering regional station infrastructure, sections from Kaunas to the Lithuanian–Polish border, and executive design services. Land acquisition and related procedures will also be carried out in the Kaunas area. The financing allows RB Rail AS to continue overseeing cross-border project coordination in line with the Project Management Agreement.
Rail Baltica is now in full-scale construction across Estonia, Latvia, and Lithuania, with mainline works, international stations, bridges, and crossings advancing. In Estonia, 105 km of substructure and related infrastructure, including overpasses, crossings, and traffic junctions, are under construction. Contracts for 200 km of substructure and superstructure construction have been signed, with more than 100 km currently being built, including the flagship Ülemiste Terminal.
In Latvia, construction of the mainline prioritises the southern section near Iecava, connecting Riga to the Lithuanian border. This area is one of the most active construction zones. It entails large-scale earthworks, road crossings, and engineering structures forming part of the 202 km of infrastructure across the country. In Lithuania, work is progressing on the Kaunas–Panevėžys section, where 77 km of embankments and engineering structures are being built. By the end of 2025, construction will extend over 114 km, including track laying and a new bridge over the Neris River, the longest in the country.
In another similar railway infrastructure development, France boasts the largest railway project in Europe, the Grand Paris Express. This project position France as a major railway transport hub in Europe.
Reported on June 20, 2025
Estonia has taken a major leap in the ambitious Rail Baltica high-speed rail project by signing two key construction contracts worth up to $1.06 billion. These agreements mark the official start of the development phase for Estonia’s 215 km section, aiming to physically integrate Tallinn with the rest of the Baltics and transport networks across Europe. Notably, international consortia led by GRK Suomi and Bouygues Travaux Publics are set to build the Ülemiste–Pärnu and Pärnu–Ikla stretches, respectively. Now that preparations are under way, heavy construction is expected to begin detailing after a roughly one-year planning stage.
Pan-Baltic Impact & Security Focus
Moreover, Rail Baltica is recognized as one of Europe’s most significant transportation projects. It will forge a direct standard-gauge link between Tallinn, Riga, Vilnius, and onward to Poland and Western Europe. In addition, the line’s acceleration has become geopolitically urgent following Russia’s war in Ukraine, by bypassing legacy rail systems and diversifying routes, the Baltic states are working to reduce reliance on Russian infrastructure. Furthermore, Lithuania’s government stresses that this rail corridor will improve military mobility and support the new TEN‑T corridor, further extending connectivity to Ukraine.
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Costs, Delays & Shared Accountability
However, interlinked financial and logistical challenges are already emerging. In fact, joint audits from Estonia, Latvia, and Lithuania estimate €10–19 billion more than existing funding. More specifically, €2.7 billion in Estonia, €7.6 billion in Latvia, and €8.7 billion in Lithuania. In response, governments are weighing phased delivery, prioritizing core routes by 2030 and delaying secondary stops. Latvians have cautioned that any delays or failure by one partner would affect all, possibly triggering significant penalties. Meanwhile, there’s concern around a EU funding gap in 2027–28, as Connecting Europe Facility grants may pause between financial cycles.
What Lies Ahead
Finally, Estonia’s stage is clear: detailed development begins now, with major works commencing in 2026 on the two awarded sections. Yet the bigger picture hinges on multi-country synchronization, only if Latvia and Lithuania stay on track will cross-border services launch as planned by 2028, with full operation by 2030. Given geopolitical urgency and economic benefits, all three Baltic governments remain committed. They are applying risk sharing and phased planning to navigate funding challenges. Ultimately, Rail Baltica aspires to unite the Baltic capitals with Europe via a modern, secure rail artery, transforming regional mobility for generations.
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Project Overview
Contracts Signed: Two major construction contracts totalling $1.06 billion, the largest infrastructure deal in Estonia’s history, covering the Ülemiste–Pärnu (approx. €394M) and Pärnu–Ikla (€332M) segments.
Scope: Build-out of Estonia’s 215 km high-speed rail section, linking Tallinn to the Latvian border and integrating efficiently with the wider pan-Baltic network.
Consortia Teams:
GRK Suomi-led Alliance (Finnish, Estonian, French, Swedish firms) handling Ülemiste–Pärnu works.
Bouygues Travaux Publics Alliance (with Budimex, Ingerop, WSP) delivering full design and construction for Pärnu–Ikla.
Timeline: A 12-month development phase is underway to finalise designs, procure materials, and plan schedules; main construction begins in 2026, aiming to finish Estonia’s segment by 2030, in sync with broader network timelines.
Strategic Impact:
A 900 km modern rail corridor connecting Tallinn, Riga, and Vilnius to Poland and Western Europe (with ferry link to Finland).
Strengthens regional connectivity, economic growth, and geopolitical independence from legacy Russian rail systems; also boosts military mobility and aligns with the EU’s TEN‑T network
Funding & Next Steps:
Primarily financed by Estonia via EU emission-trading revenues
Continuation hinges on coordination with Latvia and Lithuania to prevent cost overruns or delays; Latvia faces notable risks over budget and schedule.
