Transport Investment Priorities under Structural and ... · ISPA. One of the prominent initiatives in the European Union in this respect is the development of the Trans-European transport

Study on Strategic Evaluation on

Transport Investment Priorities

under Structural and Cohesion

funds for the Programming Period

2007-2013

No 2005.CE.16.0.AT.014

Country Report Latvia

Final Report

Client: European Commission, DG-REGIO

ECORYS Nederland BV

Rotterdam, September 2006

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Table of contents

1 Introduction 7

1.1 Background 7

1.2 The Strategic Evaluation 8

1.3 The Country Report 8

1.4 Structure of the report 8

2 Transport Sector: current situation 10

2.1 Introduction 10

2.2 Latvia 10

2.3 Situation per mode of transport 12

2.3.1 Roads and road transport 12

2.3.2 Railways 14

2.3.3 Urban transport 17

2.3.4 Inland waterway transport 17

2.3.5 Sea ports 17

2.3.6 Airports 19

2.3.7 Trends and indicators 20

2.4 Conclusions: SWOT analysis transport system 23

3 Accessibility analysis 25

3.1 Introduction 25

3.2 Methodology: Accessibility Problem Index 25

3.3 Transport needs 26

4 Previous support programmes 32

4.1 National public funding for transport infrastructure 32

4.2 EU funding 33

4.3 Other sources of financing 34

5 National Transport Strategy 37

5.1 Introduction 37

5.2 Long term National Transport Strategy and Planning 37

5.3 Operational programme 2007-2013 40

6 Prioritisation of Transport Investments (2007-2013) 43

6.1 Introduction 43

6.2 Community Strategic Guidelines 44

6.3 Additional factors for the prioritisation of transport investments 45

7 Assessment of Impacts 49

7.1 Introduction 49

7.2 Methodology 49

7.3 Scenarios 51

7.4 Impact assessment 57

7.5 European effects 68

8 Conclusions on investment priorities 73

8.1 Introduction 73

8.2 Transport investment priorities 2007-2013 73

8.2.1 National and Regional and Local Needs 73

8.2.2 Needs per sub-sector 74

Annex A: TEN-T priorities 77

Annex B: Accessibility “red flag” analysis 83

7

1 Introduction

1.1 Background

The recent enlargement of the EU to 25 Member States clearly creates a new challenge

for its Cohesion Policy. Disparity levels within the EU have increased substantially and

will further increase with the accession of Bulgaria and Romania in 2007. This is an

explicit point of attention as the Treaty states that, in order to strengthen its economic and

social cohesion, the Community shall aim at reducing the disparities between the levels of

development of various regions and the backwardness of the least favoured regions or

islands, including rural areas. This aim lies at the core of the Commission’s regional

policy.

One of the key elements of the cohesion policy of the Commission is the contribution of

the development of new transport infrastructure to regional economic development.

Extensive spending has taken place in this domain under ERDF, Cohesion Fund and

ISPA.

One of the prominent initiatives in the European Union in this respect is the development

of the Trans-European transport networks (TEN-T). In 2003 the Commission has

identified the 30 priority projects of the TEN-T up to 2020.1 The priority projects include:

“the most important infrastructures for international traffic, bearing in mind the general

objectives of the cohesion of the continent of Europe, modal balance, interoperability and

the reduction of bottlenecks”.

For the new programming period 2007-2013 the Commission seeks to strengthen the

strategic dimension of cohesion policy to ensure that Community priorities are better

integrated into national and regional development programmes. In accordance with the

draft Council Regulation (article 23), the Council establishes Community Strategic

Guidelines for cohesion policy to “give effect to the priorities of the Community with a

view to promote balanced, harmonious and sustainable development”2.

To assess the impact of programmes in relation to Community and national priorities the

Commission has indicated that evaluations on a strategic level should be undertaken. The

present evaluation should be seen as one of these specific strategic evaluations. The

strategic evaluation should feed in the process of determining transport investment

priorities and the preparation of the national strategic reference frameworks and

1 Decision 884/2004/EC of 29 April 2004. The total investment of the 30 priority projects amounts to € 225 billion at the 2020

horizon. 2 COM(2004)492

8

operational programmes. As such, it should serve to enhance the quality, effectiveness

and consistency of Fund assistance.

1.2 The Strategic Evaluation

The strategic evaluation is directed the transport sector.

Three specific objectives have been formulated for this strategic evaluation:

• To provide an analysis of the situation in selected fields relevant to transport, using

structural indicators across Member States, plus Romania and Bulgaria;

• To assess the contribution of Structural and Cohesion funds relative to the current

and previous programming periods and draw lessons of relevance for the purpose of

the study in terms of identification of potential shortcomings in the development of

transport priority projects that might have hampered the utilization of those funds or

their expected benefits;

• To identify and evaluate needs in the selected fields and identify potential investment

priorities of structural and cohesion funds for the programming period 2007-2013.

1.3 The Country Report

The strategic evaluation results in specific country reports for all 15 countries and a

synthesis report. The current report is the Country Report for Latvia. Its main aim is to

give a more detailed indication of the strengths and weaknesses of the transport system in

the country and to address areas for future intervention. Where relevant this accompanied

by recommendations with respect to the overall transport policy of the country. The

country reports feed into the joint programming effort with the Member States for the

next period, as will be detailed in the National Strategic Reference Frameworks and the

subsequent Operational Programmes.

1.4 Structure of the report

The report is structured around three building blocks.

• First a needs assessment is presented based on an analysis of the current transport

systems and a modelling analysis which reveals the current (relative) level of

accessibility per region. This leads to first conclusions strengths and weaknesses

of the current transport system and related transport investment needs (Part A).

• Next an overview is presented of the transport investment priorities in the past

period (Part B).

• Finally, future areas for priority transport investments are identified. This builds

on the needs assessment in the first part but also addresses other factors such as

the contribution to EU and national policy objectives, the availability of other

sources of funding and the administrative capacity of the country (Part C).

9

Part A: Needs assessment current situation

10

2 Transport Sector: current situation

2.1 Introduction

This chapter describes the current transport situation and policy in Latvia. After a brief

introduction on the geographical and economic characteristics of the country, it first

describes the situation per mode of transport. The analysis of the current situation is

summarized in a SWOT table on the main strengths and weaknesses. The assessment of

the transport system is followed by an analysis of the key transport policy issues in

Latvia.

2.2 Latvia

Located in the north-eastern of Europe, geographically Latvia could be considered as

being located at the periphery of the European Union. However, bordering the Baltic Sea

on one side and located between its two fellow Baltic States - Estonia to the north and

Lithuania to the south - and Russia and Belarus to the east, Latvia is at a strategic

geographical location in the North-east of Europe.

Figure 2.1 Map of Latvia

Most of the country is composed of fertile, low-lying plains, with some hills in the east.

There are not many natural barriers, except for the rivers, especially the biggest one – the

Daugava. Latvia’s coastline is 494 kilometres and it has three important ice-free sea ports.

These conditions favour Latvia as an important transit corridor to Russia and other CIS

11

countries. The backbone of Latvia's multi-modal transport corridor are the east-west

railway and pipeline systems concluding at the major ports.

Latvia is involved in the priority project number 27: ‘Rail Baltica’ axis Warsaw-Kaunas-

Riga-Tallinn-Helsinki.

Basic data

Population 2.3 million

Total area 64,589 km2

Population density 37 inh/km2

Main cities Riga, Daugavpils, Liepāja, Jelgava

Source: Eurostat

The population is about 2.3 million inhabitants. One third of the population lives in the

only large city – the capital Riga. The rest of the country has a very low population

density, one of the lowest in the EU.

Economic data

GDP (PPP, 2004) 20,6 bn€

Government debt as % of GDP (2004) 14,6

Government deficit as % of GDP (2004) 0,9

GDP per capita, Latvia (2004) 9,700 €

GDP per capita, EU15 (2004) 25,700 €

GDP per capita, EU25 (2004) 22,600 €

Source: Eurostat

Latvia is among the poorest in the EU (only 43% of the EU average in GDP per capita)

and that might be one of the reasons that the level of passenger traffic is rather low.

According to official data Latvia’s GDP has increased by an average 7.7% annually since

2000. This is the highest growth rate among the EU New Member states. Real per capita

GDP has grown by more than 50% compared to its 1995 level and it is expected that the

annual growth rates of about 6% in medium term. At the same time, current account

deficit (ranging from 7% to 10% in the past 3 years) remains one of the key

vulnerabilities of the Latvian economy.

Due to Latvia's geographic location, the transport sector, particularly freight transit, plays

a key role in the economy of the country. Transport, storage and communications

comprise approximately 16% of the GDP. The transport and communications sector is

one of the most dynamic and accounts for about 30% of all direct foreign investment3.

Freight shipments between Russia and the CIS, and the West, are the core of the transit

industry in Latvia. Freight shipments from Russia and other CIS countries to the West are

the core of the transit industry in Latvia. The centres of the freight transit industry are the

seaports of Riga, Ventspils and to a lesser extent Liepaja.

3 Finanšu ministrija, Reference Framework for assistance from the Cohesion Fund 2004-2006

12

2.3 Situation per mode of transport

2.3.1 Roads and road transport

The Latvian State Roads performs the management of the state road network,

administration of the State Road Fund and organisation of public procurement for the

state road network. Maintenance and development of parish, company and household

roads is supervised, as well.

Infrastructure

Latvia has a quite dense network of roads. In 2005 there were 6,962 km of highways

(main roads (A) and 1st class roads (P)), 13,264 km of secondary roads, and 31.500 km of

municipal roads in Latvia.

Table 2.1 Length of road network in Latvia (1994-2004) in kms

1995 2005

% change

State roads: 20.400 20.227 -0,8%

Main roads (A) Na 1.622

1st class roads (P) Na 5.340

2nd class roads (V) Na 13.264

Local (municipal) roads 30.800 31.500 2,3%

Source: Eurostat; SCB, 2006

Most of the roads in Latvia are outworn and in need of renovation. Latvia is working on

the reconstruction of state and first class roads and a number of bridges in order to

increase the road bearing capacity. Besides the bad condition of the state roads, Latvia

has a problem due to the many unpaved roads. These are not accessible throughout the

year for all road vehicles and have a decreased visibility. The focus in important state

programmes lies on road maintenance and the promotion of further inclusion of Latvian

roads into the European road network. The upgrading of road sections, often financed by

with European (co)funding, is also covered by the state programmes

The average density of the Latvia (state) road network is 315 km per 1000 sq. km, which

can be considered as sufficient, taking into account the population and territory.

Therefore, construction of new roads is foreseen only for eliminating of bottlenecks

(bypasses of cities etc.).

The main national roads connect the road network of the Republic of Latvia with the road

networks of other countries, as well as, the capital city Riga with district administrative

centres.

13

Figure 2.2 Motorway network in Latvia

Source: Latvian State Roads, 2006

Demand

Car ownership in Latvia has grown from 106 cars/ 1000 inhabitants in 1990 to 297 in

2004. Although there was a large growth in car ownership, there still is a large gap with

EU average (EU25 = 459).

Table 2.2 Car ownership Latvia

Latvia (2004) EU15 (2002) EU25 (2002)

Cars/1000 inh 297 491 459


Road traffic conditions in rural areas and smaller cities and towns are not bad, –and could

be evaluated as Level of Service (LOS) B and C, which means basically unrestricted and

fluent traffic flow. In towns and in the capital of Latvia, Riga, the problem is more serious

due to the extensive enlargement of the private car fleet. The annual increase of the traffic

intensity is estimated at 2-5 % per year up to 2005, and 1-3 % from 2006 to 2015. 87% of

the State main roads are the elements of TEN-T network.

Table 2.3 Number of vehicles 1994-2004 (in 1000 vehicles)

1994 2004 Percentage change

Cars 251,6 686,1 173%

Trucks < 3.5 tons - 38,07 -

Trucks > 3.5 tons 59,4 107,6 81%


The increase in car ownership is reflected in the modal split of passenger transport. In

2003, 73% of all passenger kilometres were performed by car. For the EU as a whole, the

share of passenger cars is 83%. Busses and coaches represent the second largest means of

passenger transportation with a share of 19%.

14

In freight transport, there was a large increase in the number of heavy trucks. This

expansion is largely due to the expanding transportation of timber. The increase

negatively influences both road quality and road safety.

Road charging

Currently, there are no pay roads in Latvia, and there are no plans for pay roads in the

future. Latvia has set up legislation to accommodate PPP. Although the government

actively promotes PPP, it foresees no infrastructure charging.

2.3.2 Railways

Infrastructure

Latvia has a relatively large railway network compared to its population (a relatively

dense network in relation to the population and population density). However, compared

to the the average railway density in the other EU member states (67/km2), the density of

Latvian railways (35/km2) is relatively small.

Table 2.4 Railway density, 2003

Railway line/1000 km2 Railway line/100,000 inh

Latvia 35 100

EU 67 42


The railway network is oriented at freight traffic along major transit cargo corridors that

mainly run in east – west direction from the Russian hinterland to the three major ports at

the Baltic Sea. The main corridors are:

• Moscow – Rezekne – Krustpils

• Vitebska – Daugavpils – Krustpils

• European transport corridor I: Tallinn-Valga – Ieriķi- Riga – Meitene – Sauli -

Warsaw

• St. Petersburg – Karsava –Rezekne – Daugavpils

Currently, Latvia is also involved in priority project number 27: ‘Rail Baltica’ axis

Warsaw-Kaunas-Riga-Tallinn-Helsinki.

The majority of the network consists of single track (incl. broad gauge). Latvian railways

operate with 1524mm wide gauge. Only at 11% of the network, some 257 km of the lines

is electrified. The majority of these lines are located in the vicinity of Riga and mainly

used for passenger transport.

15

Figure 2.3 Railway network and rail electrification Latvia

Source: Latvijas Dzelzceļš, 2005

The Latvian rail network needs considerable restoration or upgrading. Large parts of the

network are deteriorated. It is estimated that 30 %, or 605 km, of the main railways need

to be reconstructed. The shortage of resources for maintenance and development of the

existing rail system leads to wear of infrastructure and rolling stock as well as to the

incapability of performing rehabilitation works in due time. This decreases both

efficiency and safety level.

Latvia has relatively high number of railway transportation means. However, the main

part of the rolling stock is also outdated and should be modernized or replaced.

Means

Maintenance, development, and administration of railway infrastructure, organisation and

management of rail traffic are mostly covered by payments from private railway

operators through the Railway Infrastructure Fund in accordance with the Law on

Railways. The amount of investments for maintenance and development of the railway

infrastructure has decreased. On the one hand this decrease is due to the decrease of the

income level from freight carriage and on the other hand due to the fact that part of this

income is still used for cross-subsidising unprofitable passenger rail transport and not for

renewal of fixed assets.

According to the latest amendment to the Law on Railway there are two regulatory bodies

in the Latvian railway transport sector, the ‘State Railway Administration’ and the

independent ‘Public Utilities Commission’.

The State Railway Administration is responsible for issueing cargo transportation

licences. The Public Utilities Commission is responsible for issueing passenger

transportation licences and for infrastructure charging. It determines both the

16

methodology for infrastructure charging and these charges, thus ensuring a compliance

with the requirements of EU directives. The last amendments to the Law on Railway

make the State Railway Administration responsible for infrastructure capacity allocation

in cases where a railway infrastructure manager is also railway operator. Currently this is

the case for “Latvijas Dzelzceļš” (Latvian Railways) which is both infrastructure manager

and also a railway operator at the same time, although with separate accounting.

Latvijas Dzelzceļš is the main state railway operator in Latvia (apart from its role as

infrastructure manager). It is a joint stock company that is 100% owned by the state.

Since 2003, Latvijas Dzelzceļš only operates freight trains and owns all its diesel

locomotives. Other operations (e.g. passenger operations and their rolling stock repairs

and maintenance are being carried out by several subsidiary companies). International rail

cargo transportation services are provided by three companies, but their service tariffs are

not regulated.

Passenger trains are operated by subsidiary "Pasazieru Vilciens" ("Passenger Trains").

"Pasazieru Vilciens" is the, also 100% state-owned, domestic passenger services joint

stock company. It was not given any rolling stock assets from “Latvijas Dzelzcels” upon

creation but is negotiating for this transfer now. Although the passenger train market is

open to other parties, the entry of new carriers into this market is problematic, as the

market seems not very profitable at the moment.

Demand

Rail transport in Latvia is heavily dominated by freight transport demand. Latvia’s

geographical position favours the development of transit traffic. At current levels 55% to

60% of freight transit transport (in ton-km) is done via railways. Most of the annual cargo

volumes transported on railways flows in East-West direction, mainly from Russia (48.2

% of total transit shipments in 2002) and Belarus (37.4 % in 2002) to the Baltic ports.

Freight transport by rail is dominated by a very small number of shippers. Furthermore,

rail freight-traffic consists almost entirely of full wagonloads; consolidated cargoes use

road transport. It comprises a very large share of goods transported in the Baltic States.

Rail passenger transport is much less significant than freight and comprises almost

exclusively domestic traffic. At this moment the number of performed passenger

kilometres is at very low levels and still decreasing. Despite of the relatively high rail

network density, passenger rail can not compete with passenger cars and bus transport

that can provide more frequent services to the sparsely populated rural areas. Passenger

transport by rail is competitive only in Riga region.

17

2.3.3 Urban transport

Table 2.5 Urban public transport network in Latvia

Urban public

transport:

1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004

Tram network km 163 163 162 162 162 161 162 162 162 162 162

Light rail (trolley)

network km 217 217 218 218 218 218 218 218 218 211 212


Public transport has a very high share in passenger transport in Latvia. As mentioned

before, Latvia has a low share of private car us (62%). Therefore public transport is very

important. Two thirds of transport passenger-kilometres are made by buses and coaches.

There is well developed market of private bus transportation services, especially in

regions where buses are the main and most efficient mean of public transportation.

More than 100 companies perform regular commercial passenger services on urban,

regional, inter-city, and international routes. Most of them are private, but approximately

15 % are owned by municipalities or joint-stock companies. There are 39 entrepreneurs

operate long-distance bus services, of which 14 on international routes.

About a third of the passengers in public transport travel by national and urban rail

(Riga).In some regions the railway is an integral part of the local public transport system

(especially for Riga’s commuting traffic). Only in Latvia’s three biggest cities (Riga,

Daugavpils and Liepaja) an electric urban transport network (trolley and tram lines) has

been developed.

The motorisation trend is strongly against public transport, and it will be difficult to

maintain the high share of public transport. The urban region of Riga is the only region

where there are serious congestion problems. Here public transport has a real chance to

maintain or even expand its share.

2.3.4 Inland waterway transport

There is hardly any inland water traffic in Latvia. Latvia has a very small merchant fleet

(most Latvian ships operate under a foreign flag, there are no data on these available)

2.3.5 Sea ports

There are three large ports in Latvia (Ventspils, Riga, Liepaja) that are all part of TEN-T

and seven small ports (Salacgriva, Skulte, Lielupe, Engure, Mersrags, Roja, Pavilosta).

The major ports profit from their favourable geographical position, serving as ice-free

ports that are well connected through rail, for the Russian hinterland.

Ports of Riga and Ventspils are operating as Freeports for already 10 years. Port of

Liepaja is part of the Liepaja Specialized Economic Zone. Companies working in

Freeports and SEZ can receive up to 80% tax discount. The amount of rebate depends on

investments made during the tax year.

18

The larger ports are mainly involved in processing transit freight – around 80% of transit

freight transported through Latvia is handled through these ports. Latvian ports are highly

export-oriented, mostly shipping cargo for transit and export from Latvia. The volume of

cargo reloaded4 at the ports of Latvia in 2005 was 60 mln tons, an increase of 4.6 %

compared to 2004, according to the Central Statistical Bureau. In 2005, 55.9 mln tons of

cargo were loaded at ports, 3.3% more than in 2004. The volume of cargo unloaded at

ports in 2005 was 4.1 mln tons, 25.8% more than the previous year.

Table 2.6 (international) Cargo handled in ports (in 1000 tons)

Total Loaded in Latvia Unloaded in Latvia

1990 36171 30386 5785

1995 38985 36370 2651

2000 51843 49276 2567

2004 57400 54101 3299

Source: SCB, 2006

Regarding cargo turnover, the Ventspils Free Port is currently the leading port on the

Baltic Sea and is included in the list of the 15 most important European ports. The

terminals handling crude oil, oil products and liquid chemical products operating in the

Ventspils port are amongst the largest in the Baltic Sea region.

The smaller ports have local significance. They are mainly engaged in the shipment of

timber and receipt of fishing products. In the summer season they are also used as

sailboat terminals. A very small share of passenger transport is being performed by a few

ferries.

According to the rail freight forwarders, the machinery in the Latvian ports for handling

cargo coming by rail is old and in bad condition. For example, the container terminal at

Riga port can handle only eight wagons at the same time, and thus, as the cargo volumes

on rail increase annually, there is a need for increasing the cargo-handling-capacity at the

terminal.

4 Reloaded cargo includes loaded plus unloaded cargo.

19

Figure 2.4 Composition of cargo flows

Source: SCB, 2006

Traditionally, crude oil and oil products have been the most import cargo for the Latvian

ports5. However, in the last few years there has been a large decrease in the flow of crude

oil and oil products and there has been a major increase in the handling of coal.

Particularly, the volume of crude oil loaded has decreased substantially. In 2005, 0.4 mln

tons of crude oil was transported from ports, which is 5.2 times less compared to 2004.

The volume of cargo in containers accounted for the bulk of cargo unloaded. The volume

of this cargo unloaded has increased by 12.9% in comparison with 2004.

Although the port of Ventspils has faced difficulties due to reduction of oil transit from

Russia, other ports have shown very good economic results over the past few years.

2.3.6 Airports

Infrastructure

In Latvia there are several airports, the largest one being the “Riga International Airport”.

Smaller airports are located in Liepaja, Ventspils and Daugavpils. Riga International

Airport is the leading airport of the three Baltic States. There are several major airlines

operating and recently also low cost airlines started operating from Riga Airport.

The State Joint Stock Company of Air Space Utilization and Air Traffic Organisation

“Latvijas Gaisa Satiksme” provides flight control services in the air space of Latvia.

During the last years the air traffic control system has seen drastic improvement.

Substantial investments in the airport were made and the number of destinations has

increased.

Over the last decade air passenger traffic has steadily increased. The airlines have

recently turned profitable after years of negative results.

5 This amount is still accounted for only by crude oil transported to the ports by rail.

20

Figure 2.5 Traffic development, Riga International Airport

0

2000

4000

6000

8000

10000

12000

14000

16000

18000

1994

1995

1996

1997

1998

1999

2000

2001

2002

2003

2004

2005

Passenger arrivals and departures - total, 1000

Cargoes loaded and unloaded (including mail) - total, tonne

Source: SCB, 2006 ; Riga International Airport

Passenger turnover at “Riga airport” is still growing rapidly. In 2005, there were almost

1.9 million passenger arrivals at and departures from the airport. One million of these

arrived and departed with foreign airlines; an increase of 2.3 times compared to 2004.

With 366 thousand passengers the largest passenger turnover volume was secured by the

German airports, followed by British airports with 310 thousand passengers.

Air cargo and/or the express package services have also grown rapidly over the past five

years, but remain of relatively low importance.

Ventspils and Liepaja airport are the second and third biggest airports that are certified

for international air traffic. At the moment both airports serve charter, business and

general aviation flights airport. Currently, both regional airports are meeting their

operational and exploitation targets. The potential for further develop these airports to

serve the steady growing tourist and trade flows between the East and the West Baltic Sea

coasts and eventually serve as a stepping stone for budget airline entrants in the Baltic

market still needs to be determined. One regional airport feasibility study for both airports

has already been commissioned by the Latvian ministry of transport in February 2006.

2.3.7 Trends and indicators

Modal split

The comparison of the modal split in passenger travel demand reveals the importance of

public transport. Road density is at about EU level and bus transport has a very dominant

position. Also tram and metro have a high share in passenger transport compared to the

EU average. Rail passenger numbers are decreasing, and the share of rail is below EU

average. Car ownership in Latvia has not reached EU averages yet, but motorisation

levels are rising fast. For the moment, the number of passenger kilometres by car is far

below the EU15 average.

21

Table 2.7 Modal split passenger transport (share % in passenger kilometres, 2003)

Situation 2003 Passenger cars Buses Railways Tram & metro

Latvia 73.2 18.7 5.6 2.5

EU25 74.4 8.1 5.8 1.2

EU15 84.1 8.4 6.3 1.2


The share of the road in freight is the lowest of the EU (only 22.4% of the ton-km). This

is due to the high transit volumes operated by rail. The share of railways in total freight

transport (ton-km) is the highest in the EU (55%). Rail freight has substantial increased

during the past decade. The growth rate reached some 7% annually on the average.

Nevertheless, the modal share of rail freight, although still high, is gradually decreasing.

Table 2.8 Modal split freight transport (share % in ton kilometres, 2004)

Situation 2004 Road Rail Inland Waterways Pipeline

Latvia 25.3 63.5 - 11.3

EU25 72.6 16.4 5.6 5.4

EU15 75.7 13.2 6.5 4.5


Figure 2.6 Development of the modal split in freight transport

Infrastructure charging

Roads: There are no pay-roads existing in Latvia, and it is not planned to introduce a

form of toll in the near future in Latvia.

Railways: As already mentioned in section 2.3.2, both the methodology for infrastructure

charging and the infrastructure charges are determined by the Public Utilities

Commission as independent regulator, since the infrastructure manager, LDz, is also

railway operator. The charge system is based on four principles:

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1. To satisfy the financial needs of the public railway infrastructure for 100%

2. To establish (gradually) the same conditions for competition in freight and

passenger transport

3. To achieve the optimal conditions for intermodal competition, taking into account

social costs, environmental issues, and the economic interests of the country

4. To achieve the maximal utilization of the public railway infrastructure capacity

The charge for the usage itself is

based on the principle of full cost

recovery. The Stock Company

LDz does not receive any State

budget financing to carry out its

tasks as infrastructure manager.

The level of charge that rail

infrastructure users have to pay

depends on the type of operator

(freight or passenger) and the

type of line (3 categories).

Furthermore, there are discounts

depending on the type of

individual train category and for

freight operators there are

discounts depending on train

kilometres travelled by all freight

forwarders during the year.

The charge highly depends on

the actual traffic volume,

creating incentives for efficient use of the infrastructure. On the other hand, charges will

be very sensitive to traffic volume variation and the actual charges are relatively high, as

full cost recovery is aimed for (and rail infrastructure management in Latvia is relatively

costly).

Fuel prices

Table 2.9 Excise duty and VAT on transport fuels in Latvia

Fuel for propellant

use

Minimum agreed Excise duty rate

(Directive 2003/96/EC)

National Excise duty

rate (as at 1.1.2005)

VAT %

Leaded Petrol 421 €/1000 l 420.97 €/1000 l 18

Unleaded Petrol 359 €/1000 l 287.64 €/1000 l *) 18

Source: European Commission, Excise duties and transport, environment and energy taxes

Together with Cyprus, Lithuania and Estonia, Latvia has the lowest fuel prices and fuel

excise duties in Europe. There is almost no distinction in the price of petrol and diesel. In

May 2005 fuel prices were at about 80 cents per litre (Source: www.oeamtc.at). There is

no tax exemption for biofuels in Latvia.

It is expected that Latvia will have to introduce some sort of fiscal incentives in the

future, or increase energy and fuel taxes or introduce infrastructure charging. According

to Council directive 2004/74/EC Latvia is allowed to apply a transitional period until 1

23

January 2011 to adjust its national level of taxation on gas oil and kerosene as propellant

to a new minimum level of 302 Euro per 1,000 litres and until 1 January 2013 to reach

330 Euro. Similarly Latvia is allowed to apply a transitional period until 1 January 2011

to adjust its national level of taxation on unleaded petrol used as propellant to a new

minimium level of 359 Euro per 1,000 litres.

Traffic safety

Decreasing the number of road and railway accidents is one of the priorities under the

NTDP. Reportedly measures for improvement of road safety are the pre-requisite for

approval for financing for all road infrastructure investment projects.

Figure 2.7 Road Traffic Accidents

Source: CSDD

Latvia has the highest traffic death toll rate per million inhabitants (205) and per million

cars (814) in the EU. In average each year approximately 500 people are killed in road

accidents and approximately 6000 people are injured. Compared with other European

countries, for example Sweden and Finland, the number of deaths in road accidents per 1

million inhabitants is three to five times higher.

One of the main reasons for the high rate of accidents is very low quality of roads. Road

infrastructure in Latvia is outworn and with the available financial resources of the last

ten years it was not possible to plan for and perform duly the rehabilitation of outworn

asphalt pavement and gravel road and bridge repairs. At the same time a rapid increase in

the number of road vehicles has been observed in Latvia (the number of cars per 1000

inhabitants increased from 106 in 1990 to 264 in 2002).

2.4 Conclusions: SWOT analysis transport system

For some means of transportation, the infrastructure in Latvia is well developed. Due to

substantial investments, international air traffic has a high standard and an increasing

passenger flow. Latvia also has a dense railway network and a large share of freight

24

transport is conducted by rail (approximately 60%). The railway stock however is

outworn and in bad condition. This significantly hinders rail passenger transport.

Due to large economic growth, car ownership in Latvia has significantly increased over

the last ten years. The large growth in both passenger cars and road freight transport can

damage the state roads, which are already in a bad condition. Latvia therefore must focus

on improving road quality and optimizing the road and railway network.

In conclusion the following SWOT analysis has been made for the transport sector in

Latvia.

Strengths Weaknesses • High standards and increasing passenger flow of the

international air traffic

• A strong railway system - approximately 60 % of the cargo is carried by the railways.

• Access to ice-free Baltic Sea ports throughout the

winter season.

• The majority of the roads are in a poor technical condition (lighting, traffic signs, etc).

• A high number of road fatalities which remains the highest in EU.

• The rolling stock of the railways is worn out and old.

The railway transportation is slow, which hinders the

passenger transportation.

• The ferry services are poorly developed in Latvia

Opportunities Threats

• To improve the safety on Latvian roads via improved

road quality.

• To optimise the network of railways and auto transport

roads and further coordinate with the territorial

planning.

• Develop the public transport system, particularly in

Riga with an appropriate pricing policy.

• To develop logistic services to ensure Latvia becomes

more significant transit route for cargo from Asia to Europe.

• The potential of regional airports (Baltic hub) should

be assessed and developed.

• The rapidly growing number of passenger km (210.6 in

1993 and 815.6 in 2004) and cargo tons (28.9 thou tons

in 1993 and 41.8 thou tons in 2003) can cause a further

damage to the roads.

• Increasing pressure upon the urban centres’ transport system.

• The workforce emigration.

• Political changes, particularly in regarding the transit

sector

25

3 Accessibility analysis

3.1 Introduction

This chapter presents a more quantitative transport needs assessment on a regional level.

It clearly complements Chapter 2 in which the current situation of the transport system is

described where potential deficiencies are addressed. The analysis on the current situation

together with the analysis of transport needs from a cohesion perspective form a basis for

identifying possible investment priorities.

In this chapter, first a description of the needs assessment methodology is presented.

Especially the determination of the composite Accessibility Problem Index (API), which

has a central role in the approach, is explained. A higher value of the index indicates a

higher need for intervention. This approach has been labelled as the “red flag” analysis.

This composite Accessibility Problem Index is a combined measure, which addresses

transport network quality, population density and regional disparity (a more elaborate

explanation is provided in Annex C). As such the accessibility analysis is much more

linked to cohesion policy than a more traditional accessibility analysis. Next, results of

the application for Latvia are illustrated and analysed. This analysis identifies main areas

for intervention in rail and road transport for the current situation (2006).

3.2 Methodology: Accessibility Problem Index

To determine the need for transport investments, the SASI model has been used to assess

the present situation of the road and rail systems in each country without the national

transport projects to be examined later. For this the accessibility provided by the road and

rail systems in each country was evaluated from both a national and a European

perspective. This was used to identify regions with serious accessibility deficits that

should be addressed by European transport policy taking account of the stated EU goals

competitiveness and territorial cohesion. In the SASI model accessibility, which is

directly influenced by transport policy and investments, is judged to play a crucial role in

promoting the realisation of the cohesion objectives.

To determine the appropriate assessment of transport investment need from the cohesion

policy perspective an agreement on the indicator of accessibility to be used is required.

Traditional accessibility indicators are not useful for this. They measure the total effect of

both geographical location (periphery v. core) and quality of transport provided by the

transport system. As a result they always show a steep gradation in accessibility from the

26

core to the periphery. However, public policy cannot change the fact that some regions

are central and some are peripheral, i.e. provide the same level of accessibility to all

regions. Public policy can only alleviate disadvantages through unequal transport

provision.

This distinction is relevant for European transport policy. To invest only in transport in

the most peripheral regions with the lowest accessibility according to such an indicator

would benefit only the relatively few people living there and would ignore the needs of

the densely populated central regions to combat traffic congestion and so endanger the

competitiveness goal of the Lisbon Strategy of the European Union. On the other hand, to

invest only in transport in the most densely populated central regions with the greatest

congestion problems would not only lead to ever more traffic but also widen the existing

gap in accessibility between the central and peripheral regions and would so run counter

to the territorial cohesion goal of the European Union.

To avoid this dilemma, a new composite accessibility indicator was defined which

distinguishes geographical location and quality of transport. This indicator assumes that

people in the peripheral regions can not expect to enjoy the same level of accessibility

(measured in traditional terms) as the central regions, but that they can demand to be able

to reach relevant destinations with the same travel speed ("as the crow flies") as the

people in the central regions. In addition, the indicator recognises the utilitarian principle

of the happiness of the greatest number, i.e. that the transport needs of densely populated

regions should be given more weight than those of regions with only few inhabitants.

And finally, the indicator recognises that economically lagging regions with severe

deficits in accessibility may offer greater potential for stimulating economic effects by

transport investments than regions which enjoy already high accessibility.

These three principles avoid the pitfalls of both an extreme egalitarian view, which

postulates that all regions in Europe enjoy the same level of accessibility and a purely

efficiency-oriented view which postulates that accessibility in the already highly

accessibly central metropolitan areas should be further strengthened because they bring

the largest economic benefits. In other words, the three principles aim at a rational trade-

off between the stated EU goals of competitiveness and territorial cohesion. Annex C

gives a more elaborate description of the composite Accessibility Problem Index.

3.3 Transport needs

The composite Accessibility Problem Index takes account of the transport system quality

(travel speed), population density and regional disparity. Figure 3.1 and 3.2 depict the

population density and the regional distribution of income between the different regions

in Latvia. In terms of population density, the capital region of Riga (population 732,000)

clearly stands out. The other urban centres Daugavpils, Liepaja, Jelgava and Ventspils are

parts of larger regions with low overall population density (Figure 3.1). The capital city

region is also the economic centre of the country producing almost two thirds of the GDP

of the country (Figure 3.2).

The new accessibility

indicator recognises

transport network

quality, population

density and regional

disparity

27

Figure 3.1 Population densities (population/sqkm) Latvia 2006

Figure 3.2 GDP/capita (Euro of 2005), Latvia 2006

The results of the analysis of regions with accessibility deficits that should be addressed

by European transport policy are presented in Figures 3.3 to 3.6. These figures show the

28

spatial distribution of the Accessibility Problem Index in Latvia first for road and then for

rail from a national and a European perspective for the current situation (2006). The

colour scale of the maps resembles that of a traffic light: green shades indicate average

interregional travel speeds above the national or European average, yellow values

indicate speeds slightly above the national or European average and red shades indicate

speeds significantly lower than the national or European average.

Overall accessibility

If accessibility in Latvia is compared with the European average (Figures 3.4 and 3.6), it

becomes apparent that road accessibility is moderately below and rail accessibility

severely below the European average as indicated by the orange and red shades on the

maps.

Regional imbalances

Figure 3.3 shows the spatial distribution of road accessibility in Latvia seen from a

national perspective. There are no great disparities in road accessibility between the

regions, only the coastal region of Liepaja and the eastern region of Daugavpils have

slightly higher average interregional road speeds. However, the road speeds in all regions

are below the European average (Figure 3.4).

The spatial pattern of accessibility problems for rail shows a similar pattern (Figure 3.5).

Again the western and eastern regions have above-average rail speeds, whereas the

central regions including the capital Riga have lower rail speeds. The average

interregional rail speeds of all regions are below the European average. However, the gap

between the quality of the rail system of Latvia and the European average is much larger

than that of the road network (Figure 3.6).

29

Figure 3.3 Accessibility Problem Index Road (national), Latvia 2006

Figure 3.4 Accessibility Problem Index Road (European), Latvia 2006

30

Figure 3.5 Accessibility Problem Index Rail (national), Latvia 2006

Figure 3.6 Accessibility Problem Index Rail (European), Latvia 2006

31

Part B: Past transport investment priorities

32

4 Previous support programmes

4.1 National public funding for transport infrastructure

Although, at this moment Latvia is still one of the poorer countries of the EU, the Latvian

economy is expanding rapidly. It can only be expected, that along with Latvia’s economic

development also traffic volumes and motorisation rates will grow.

The transport sector is regarded as a priority sector. Since 1995 Latvia is running a Public

Investment Programme. It comprises the total amount of infrastructure investments for

which annually state budget resources are allocated or are planned to be allocated, and

comprises approximately half of public investments in infrastructure.

As table 4.1 shows the budget dedicated to transport increased rapidly until 2000.

Between 2000 and 2003 the budget of Public Investment Programme decreased every

year. In 2003 1.7% of the GDP was invested through the Public Investment Programme

compared to 3.3% in 1999. Nevertheless the share of the transport related expenditures in

the total national expenditures is rather high compared to other new member states (e.g.

in 2003 Latvia spent 5.8% of its total national expenditures on transport; for Poland this

share was 1.7%, for Cyprus this share was 4.6 in 2003).

Table 4.1 National funding (budget allocation) for transport, 1995-2003 (mln €)

Total governmental expenditure

(including lending and

repayment)

Of which transport and

communications

Share of transport

related expenditures

Million LVL Million Euro* Million LVL Million

Euro*

% of the total

governmental

expenditures

1995 951 1367 7 10 0,7% 1996 1112 1598 49 70 4,4% 1997 1267 1821 73 105 5,7% 1998 1572 2259 92 132 5,8% 1999 1745 2508 106 152 6,1% 2000 1743 2505 86 124 4,9% 2001 1798 2584 83 119 4,6% 2002 2005 2881 89 128 4,4% 2003 2579 3706 149 214 5,8%

(*1 LVL=1.436988 Euro, ECB exchange reference rate as at 21 June 2005)

Source: Latvian Ministry of economic affairs

Apart from the Public Investment Programme investments are financed by the special

budgets (State Motorways Fund, Railway Infrastructure Fund, Ports Development Fund,

Environmental Protection Fund, etc.), as well as from local government budgets, loans

33

taken by local governments and loan guaranties given by local governments to enterprises

owned by local governments.

In the road sector, the State budget is mainly spent on road maintenance, whilst EU

Structural funds and Cohesion Funds are used for development of infrastructures.

The main source of financing of the state budget for road infrastructure is money

generated from the excise duty. Currently approximately 35 – 40% of all income from the

excise duty has been allocated for improvement of road infrastructure. According to the

new regulations starting from 2007 the roads will receive 100% financing from cars duty

and 65% from excise duty. The share from the excise duty will be increased till 80% in

2010. Approximately 30% of all road financing is being transferred for regional roads.

For railways maintenance costs are mostly covered by payments by private railway

operators. However the level of financing from private operators is insufficient to cover

all maintenance and State budget and EU funds have to provide additional funding.

The costs for developing the major ports and airport are mainly covered by private

investment. State budget is providing only a limited amount of funds for reconstruction of

infrastructure of small ports (reconstruction of bulwarks, deepening of harbour) as well as

access roads to the big ports.

4.2 EU funding

Under the Phare programme relatively few investments were made in the transport

infrastructure with contributions from the European Commission. Investments were

mainly targeted at administrative capacity building and strategic planning, with few

interventions in building of infrastructure.

From the pre-accession fund ISPA on average 24 million EUR (plus national co-

financing 25%) per year has been made available for investments during the period 2000

to 2006. Moreover since Latvia’s accession to the EU in May 2004 Latvia can apply for

financing from the Cohesion Fund up to the amount of approximately 60 million EUR per

year, and 30 million EUR per year from the European Regional Development Fund.

As a result, total EU funds for the transport sector have increased from 108 million EUR

in 2001 to 315 million EUR in 2004.

The number of projects in the transport sector has increased from 5 in 2001 to 21 in 2006.

The focus of the projects financed under ISPA lies mainly on rail projects. Major works

funded by ISPA in 2004-2006 included: the replacement of 780 railway track turnouts;

the construction of the new railway reception yard in Rezekne II station; and the

modernisation of signalling and hot-box detection systems on the East - West railway

corridor. Also 62.2 km of state main roads have been reconstructed, as well as the

Saulkrasti bypass.

Projects in Latvia funded by the Cohesion fund from 2004 to 2006 (plus national co-

financing 15 - 50%) include:

• Reconstruction of 190 km of state main roads;

• Reconstruction of 220 km of railway tracks in the East-West railway corridor;

34

• Development of access roads to Ventspils and Liepaja ports;

• Extension of runway and reconstruction of the lighting system at the Riga

International Airport.

Projects in Latvia funded by the ERDF from 2004 to 2006 (plus national co-financing 15

- 50%) include:

• Reconstruction and development of 250 km of state 1st class roads and transit

streets of cities;

• Reconstruction of 11 bridges in the network of state 1st class roads;

• Reconstruction of breakwaters in Mersrags, Skulte and SalacgrTva ports;

• Launching of modernisation of passenger electric trains.

However, implementation of the projects was rather slow, ex-ante approval by the EC

Delegation in Latvia was required at all stages, which reportedly delayed implementation

of ISPA and CF funded projects. The situation notably improved after introduction of the

national procurement procedure.

4.3 Other sources of financing

This section gives an overview of other sources of financing for transport infrastructure.

EBRD

Only a limited number of projects related to developing transport infrastructure in Latvia

have been financed with funds from the EBRD. Since 1993, five projects received

support from the EBRD, all in the form of a Direct Investment. Two projects were related

to the airport: the Upgrade of existing runway, taxiways and lighting system at Riga

International Airport; and an investment in a Facility of RAF Avia for the Construction of

a new aeroplane maintenance facility, located at Riga International Airport.

Two other EBRD investments were supporting the Construction and operation of a

terminal servicing general cargo traffic from the Baltic Sea at Ventspils port. Finally, the

EBRD invested in a project for Road rehabilitation and Upgrade of Latvia’s main road

network

EIB

The European Investment Bank has been financing projects fostering the integration of

the Baltic States into the European Union since the early 1990s. Last year (2005), the EIB

signed a contract for co-financing of priority projects fostering the development of the

Latvian economic and social infrastructure that are co-financed by the EU Structural

Funds as well as projects in the fields of the environment and Trans-European networks

co-financed by the EU Cohesion Fund.

From 1998 to 2002 the EIB provided individual loans totalling 85 mln EUR for transport

projects in Latvia like:

• The upgrading of the East-west railway line (1998)

• Upgrading the Ventspils port infrastructure (1999)

• Modernisation and enlargement of the passenger terminal at Riga international

Airport (2000)

35

• The rehabilitation and upgrading of road sections forming part of the “Via

Baltica”.

PPP financing

Financing through Public Private Partnership is not widespread in Latvia. There are only

14 relatively small concession agreements registered in the Register of Concessions.

Although legal preconditions for PPP have been established also in Latvia6, currently

conditions PPP projects are considered problematic. Interest rates proposed by the

commercial banks are considerably higher than that by the State Treasury and

commercial banks rather require real estate as a pledge than a propect on a future finance

flow.

Nevertheless there is a high expectancy and strong interest in the PPP approach. As the

cost and works to improve the road infrastructure are extremely high (approx. 2-3 billion

LVL), the Ministry of Transport, envisages to implement reconstruction projects for all

category A- roads using PPP models.

The Ministry of Economy has selected the project on Improvement of Road safety in

Cesu city as a pilot PPP project in transport sector, and commenced preparation of

methodological guidelines.

6 The implementation of PPP projects is regulated by the Law on Concessions adopted in 2000. The procedure of concession

agreement registration in the Register of Enterprises of the Republic of Latvia and control over these agreements are

established in Regulations adopted in 2004.

36

Part C: Future transport investment priorities

37

5 National Transport Strategy

5.1 Introduction

This is the first section of Part C which aims to determine transport investment priorities

at a strategic level. This chapter deals with the current national transport policy and

resulting investment priorities. In the next chapter these investment priorities are

confronted with an analysis of possible sources of financing, and other factors such as

their contribution to EU policy objectives, the administrative capacity of the country, the

socio-economic impacts in relation to the costs of the projects, and the extent in which the

projects contribute to the needs identified in Part A of this report. Finally, the overall

impact of the proposed investment priorities is assessed.

5.2 Long term National Transport Strategy and Planning

Road infrastructure development

The main objectives of the Latvian policy for the road sector are to foster economic

progress of the state, increase the standard-of-living of the population, and reach

compliance of Latvian international roads to requirements of the European road network,

through an effective maintenance and development of the Latvian road network. The road

infrastructure in Latvia is outworn. The lack of sufficient financial resources during the

last ten years prohibited the planning and performance of rehabilitation works on outworn

asphalt pavement and gravel roads and bridge repairs. The task of the current period is to

preserve and maintain the road network at operative level, to stop its further decay, and to

develop the road network in accordance with the most urgent economic and social

interests. Thus the main lines of action are:

• Improvement of road maintenance by improvement of the funding system;

• Quality improvement and development of international road transport corridors;

• Improvement of traffic safety;

• Raising the load carrying capacity of road surfaces and bridges;

• Optimisation of road network division and improvement of management.

Key priority lies with further developing the Via Baltica and East-West road-corridors

and improvement of their quality standards, including improvement of the traffic situation

in the city of Riga (construction of a new Daugava river crossing). Secondly, the rural

roads have to be better maintained and developed.

38

Railway infrastructure development

The objective of the Latvian railway development policy is a comprehensive

modernisation and development of the Latvian railway-sector, in order to achieve

successful integration into the European railway transport system as well as successful

operation within market economy conditions.

The key priorities for railway infrastructure development are:

• Reconstruction and increasing of traffic safety level of the rail corridor East-West

(Ventspils-Tukums-Jelgava-Krustpils-state border with branch lines Riga-

Krustpils and Krustpils-Daugavpils-state border);

• Finishing of reconstruction of access tracks to Milgravis channel railway bridge;

• Development of Ventspils and Rezekne railway junctions;

• Development of information systems and data transmission network;

• Modernisation of rail track and shunt repairing and rail welding equipment;

• Optimising and development of port railway infrastructure in response of

increasing demand

• Development of transit corridors in North-South direction, thus facilitating

movement of passengers and increasing cargo flows in the single European territory.

• Creation of border-crossing control infrastructure at railway stations in

accordance with the respective EU requirements.

Taking into account the trends of the prospective European development, it is planned to

equip the main transit corridors with electrical traction in the future. Therefore Latvia is

engaged in studies on possible future electrification of the main lines. Latvia has also

planned the implementation of GSM-R as a part of ERTMS.

Port infrastructure development

The objective of the port-sector’s development is to increase cargo and passenger flow

through Latvian ports. Attractive and up-to-date cargo handling conditions need to be

created, as well as high-quality services for passengers.

The development of the Latvian ports and their integration into the European transport

system is hampered mainly by the low quality of the infrastructure associated with port

operations (i.e. roads, railway access roads and other infrastructure).

Key priorities for the Latvian port sector are:

• Further developing the port infrastructure at the three major ports; Ventspils,

Riga, and Liepaja;

• Implementation process of “Motorways of the sea”;

• Regulating shipping safety and conforming legislation, its implementation

practices and process control to international requirements and standards;

• Creating border-crossing control infrastructure in ports in accordance with the

respective EU requirements.

39

Airport infrastructure development

The main task of air traffic policy is the development of Riga airport into a significant air

traffic centre integrated in EU transport system. Policy actions aim at creating a

homogeneous environment for the users of air transport, and at harmonizing the operation

of Latvian air traffic control service with the air traffic control system of other European

countries.

Infrastructure projects at Riga airport are to increase the Riga airport passenger terminal

throughput capacity up to 1.4 million passengers per year and to ensure passenger service

quality in accordance with international standards enabling to provide competitive

services. Development projects are related to the upgrading of the airport category and to

the extension of the runway.

Most relevant planning documents

The main national policy document in the transport sector is the National Programme

for Transport Development 1996-2010. The National Transport Development

Programme is a medium term strategic planning document. The implementation of this

planned strategy is deemed of vital importance for a balanced development of the society

and national economy of Latvia. The goal of the transport development policy in Latvia

continues to be the setting-up of an efficient, safe, environmentally friendly, multimodal,

balanced and competitive transport system.

The document was prepared by the Ministry of Transport and adopted by the Cabinet of

Ministers in November 1995. The National Transport Development Programme is a

medium term strategic planning document in the transport sector. The implementation of

this planned strategy is of vital importance and indispensable for the purpose of balanced

development of the society and national economy of Latvia.

The Sub-Program N3 of the National Transport Development Program aims to

establish a united passenger transport system to provide qualitative and accessible public

transport services; and to increase safety, sustainability, and effectiveness in freight

transport operations.

The key mid-term planning document is the Strategy of the Ministry of Transport 2006

– 2013. In principle this document reiterates the objectives outlined in the current NTDP.

Additionally, it includes the priority: to develop public transport system. The Strategy is

revised each three years and presented for the adoption to the Government. The goals

listed in Strategy are further reflected in the relevant strategies for the Cohesion Fund,

and integrated in the draft National Strategic Reference Framework Document (NSRF).

Other important policy and planning documents include:

• Guidelines for the Development of Public Transport for the Years 2005 to 2014,

accepted on 28th of September 2004;

• Programme for Regional Support of the State 2nd Class Roads, accepted on 30th

of November 2004;

• Concept on Shipping Policy, accepted on 21st of July 1998;

• Concept on the Control of the Road Traffic, accepted in 2002;

40

• State Programme for the Development of Latvian Ports for the Years 1995 to

2010;

• State Programme for the Development of Safety of Maritime Services;

• National Programme for the Road Traffic Safety

Environment in the planning process

The EIA procedure is a requirement for implementation of every infrastructure

investment project and no financial decisions can be taken before the EIA procedure is

finished for every project. The Law “On Environmental Impact Assessment”, in full

compliance with the relevant EC legislation and along with several amendments, was

passed on 14th October 19987.

Since June 2004 the Law on Environment Impact Assessment requires that a SEA is

elaborated for all major investment projects. Both the National Development Plan and

territorial and spatial plans require a SEA. Since June 2004 there have been about 400

applications submitted for SEAs and in 188 cases the SEA procedure has been started. In

31 cases the SEA procedure has been finished.

5.3 Operational programme 2007-2013

The National Strategic Reference Framework Document (NSRF) and related Operational

Programmes are being prepared under responsibility of the Ministry of Finance. The draft

NSRF foresees three Operational Programmes. The OP for the transport sector will be

integrated under Operational Programme “Infrastructure and services” and will not be a

separate document. The Ministry of Transport has elaborated draft proposals for this OP.

Main objectives of the OP

Strategic objectives in the field of transport and transport infrastructure are determined

based on the “National Programme for Transport Development 1996-2010” and the

“Strategy of the Ministry of Transport”.

The Operational Programme “Infrastructure and Services” has two main objectives which

are translated into two measures: “Improvement and development of large scale transport

infrastructure”, and “Development of accessibility and transport systems”.

Measure “Improvement and development of large scale transport infrastructure” will be

financed from Cohesion fund and will include the following activities:

• Improvement of TEN road network;

• Development of East-West railway corridor infrastructure;

• Development of large ports infrastructure; • Development of airport infrastructure;

• Improvement of urban infrastructure connections with TEN-T.

7 Amendments on 30th May 2001 corresponding to ESPOO Convention; Amendments on 19th June 2003 incorporating the

legal provisions of the Directives 92/43/EEC, 2001/42/EC; Amendments on 26th February 2004 incorporating the legal

provisions of the Directives 2003/35/EC and 92/43/EC; The Cabinet of Ministers Regulations No 87 on 17th February 2004:

“Procedures for Environmental Impact Assessment”; The Cabinet of Ministers Regulations No 91 on 17th February 2004:

“Procedure for Regional Environmental Board issues technical Regulations for providing action which does not need

Environmental Impact Assessment”

41

Measure “Development of accessibility and transport systems” will be financed from

European Regional Development fund and will include the following activities:

• Improvement of 1st class state road routes;

• Improvement of urban streets following 1st class state road transit routes;

• Improvement of transport safety in populated areas;

• Optimisation of Riga public transport system by improvement of electric public

transport;

• Improvement of small ports infrastructure;

• Modernization of Riga suburban train passenger traffic infrastructure;

• Improvement of regional urban electric transport for passenger traffic.

Priorities in OP by sector

The current approach favors an equal spread of available funds over the sectors (roads,

railways, ports, airports and public transport) and among the regions. The majority of

measures are continuing Phare, ISPA, Cohesion Fund and Single Programming

Document (2004 -2006) policies, for instance development of TEN-T road, rail and port

elements and ensuring sustainability and safety of transportation.

Priorities for EU funding

The resources obtained from EU funds are to be invested in projects which promote the

growth of the whole country, by integrating Latvia’s transport infra-structure in the united

EU transport system. In the field of transport, with the resources of the Cohesion Fund

and ERDF, development of infra-structure included in the Trans-European transport

network (TEN-T) is supported: major State motorways, East – West railway corridor, the

Rail Baltica route, and the three largest ports and airports.

On the basis of the operational objectives the government of Latvia established a list of

projects for the period 2007-2013. The lastest list of projects to be funded with European

Commission funds includes:

Transport projects Type EU funds

involved Status

Modernization of Via Baltica - section Riga-Kekava and Kekava bypass road CF approved

Construction of E22 - section Riga-Koknese road CF approved

Modernisation of TEN-T road network, 2nd project road CF approved

Modernisation of E22 - section Rezekne-Terehova road CF approved

Via Baltica - construction of Baltezers bypass road CF potential

Daugava river North crossing in Riga road CF potential

Construction of E22 entrance to Riga road CF potential

Construction of city bypasses road CF potential

Construction of second track on section Riga-Krustpils railway CF approved

Reconstruction of Riga railway junction railway CF approved

Introduction of unified railway communication system GSM-R railway CF potential

Rail Baltica railway CF potential

Reconstruction of Liepaja airport runway airport CF potential

Development of Ventspils airport infrastructure and access roads airport CF potential Source: Finanšu ministrija, Reference Framework for Assistance from the Cohesion Fund, Republic of Latvia, August 2005

42

It must be noted that several large scale investment projects, i.e. Development of Second

Runway in Riga Airport, Daugava River Crossing in Riga, Transferring the Railways

Power Supply from Fossil Fuel to Electric Power, The City Bypass Programme on 1st

Class Roads are not as mature as others and that the investments needed for these projects

are considered very high. This might give these projects a lower priority than the others

on the list.

43

6 Prioritisation of Transport Investments

(2007-2013)

6.1 Introduction

This chapter intends to identify the main areas for transport investments that would merit

EU funding in the period 2007-2013. It should be emphasized that this is based on an

analysis that has been carried out at strategic level. Although the areas identified are

expected to result in high potential projects they should still be subjected to the regular

cost-benefit analysis at a project level before being finally selected.

Community Strategic Guidelines

The context for identifying strategic investment priorities is set by the Community

Strategic guidelines. In accordance with the draft Council Regulation (article 23), the

Council establishes Community Strategic Guidelines for cohesion policy to “give effect

to the priorities of the Community with a view to promote balanced, harmonious and

sustainable development”8.

These Strategic Guidelines form the basis for identifying investment priorities, which are

then elaborated in National Strategic Reference Frameworks at the Member State level,

which are subsequently further detailed in Operational Programmes (OPs) for thematic

areas. A Commission proposal on these Strategic Guidelines was published in July 20059.

In parallel, Member States have already started preparations for their National Strategic

Reference Frameworks and OPs.

Additional factors influencing investment priorities

As indicated the Strategic Guidelines form the context in which investment priorities for

Community financing should be identified. In addition to these strategic guidelines a

number of other factors shape the eventual establishment of transport investment

priorities. These other factors include:

• Cost-effectiveness of projects;

• Availability of other sources of funding;

• Appropriateness of transport policy

• Administrative capacity to adequately absorb and manage funds.

8 COM (2004)492 9 COM (2005) 299 Cohesion Policies in Support of Growth and Jobs: Community Strategic Guidelines, 2007-2013.

44

In the next section the Strategic Guidelines and the other factors are elaborated in more

detail, leading to a proposed prioritisation of areas for funding from Cohesion and

Structural Funds.

6.2 Community Strategic Guidelines

The (draft) Community Strategic Guidelines set the scene for any future transport

investment financed as part of the Commission’s cohesion policy. According to the

communication of the Commission (COM(2005)299) the guidelines with respect to the

expansion and improvement of transport infrastructures for the period 2007-2013

determine clear guidelines for action (see text box 6.1)

Box 6.1 Community Strategic Guidelines: Guidelines for action

The Community Strategic Guidelines distinguish the following guidelines for action:

• Member States should give priority to the 30 projects of European interest, located in Member States and regions eligible under the Convergence objective10. Other TEN projects should be supported where this is a strong case in terms of their contribution to growth and competitiveness. Within this group of projects, cross-border links and those overseen by the specially designated European co-ordinators in the Member States merit special attention. Member States should make use of the co-ordinators as a means of shortening the time that elapses between designation of the planning of the network and the physical construction

• Complementary investment in secondary connections will also be important in the context of an integrated regional transport and communications strategy covering urban and rural areas, in order to ensure that the regions benefit from the opportunities created by the major networks.

• Support for rail infrastructure should seek to ensure greater access. Track fees should facilitate access for independent operators. They should also enhance the creation of an EU-wide interoperable network. Compliance and applications of the interoperability and the fitting of ERTMS on board and on track should be part of all projects financed.

• Promoting environmentally sustainable transport networks. This includes public transport facilities (including park-and-ride infrastructures), mobility plans, ring roads, increasing safety at road junctions, soft traffic (cycle lanes, pedestrian tracks). It also includes actions providing for accessibility to common public transport services for certain target groups (the elderly, disabled persons) and providing distribution networks for alternative vehicle fuels.

• In order to guarantee the optimum efficiency of transport infrastructures for promoting regional development, attention should be paid to improving the connectivity of landlocked territories to the Trans-European network (TEN-T) (…). In this respect, the development of secondary links, with a focus on inter-modality and sustainable transport, should be promoted. In particular, harbours and airports should be connected to their hinterland.

• More attention should be paid to developing the “motorways of the sea” and to short-sea shipping as a viable alternative to long-distance road and rail transport.

In addition the Guidelines give specific instructions with respect to the territorial

dimension of Cohesion policy in stressing that Member States should pay particular

attention to prevent uneven regional development and improve territorial integration and

cooperation between and within regions.

10 Decision n°. 884/2004/EC of the European Parliament and of the Council, 29 April 2004.

45

6.3 Additional factors for the prioritisation of transport investments

As indicated in the introduction a number of other factors determine the eventual

prioritisation of transport investment priorities under the Commission’s cohesion policy

instruments. These will be subsequently elaborated.

Cost-effectiveness

Cost-effectiveness or value for money stands at the core of any sound investment

programme. It is also fully embedded in the procedures and structure of the cohesion

policy of the Commission in which cost-benefit assessments of proposed projects are

standard procedure. Also the EIB applies CBA as standard assessment methodology

before granting new loans.

The cost-effectiveness criterion is especially important if budget resources are limited. In

this case cost-benefit analyses can be used to phase foreseen transport investment in time

or to seek alternatives with a similar functionality that offer a higher value for money.

Availability of other sources of financing

As can be learned from the previous investment programmes other sources of finance

should not be overlooked with respect to future transport investments. Apart from public

financing by the country itself important potential sources are:

The Commission recently reached an agreement with the EP on future TEN-T financing.

Total budget available is 7 billion € for the coming programming period. Financing can

be up to 20%. It should be noted however that this financing is only a fraction of total

cohesion financing (e.g. Cohesion Fund financing for transport approximates 45 billion

€), while TEN-T funds are valid for all EU members. It is expected that TEN-T funds will

be focused on cross-border TEN-T projects.

EIB financing is another potential source of financing available for transport investment.

In 2005, EIB signed a EUR 150 million loan with Latvia that will be used for investments

in priority areas identified in the Single Programming Document and the Cohesion Fund

Reference Framework for 2004-2006, such as the development of transport

infrastructures. For example, the loan will finance projects like the upgrading of the

Latvian priority road networks and modernisation of the East-West railway Corridor

including access roads to Latvian ports.

The EBRD supports the upgrade of transport infrastructure and municipal infrastructure,

particularly in regional cities and towns. Financing is provided where possible without a

state guarantee or on a private basis. The EBRD encourages private sector participation,

particularly relating to large, complex or sensitive projects. Between 1998 and 2000 the

EBRD financed 3 projects, including a direct investment for the Construction and

operation of terminal servicing general cargo traffic from the Baltic Sea in Ventspils port.

PPPs are explicitly mentioned in the Community Strategic Guidelines as a possible and

appropriate method of financing investment when there is significant scope for involving

the private sector. Apart from the financial leverage positive impacts are expected on

TEN-T budget

EIB

EBRD

PPPs

46

implementation and management of projects.

Experience with private involvement in transport infrastructure in the form of PPPs has

been limited until now. However, based on the experience in other countries appropriate

sectors for a more intense private sector involvement are: ports, airports and logistics

centres. Also motorways sometimes figure as typical PPP models.

As already discussed in section 4.3, currently only a very limited number of PPP projects

projects have been executed, although legal preconditions for PPP have been established

also in Latvia. The current situation on the financial markets can be judged as problematic

and hinder the wider use of the PPP approach. Nevertheless, the current needs in the

sector would justify a wider application of the PPP.

Both EBRD and EIB can also get involved if PPP constructions are considered through

direct equity participations.

In summary, other financing sources are expected to relevant for the following areas:

Table 6.1 Potential financing sources and expected destination of funding

Source Destination

TEN-T TEN projects, especially cross border sections

EIB Motorways and railways, port access

EBRD Possibly state roads (road rehabilitation) ports and

airports

PPP & private capital Income generating transport investments: ports,

airports, logistic centres

Appropriateness of the transport policy

Almost all objectives of the ‘White Paper’ of the European Commission can also be

found in the documents outlining the principals of the Latvian transport policy. Only

three transport related aims of the European Commission (i.e. ‘Efficient Infrastructure

pricing taking account of internal and external cost’; ‘Intermodality for people makes

travel conditions easier for passengers and facilitates modal transfers’; and ‘Rights and

obligations for users: Passengers are able to invoke their rights, both vis-à-vis the

transport company and vis-à-vis the public service.’) are not explicitly mentioned in the

Latvian transport policy documents.

Apart from the investment policy other aspect of the Latvia’s transport policy are relevant

to contribute to EU and national policy objectives. Two specific elements are identified

on the basis of the analysis of the current transport system:

• Transport safety

• Transport pricing and charging

Transport safety is clearly an area for attention as accident levels are still clearly above

the EU average. The accident rate is the highest in the EU and it remains to be seen,

whether the ambitious target of halving the accident rate can be met in Latvia. To bring

down the accident rate it is important to improve the quality of the state road network.

47

Another point of attention is the development of a specific transport safety policy and an

adequate level of enforcement.

Research on causes of the high accident rate is needed, and based on this, effective

measures need to be developed to decrease the number of accidents. The current situation

is clearly unsatisfactory.

With respect to transport pricing current transport price structures do not clearly reflect

the costs of transport to the community and therefore fair competition between modes is

not ensured (although is has to be taken into account, that the share of rail in freight is the

highest in the EU). Fuel taxes are at the lower limit set by the EU, which is however in

line with the low level of GDP in Latvia. The Ministry of Transport has elaborated new

Regulations of Cabinet of Ministers that envisage constant increase of the share from the

excise duty. Nevertheless further attention should be paid to the generation of income

from user of the transport system. This is specifically important with respect to the

financing of the maintenance and operation of the state road network and possibly also

the rail network which are both in a bad state.

Depending on EU-policies, Latvia might have to introduce some sort of infrastructure

charging in the future.

Administrative capacity

Since 2004 the management of the projects financed by the Cohesion Fund and the

Structural funds has been performed by the Ministry of Finance, the State Treasury and

the Ministry of Transport. The technical and administrative capacity varies among the

involved institutions. Project planning and design are very important elements where the

capacity still remains a problem. The number of projects in transport sector has increased

from 5 in 2001 to 21 in 2006. The funds have been increased from 108 MEUR in 2001 to

315 MEUR in 2004. Respectively, the number of employees working with the projects in

Ministry of Transport has doubled comparing in 2001 (14) and in 2006 (28). New

employees need extensive training and their potential can be used fully only after a year

of employment. The resulting lack of experience leads to delays in project

implementation. Due to the poor quality of tender documentation more time needs to be

spent on tendering, the tenders are delayed and sometimes need to be re-launched. From

the Cohesion Fund’s 2004 programme none of the tenders has been successfully

accomplished during 2005. Recently, the situation on tendering has somewhat approved;

for the projects approved in December 2005, several tenders have been launched of which

some have been awarded already and contracts were signed early 2006.

Reportedly all institutions involved in the management of the SF and CF lack experienced

and qualified employees. In addition, there is a lack of capacity among final beneficiaries

and implementing bodies regarding the application of procedures.

A major problem is the high turnover of employees – the average length of working time

in one institution is 1-2 years. Main reasons for the high turnover are: the low

remuneration in the public sector and the lack of a transparent and appropriate payment

system. New employees with the necessary qualifications are hard to find on the labour

market. This results in a high number of young, inexperienced staff, who remain in the

institution for a relatively short period.

48

In order to improve the situation there are capacity building measures undertaken

targeting the institutions in charge of the SF and CF. These measures are partially

covered by the Technical Assistance means under the Structural Funds (Priority 5) and

the Cohesion Fund. In accordance with the Human Resources Development plan 2004.

– 2008 for the institutions involved in management of the SF there are: a) specific

payment provisions for employees working with the EU financed projects, b) training and

coaching of the employees working with the SF and CF.

49

7 Assessment of Impacts

7.1 Introduction

This chapter assesses different scenarios with respect to their impacts on three different

(EU) policy objectives:

• Economic competitiveness

• Territorial cohesion

• Environmental sustainability

In addition the impacts are assessed on the Accessibility Problem Index (see Chapter 3).

First the methodological approach is described, including the SASI model that has been

used to assess the impacts. Next the scenarios are described, followed by a presentation of

the impacts.

7.2 Methodology

The SASI model

The impacts are assessed with the support of the SASI model. The SASI model is a

recursive-dynamic simulation model of socio-economic development of 1330 regions in

Europe. The model was developed to assess socio-economic and spatial impacts of

transport infrastructure investment and transport system improvements. It has been

applied and validated in several large EU projects including the IASON and ESPON

projects.

The SASI model differs from other forecasting models of regional development by

modelling not only production (the demand side of labour markets) but also population

(the supply side of labour markets). Regional production by industry is forecasted by

regional production functions containing production factors capital, labour, regional

endowment and accessibility. Regional population is forecasted by a demographic model

including fertility, mortality and migration.

The SASI model is specifically relevant for projects that serve a function on a European

level (e.g. the TEN projects). Such projects can not be adequately evaluated using

traditional cost-benefit analysis on a national scale, since they are less able to capture the

international effect and the indirect effects occurring in non-transport sectors11.

11 See e.g. Rothengatter, The relevance of Transeuropean Transport Networks for Integration and Growth in the Extended

European Union.

50

Figure 7.1 Main structure of the SASI model

SASI Model

The reference network

To assess the impacts of new transport investments a reference scenario has been

prepared. This mainly implies an adjustment of the transport network in the SASI

model12

. The dynamic network database of SASI is based on highly detailed pan-

European transport networks with respect to:

• Roads (including short-sea shipping)

• Rail (including ferries)

• Air (including regional airports).

Network calculations are based on travel times or generalised costs including border

waiting times and (political, economic cultural and language) barriers.

The reference network has been updated based on the most recent information from the

countries on implementation schedules and alignment with respect to TEN and national

transport projects (also information on toll is included). The reference network includes

all projects that are already under construction and will be operational in at latest 2007.

In addition the reference scenario assumes the further development of the European

integration with the accession of Bulgaria and Romania to the European Union in 2007.

12 Which relies on the trans-European transport network database developed by IRPUD (2003) and now maintained and

further developed by RRG (2005)

51

Increased European integration results in reductions in waiting times and lower barriers

between countries.

7.3 Scenarios

Impacts have been assessed for different scenarios to be able to compare the outcomes

and draw conclusions on the different impacts. Although the study aims to identify

strategic areas for investment priorities these areas need to be “translated” into projects to

enable the SASI model to assess impacts. As a result assumptions have been made on

projects within the scenarios. These projects have not been listed separately as this would

distract the discussion from strategic priorities to projects. Where possible, these projects

are based on existing planned projects and related cost estimates13. Where no existing

data existed, estimates are based on existing unit parameters in EU wide infrastructure

needs assessments14

. In all scenarios, after 2016 no further transport projects are

implemented. However, it is assumed that European integration proceeds as in the

Reference Scenario.

In addition to the Reference scenario, two major scenarios have been distinguished:

• The Maximum Scenario, which comprises a listing of possible projects15

which

have been identified in the respective countries;

• The Balanced Scenario, which applies a budget restriction (with in parallel an

assessment of additional financing opportunities). Projects are prioritised on the

basis of their benefit-cost ratio and their contribution to specific objectives and

needs (sustainability, regional disparity, and contribution to accessibility16).

On the basis of the maximum scenario, two sub-sets are determined: the Maximum Road

Scenario and the Maximum Rail Scenario which illustrates the differential impact of rail

versus road projects.

The Maximum Scenario

The Maximum Scenario is based on an extensive listing of possible investment projects

that have been identified by the national project partners in the project. Where relevant

these projects lists have been extended with projects that have been identified on the basis

of existing network analyses and studies17

, projects identified on the basis of interviews

that have been carried out in the countries, or projects that can be additionally identified

on the basis of the needs assessment in Part A of this report (including the “red flag”

analysis).

This results in a scenario of all TEN priority projects and additional national projects that

are planned to be constructed (or start with construction) in the period 2007-2013 and

13 This can be national studies or information, information on TEN priority projects 2005 (EU 2005), or recent studies on the

Pan-European corridors (VTT 2006). 14 E.g. TINA, TEN-Invest, TEN-STAC 15 The impact assessment in SASI has only been done on a selected set of road and rail projects. This is done because these

sub-sectors in general will receive the majority of funding and an assessment of their impacts can be done without having

to go into too much project detail. It is assessed that this approach gives sufficient feedback on the potential impacts. 16 Are projects solving “missing links” in the network. 17 For example the recent study carried out by VTT on the Pan-European corridors (VTT 2006).

52

which are operational by 2016. An important notion with respect to the maximum

scenario is that no budget restriction is applied.

53

Within the Maximum Scenario two specific sub-sector scenarios are distinguished:

• The Maximum Road Scenario assumes the implementation of all proposed road

projects including cross-border transport corridors.

• The Maximum Rail Scenario assumes the implementation of all proposed rail

projects including cross-border transport corridors.

The Balanced Scenario

The Balanced Scenario starts from the Maximum Scenario. First, an assessment is made

of the available EU funding in comparison to the total budget requirements of the

projects. If a budget restriction applies projects are selected and prioritised18 on the basis

of a number of criteria:

• Cost -benefit ratio. Are projects in this field expected to deliver value for money

(socio-economic rate of return19

)?

• Accessibility. Are they contributing to a clear improvement in accessibility both

on a European and national scale (missing links in networks, main transport

corridors, and secondary connections to backbone network)?

• Sustainability. Do interventions facilitate modal shift to more environmentally

friendly transport modes?

• Territorial cohesion. Is there a contribution to improving the accessibility of

more backward regions?

• Safety. Do measures contribute to improved transport safety?

The assessment in this respect draws strongly on the finding in Part A of the report

(SWOT-analysis of the transport system and “red flag” analysis).

Finally, an assessment is made of the extent in which other financing sources could play a

role. In this respect especially the potential of EIB involvement and PPP is included (see

also Chapter 6):

• Other sources of finance. Are projects able or likely to attract other sources of

finance? In those cases application for EU financing might not be necessary.

In addition, the possible impacts of limitations in the administrative capacity and changes

in the pricing policy (if large distortions exist in this respect) are taken into account.

Table 7.1 gives an overview of the criteria that have been applied for the sub-sectors road

and rail.

18 In the calculations in certain countries this leads to the elaboration of an interim scenario, which is called the Restricted

scenario (strict application of the budget restriction, i.e. no other sources of finance). 19 Based on TEN-STAC

54

Table 7.1 Assessment of selected areas for road and rail investment

Sub sector

Co

st-

effe

ctiv

en

ess

Accessib

ility

Su

sta

ina

bility

Territo

rial

Co

hesio

n

Safe

ty

Oth

er s

ou

rces

of fin

an

ce

Roads:

- East-West corridor and Via Baltica

- reconstruction and upgrading (TEN-T) roads

+

+

+

+

-

-

0

0

+

+

+

+

Railway:

- Rail Baltica corridor (Kaunas-Riga)

- Upgrading/modernisation East-West corridor

+

+

+

+

+

+

0

0

+

+

+

+

Legend: + positive effect on criterion; 0 neutral effect on criterion; - negative effect on criterion

Roads

Projects promoting the integration of the Latvian transport network into the European

transport system stand out as the most significant ones in the sphere of road traffic. In

particular improvements in the Western-Eastern corridor route, the Via Baltica and TEN

road network are deemed of high importance. The aim is to eliminate the current

bottlenecks by gradually reconstructing and widening its sections, building bypasses,

increasing the number of traffic lanes, constructing viaducts and intersections. With an

increasing motorisation rate and the important position of Latvia in freight transit it is

necessary to improve the load carrying capacity of road surfacing and bridges. At the

same time improving the quality of the road network will help to achieve the much

needed improvement in traffic safety and reducing accident rates.

Latvia has already got a quite dense network of roads. However, backlog maintenance is

a major problem restricting road capacity and safety. Priority should also be given to the

roads in the region of Riga which is the only region where considerable congestion

problems occur.

For the rehabilitation and upgrading of the national road sections, particularly those on

the major international corridors, (co)financing through EIB loans is an option. To collect

sufficient funds further attraction of finance from the CF is likely. To link economic

centres and connect them to the TEN-road-network financing from the ERDF could be

attracted.

Railways

Latvia should modernise the current rail infrastructure network and focus on the rail

connections with the seaports and the main rail connection with Russia and neighbouring

countries. Whilst the (Warsaw -) Kaunas - Sialial - Jelgava – Riga section of the TEN-T

railway Rail Baltica project can be a valuable addition to Latvia’s rail network, the

section connecting Riga – Tartu - Tallinn is not considered a real priority yet.

Rehabilitation and maintenance of some of the links on the railway corridor network is

expected to be financed through CF/ ERDF involvement and possibly EIB loans.

55

Table 7.2 gives on overview of the assessment which areas for the road and rail projects

can be (potentially) financed by other sources.

Table 7.2 Potential financing sources and expected destination of funding

Sub sector CF/ERDF EIB EBRD PPP

Roads:



√

√

√

√

√

√

Railway:



√

√

√

√

?

Legend: √ = potential source of funding

Location of projects

Figures 7.2 and 7.3 show the location of the expected projects under the Maximum (Road

and Rail) and Balanced Scenarios that have been included in the impact analysis.

Figure 7.2 Road network in Reference, Maximum and Balanced Scenarios

TEN/Tina road projects Riga - Plavinas Other road projects Jurmala - Tukums Skulte - Babite Ludza - Zilupc (Russian border)

56

Figure 7.3 Rail network in Reference, Maximum and Balanced Scenarios

TEN/TINA rail projects Rail Baltica: (Warsaw -) Kaunas - Sialial - Jelgava - Riga Rail Baltica: Riga - Tartu (-Tallinn - Helsinki) Other rail projects Jelgava - Ventspils (sections) Riga - Jekabpils - Daugavpils (sections) Jegalva - Jekabpils - Rezekne (sections) Rezekne - Russian border - Ostrov (sections) Daugavpils Junction North-East

57

7.4 Impact assessment

The impacts of the balanced transport scenario are measured as differences between the

Balanced Scenario and Reference Scenario. These impacts are evaluated with respect to

the strategic objectives:

• Economic competitiveness

• Territorial cohesion, and

• Environmental sustainability

The following objectives have been identified to describe the impact on the different

policy objectives:

Table 7.3 Strategic objectives and related indicators

Objective Indicator Level

Average speed of interregional road trips (kph)

National, regional average

Average speed of interregional rail trips (kph)

National, regional average

Economic competitiveness

GDP per capita (Euro) National, regional average

Primacy rate population (%) National

Primacy rate GDP (%) National

Gini coefficient20 of accessibility (0-100)

National

Territorial cohesion

Gini coefficient of GDP per capita (0-100)

National

Environmental sustainability Share of interregional rail trips (%) National, regional average

It should be realised that these spatial impacts are long term effects, as:

• Location decision of firms result in changes in economic activity and

employment only after some time;

• Secondary effects of economic activity (i.e. attraction of other firms) take even

longer.

This is accounted for in the SASI model by time delays of one to five years. In order to

take due account of the long-term spatial impact of transport infrastructure investments in

the period 2007-2013, the target year for the model simulations is set at 2031.

Overall Impacts

Table 7.4 presents the impacts of the proposed priority transport investments on the above

indicators. For each indicator the table shows the value of the indicator in 2006 and its

values in the five scenarios in 2031. The numbers in italics are the differences between

the indicator values of the policy scenarios compared with those of the Reference

Scenario in 2031 in percent.

20 The Gini coefficient is a measure which represents the deviation from a fully egalitarian distribution of indicator values

between regions (i.e. equal indicator values in all regions).

58

Table 7.4 Strategic objectives and related indicators (2031 impacts)

Scenarios

Refer-ence

Maxi-mum Road

Maxi-mum Rail

Maxi-mum

Bal-anced

Objective

Indicator

2006 2031 2031 2031 2031 2031

Average speed of interregional road trips (kph)

38.0 40.3 40.4 +0.2%

40.3 -0.0%

40.4 +0.2%

40.3 +0.0%

Average speed of interregional rail trips (kph)

24.6 24.6 24.6 0.0%

28.7 +17.0%

28.7 +17.0%

27.3 +11.1%

Economic competitiveness

GDP per capita (Euro)21

3,108 6,490 6,491 +0.0%

6,603 +1.7%

6,604 +1.8%

6,595 +1.6%

Primacy rate (%) population

40.5 40.9 40.9 0.0%

40.9 +0.0%

40.9 +0.0%

40.9 +0.0%

Primacy rate (%) GDP

63.8 61.0

61.0 +0.0%

60.9 -0.1%

60.9 -0.1%

60.9 -0.1%

Gini coefficient22 of accessibility (0-100)

3.82 3.72 3.74 +0.8%

4.23 +13.8%

4.26 +14.5%

4.17 +12.1%

Territorial cohesion

Gini coefficient of GDP per capita (0-100)

26.26 22.80 22.80 +0.0%

22.79 -0.0%

22.80 0.0%

22.79 -0.0%

Environmental sustainability

Share of interregional rail trips (%)

23.0 20.3 20.2 -0.5%

31.2 +53.8%

31.1 +53.2%

27.8 +38.8%

Table 7.4 indicates that the economic impacts of the scenarios on Latvia are significant.

The transport improvements of the policy scenarios increase the average income in Latvia

by up to 110 Euro per capita per year. This effect is almost completely due to the rail

investments of the Rail Baltica, which increase interregional rail speeds in Latvia much

more than the planned road investments.

The impacts on the cohesion indicators, which reflect the impact on the spatial structure

of the country, are negligible. The model expects the capital region of Riga, which

contains 40 percent of the national population, to decline in population nearly as much as

the overall population in Latvia, so that its share of the national population grows only

slightly. The Riga region is even more dominant as economic centre – it produces almost

two thirds of the GDP of the country. According to the SASI forecasts, this dominance is

likely to decrease as other regions catch up in development. However, these trends are

only marginally changed by the transport infrastructure scenarios. However, the Gini

coefficients of accessibility show a strong divergence effect, though from a very low

level, through the Rail Baltica, which serves mainly Riga, whereas the Gini coefficient of

GDP per capita shows practically no effect on the income distribution between the

regions.

21 The GDP per capita value for 2006 is not an official statistic but a result of the SASI model based on regional GDP per

capita statistics for 2001 by Eurostat. Regional GDP is forecast in the SASI model in terms of international exchange value; in purchasing power standards all GDP figures for Latvia would be about twice as high.

22 The Gini coefficient is a measure which represents the deviation from a fully egalitarian distribution of indicator values between regions (i.e. equal indicator values in all regions).

59

The environmental effects of the policy scenarios in terms of increased rail share are

significant. If only rail projects were implemented as in the Maximum Rail Scenario, rail

use on interregional trips, including trips abroad but without air, would more than double.

This effect would hardly be reduced if also the planned road projects are implemented as

in the Maximum Scenario. However, if the northern extension of the Rail Baltica is not

built, as in the Balanced Scenario, this effect is reduced substantially.

Regional impacts

Figures 7.4 to 7.6 show the spatial distribution of gross domestic product (GDP) per

capita in the regions of Latvia in the target year 2031.

Figure 7.4 shows GDP per capita of the regions in the Reference Scenario in the year

2031. Because of the growth in GDP per capita a different colour scale as in Figure 3.2

had to be used. Except for the higher level, the two maps are nearly identical, i.e.

according to the model the regional distribution of income in Latvia remains much the

same.

Figures 7.5 and 7.6 show the effects of the Maximum and Balanced Scenarios on the

distribution of GDP per capita. The impact maps show the percentage differences in GDP

per capita between the policy scenarios and the Reference Scenario. The more intense the

green shade, the higher the impact. The two maps are also nearly identical; only the

economic effects of the northern part of the Rail Baltica, which are not included in the

Balanced Scenario, are missing in Figure 7.5.

Figure 7.4 GDP per capita (in 1,000 Euro 2005), Reference Scenario, 2031

60

Figure 7.5 Impact on GDP per capita, Maximum Scenario, 2031

Figure 7.6 Impact on GDP per capita, Balanced Scenario, 2031

61

Figures 7.7 to 7.9 show the impacts of the Maximum and Balanced Scenarios on

sustainability (as expressed in the share of interregional passenger rail trips).

Figure 7.7 shows the average share of interregional rail trips originating in the NUTS-3

regions of Latvia (excluding air) in the Reference Scenario in the year 2031, i.e. without

road or rail improvements. The spatial distribution of rail use shows the combined effect

of better roads and rail services in the coastal and eastern parts of Latvia (see Figures 3.3

and 3.4) resulting in higher rail shares in the east and lower rail shares in the west and in

the metropolitan area of Riga.

Figures 7.8 and 7.9 show the combined effects of the road and rail projects in the

Maximum and Balanced Scenarios on the share of interregional rail trips. Here, too, the

reversed traffic light colour scale is used; green indicates a higher and red a lower share

of rail trips than in the Reference Scenario. The distribution of impacts follows the

distribution of road and rail projects (See Figures 7.2 and 7.3). It shows that the

sustainability is heavily affected if major investments in rail, notably the implementation

of the (two) Rail Baltica sections, would be made. Remarkably, the effects in Lithuania

are even greater than those in Latvia, as Lithuania is nearer to the important destinations

in Central and Western Europe. However, the preliminary results of a detailed study into

the specific feasibility of the Rail Baltica demonstrate that there is little potential for

(international) passenger traffic and these figures should be treated with caution23

.

Figure 7.7 Sustainability of transport (share of interregional rail trips), Reference Scenario, 2031

23 It would be expected that similar effects on sustainability could occur based on a shift of freight from road to rail.

62

Figure 7.8 Impact on sustainability of transport (share of interregional rail trips), Maximum Scenario, 2031

Figure 7.9 Impact on sustainability of transport (share of interregional rail trips), Balanced Scenario, 2031

63

Finally the impacts of the policy scenarios on the composite Accessibility Problem Index

(see Chapter 3) are shown to examine to what extend the transport projects contribute to

solving the accessibility problems identified in the red-flag analysis. As already noted in

Chapter 3, both road and rail accessibility in Latvia are significantly below the European

average (Figures 3.4 and 3.6).

Figures 7.10 and 7.11 show the Accessibility Problem Index for road and rail in the year

2031 in the Reference Scenario from a European perspective24

. It should be remembered

that in the Reference Scenario no new road or rail projects are started after 2006. The

comparison with Figures 3.4 and 3.6 shows that despite of this accessibility has improved

in many regions due to the ongoing European integration, which has led to shorter border

waiting times and reduced trade barriers. Figure 7.10 shows the Accessibility Problem

Index Road. Now all regions in Latvia are coloured in a lighter shade of yellow, i.e. their

accessibility has moved closer to the European average. Figure 7.11 shows the

Accessibility Problem Index Rail. Here the effects of European integration are weaker. It

can be seen that without rail improvements most parts of Latvia would remain poorly

served by rail.

Figures 7.12 to 7.15 show the impacts of the Maximum and Balanced Scenarios on the

Accessibility Problem Index in Latvia seen from a European perspective. Compared to

the Reference Scenario in 2031 (Figure 7.10), road accessibility has further improved

only little in both scenarios (Figures 7.12 and 7.14). The improvements in rail

accessibility in the Maximum Scenario (Figures 7.13) are much larger and focussed on

the Rail Baltica between Kaunas and Riga. In the Balanced Scenario (Figure 7.15) the

part of the Rail Baltica north of Riga is not included, so the effects on rail accessibility

are reduced.

24 Note that the Accessibility Problem Index for 2031 is calculated in reference to the national and European average of the

base year 2006 in order to show changes in accessibility.

64

Figure 7.10 Accessibility Problem Index Road (European perspective), Reference Scenario, 2031

Figure 7.11 Accessibility Problem Index Rail (European perspective), Reference Scenario, 2031

65

Figure 7.12 Accessibility Problem Index Road (European perspective), Maximum Scenario, 2031

Figure 7.13 Accessibility Problem Index Rail (European perspective), Maximum Scenario, 2031

66

Figure 7.14 Accessibility Problem Index Road (European perspective), Balanced Scenario, 2031

Figure 7.15 Accessibility Problem Index Rail (European perspective), Balanced Scenario, 2031

67

Table 7.5 summarises the effects of the four policy scenarios on the Accessibility

Problem Index: index values above one indicate accessibility problems, whereas index

values below one indicate above-average performance.

Table 7.5 Accessibility Problem Index, Latvia, 2031

Scenarios

Refer-ence

Maxi-mum Road

Maxi-mum Rail

Maxi-mum

Bal-anced

Mode

Level

2006 2031 2031 2031 2031 2031

National 1.000

0.901 0.898 -0.3%

0.901 0.0%

0.898 -0.3%

0.901 0.0%

Roads

European 1.201

1.082 1.078 -0.4%

1.081 -0.1%

1.078 -0.4%

1.081 -0.1%

National 1.000

0.960 0.960 0.0%

0.710 -26.0%

0.710 -26.0%

0.744 -22.5%

Rail

European 1.423

1.366 1.366 0.0%

1.011 -26.0%

1.011 -26.0%

1.059 -22.5%

The table reflects the results of the evaluation. There are some improvements in both road

and rail accessibility between 2006 and 2031 already in the Reference Scenario through

the effects of European integration in the form of reduced waiting times and other

barriers. There are only small further improvements to the road network in Latvia if the

envisaged road projects are implemented as in the Maximum Road and Maximum

Scenarios. The improvements in rail accessibility in the Maximum Rail and the

Maximum Scenarios are much larger, however in the Balanced Scenario the

improvements are reduced as the northern part of the Rail Baltica is excluded from the

Balanced Scenario.

68

7.5 European effects

The effects of transport infrastructure improvements are not confined to the country in

which the construction work actually occurs but reach across borders into neighbouring

countries. The SASI model forecasts these effects.

To demonstrate this on the following pages maps of the spatial distribution of the impacts

of the transport infrastructure investments in Latvia are shown (Figures 7.16 to 7.23).

The maps show the difference between the Maximum and Balanced Scenarios and the

Reference Scenario in 2031 for four of the evaluation criteria of Table 7.4: average speed

of interregional road trips (Figures 7.16 and 7.17), average speed of interregional rail trips

(Figures 7.18 and 7.19), GDP per capita (Figure 7.20 and 7.21) and share of interregional

rail trips (Figures 7.22 and 7.23). It can be seen that although the main impacts occur in

Latvia itself, significant effects spread beyond its national borders.

Because of the small number of road projects in the two scenarios, the weakest cross-

border effects are with respect to average interregional road speed. Only parts of Estonia

and, through the ferries from Tallinn, parts of Sweden are affected. The situation is totally

different for interregional rail speeds. If the Rail Baltica is completely implemented, as in

the Maximum Scenario, the effects on interregional rail speeds are felt through all Nordic

countries and large parts of eastern and central Europe. As to be expected the impacts are

stronger if also the northern part of the Rail Baltica between Riga and Tallinn is

implemented as in the Maximum Scenario. The economic impacts, though marginal, are

almost equally widespread, to the north to Estonia, Finland and Sweden and to the south

to Lithuania, Poland, Germany and the Czech Republic. The environmental impacts in

terms of share of rail trips depend on the implementation of the Rail Baltica as well, but

even if the implementation of the northern part of the Rail Baltica is deferred, the share of

rail trips grows in all affected countries.

69

Figure 7.16 Average speed of interregional road trips: European impacts, Maximum Scenario, 2031

Figure 7.17 Average speed of interregional road trips: European impacts, Balanced Scenario, 2031

70

Figure 7.18 Average speed of interregional rail trips: European impacts, Maximum Scenario, 2031

Figure 7.19 Average speed of interregional rail trips: European impacts, Balanced Scenario, 2031

71

Figure 7.20 GDP per capita: European impacts, Maximum Scenario, 2031

Figure 7.21 GDP per capita: European impacts, Balanced Scenario, 2031

72

Figure 7.22 Share of interregional rail trips: European impacts, Maximum Scenario, 2031

Figure 7.23 Share of interregional rail trips: European impacts, Balanced Scenario, 2031

73

8 Conclusions on investment priorities

8.1 Introduction

Based on the previous analysis the main areas for transport investments that would merit

EU funding in the period 2007-2013 have been identified. It should be emphasized that

this is based on an analysis that has been carried out at strategic level. Although the areas

identified are expected to result in high potential projects they should still be subjected to

the regular cost-benefit analysis at a project level before being finally selected.

8.2 Transport investment priorities 2007-2013

8.2.1 National and Regional and Local Needs

The investment priorities are defined within the framework of trans-national requirements

and local development needs. On the one hand, there is potential for Latvia to play more

important role in transportation of cargo and people in international transport. There

already is a substantial flow, mainly of freight traffic, in the direction East-West and it is

expected that following the increasing integration of the Baltic States into the EU, traffic

flows in North-South direction will increase as well. In order to utilise this potential, there

is a need for significant improvement of infrastructure, particularly by reconstruction of

railway hubs, building of railway tracks, modernization of train service management

automatic systems, introduction of joint railway mobile communication system GSM-R;

reconstruction of the main motorways, building of new sections, double level crossings;

building of access roads and railway tracks to the ports, passenger terminals in the ports;

modernization of airport infrastructure both in Riga international airport and in regional

ones; as well as building of access roads to the TEN-T network in urban areas. Cohesion

Funds can substantially tribute to the achievements of these goals.

On the other hand, there is a need to ensure higher mobility of the population and labour

force in order to advance the economic development of the country. Latvia has to

improve the living conditions of the rural population, particularly in terms of access to

social and economic infrastructure, in order to avoid emigration of population to Riga and

other countries. These needs are mainly to be funded from the SF (ERDF) and local

funds.

The analysis of impacts of the proposed investment project, focussed almost entirely on

the impacts of projects on the major transport axis as virtually no specific local projects

have been identified for Latvia. This makes it impossible to comment on an optimal split

74

between investments in the major transport axis and the secondary transport network

based on modelling results for Latvia. Nevertheless it is still possible to comment on the

priorities for investments given the needs related to both the major transport axis as well

as the secondary network, based on the modelling results for other countries and SASI-

model generetics. It appears that investing in secondary network connecting peripheral

areas does indeed promote territorial cohesion reducing travel times, but produce only

very limited benefits in terms of limiting differences in economic activity and growth

(GDP). Moreover, general modelling results have demonstrated that investing in the main

transport axis, particularly in missing links, results in larger economic benefits for a

single country, but also for surrounding European countries. Connecting trans-national

economic centres will provide larger benefits related to both travel speed and economic

activity (GDP). From an economic perspective, prioritising investment projects should

focus therefore on resolving missing links and upgrading the main transport axis.

Investments in the secondary network should focus on facilitating good access of the

major economic centres (ports, logistic centres, industrial and business areas, major

cities)

8.2.2 Needs per sub-sector

The identified priority areas are described per sub-sector. These sub sectors are assessed

on a number of criteria:

Table 8.1 Assessment of priority areas

Sub sector

Co

st-

effe

ctiv

en

es

s

Accessib

ility

Su

sta

ina

bility

Territo

rial

Co

hesio

n

Safe

ty

Oth

er s

ou

rces

of fin

an

ce

Roads:



+

+

+

+

-

-

0

0

+

+

+

+

Railway:



+

+

+

+

+

+

0

0

+

+

+

+

Ports

- motorways of the sea

0

0

+

0

0

+

Multimodal transport

- terminals and logistic centres

+

0

+

0

0

+

Urban transport

- modernization system and fleet

- integrated urban transport plan

+

+

+

0

+

+

Legend: + positive effect on criterion; 0 neutral effect on criterion; - negative effect on criterion

75

Road

The task of the coming period is to preserve and maintain the road network at operational

levels and to stop its further decay. The rehabilitation and upgrading of road sections on

the Western-Eastern corridor route and the Via Baltica are priorities for the further

development of the road network. The aim is to eliminate the current bottlenecks by

gradually reconstructing and widening its sections, building bypasses, increasing the

number of traffic lanes, constructing viaducts and intersections.

Special attention needs to be paid to measures that will help increase road safety. Also

there is a strong need to attract private sector funding, which requires a critical look into

the present environment for PPP constructions.

Railways

The current rail network of Latvia is to be modernised to sustain the high levels of freight

(and passenger) levels.

Reconstructing and upgrading and increasing of traffic safety levels of the rail corridor

East-West (Ventspils-Tukums-Jelgava-Krustpils-state border with branch lines Riga-

Krustpils and Krustpils-Daugavpils-state border) are the biggest priorities.

From a European perspective rail accessibility of the Latvian regions remains poor, but it

is considered more important to maintain and develop the main railway connections and

intermodal rail terminals, than to build new rail infrastructure connections. Whilst the

(Warsaw -) Kaunas - Sialial - Jelgava – Riga section of the TEN-T railway Rail Baltica

project can be a valuable addition to Latvia’s rail network, the section connecting Riga –

Tartu - Tallinn is not considered a real priority yet.

Rehabilitation and maintenance of some of the links on the railway corridor network are

expected to be financed through CF/ ERDF involvement and possibly EIB loans.

Ports

One of the major goals is to develop the transport axis linking the TEN-T priority project

Motorways of the Baltic Sea through Latvian ports and rail/ road connections with Russia

and the states of Central Asia and Far East. Further development of

Riga/Ventspils/Liepaja position as gateway for Russia and beyond (be it that Russia is

finding alternative outlets for oil (products) is important for the economic development.

The development of the Latvian ports and their integration into the European transport

system is hampered mainly by the low quality of the infrastructure associated with port

operation (i.e. roads, railway access roads and other infrastructure). In order to support

the development and modernisation of the ports it is necessary to invest in port

infrastructures and accessibility. This could well be done through PPP and

contributions/loans from the EIB and EBRD.

Urban transport

The quality of the public transport system and relatively high share of urban public

transport should be maintained in future. In passenger transport, the most urgent problems

are developing in the urban agglomeration of Riga.

With rising motorisation in Riga, modernization of the public transport system is

required. To make the urban transport more efficient and less time consuming and

introduce more environment-friendly types of urban transport, the transport networks

within the cities need improvement.

76

In this field further development and extension of the tramway and trolley system and

renewal of the urban fleet will add to the improvement of the environmental conditions as

well as to the decline in the traffic congestion in the capital.

Whilst Cohesion Funds are mainly focussed on for national and transnational projects,

funds from ERDF and EIB should be used urban transport.

Multimodal transport

The importance of the sea ports of Latvia in freight and passenger transport gives

opportunities to develop connections with the main economic areas in the neighbouring

countries. To strengthen the interaction between modes, ports should be connected by rail

and road with intermodal terminals in hinterland. Implementation of intermodal terminals

and distribution points between the seaports and the main economic areas can support

Latvia’s transit function and make logistics centres of more added value for Latvia’s

economy.

The development of the main sea ports in Latvia will be important for the integration of

the different transport modes and for an effective multimodal transport network.

The strengthening of intermodal transport infrastructure stimulates intermodal freight

transport via modern terminals and could be financed with PPPs constructions.

77

Annex A: TEN-T priorities

Table A.1. TEN priority projects and major Swiss projects

No. TEN project Completion

1 Railway axis Berlin-Verona/Milan-Bologna-Naples-Messina-Palermo

- Halle/Leipzig-Nurnberg (2015)

- Nurnberg-Munich (2006)

- Munich-Kufstein (2015)

- Kufstein-Innsbruck (2009/2012)

- Brenner tunnel (2015)

- Verona-Naples (2007)

- Milan-Bologna (2008)

- Rail/road bridge over the Strait of Messina-Palermo (2015)

2015

2 High-speed railway axis Paris-Brussels/Brussels-Cologne-Amsterdam-London

- Channel tunnel-London (2007)

- Brussels/Brussels-Liege-Cologne (2007)

- Brussels/Brussels-Rotterdam-Amsterdam (2007)

2007

3 High-speed railway axis of south-west Europe

- Lisbon/Porto-Madrid (2015), including:

- Lisbon-Porto (2013)

- Lisbon-Madrid (2010)

- Aveiro-Salamanca (2015)

- Madrid-Barcelona-Figueras-Perpignan (2009)

- Perpignan-Montpellier (2009)

- Montpellier-Nimes (2015)

- Madrid-Vitoria-Irún/Hendaye (2010)

- Irún/Hendaye-Dax (2015)

- Dax-Bordeaux (2020)

- Bordeaux-Tours (2015)

2015

Formatted: Dutch(Netherlands)

78


4 High-speed railway axis east

- Paris-Baudrecourt (2007)

- Metz-Luxembourg (2007)

- Saarbrücken-Mannheim (2007)

2007

5 Betuwe line 2006

6 Railway axis Lyon-Trieste-Divača/Koper-Divača-Ljubljana-Budapest-Ukrainian border

- Lyon-St Jean de Maurienne (2015)

- Mont-Cenis tunnel (2018)

- Bussoleno-Turin (2011)

- Turin-Venice (2011)

- Venice-Ronchi Sud-Trieste-Divača (2015)

- Koper-Divača-Ljubljana (2012)

- Ljubljana-Budapest (2015)

2018

7 Motorway axis Igoumenitsa/Patra-Athens-Sofia-Budapest

- Via Egnatia (2006)

- Pathe (2008)

- Sofia-Kulata-Greek/Bulgarian border (2010)

- Nadlac-Sibiu motorway (branch to Bucharest and Constanza) (2007)

2010

8 Multimodal axis Portugal/Spain-rest of Europe

- Railway La Coruňa-Lisbon-Sines (2009)

- Railway Lisbon-Valladolid (2015)

- Railway Lisbon-Faro (2006)

- Lisbon-Valladolid motorway (2010)

- La Coruña-Lisbon motorway (2005)

- Seville-Lisbon motorway (completed 2001)

- New Lisbon airport (2015)

2015

9 Railway axis Cork-Dublin-Belfast-Stranraer completed 2001

10 Malpensa Airport completed 2001

11 Öresund fixed link completed 2001

79


12 Nordic triangle railway/road axis

- Road and railway projects in Sweden (2015)

- Helsinki-Turku motorway (2009)

- Railway Kerava-Lahti (2006)

- Helsinki-Vaalimaa motorway (2015)

- Railway Helsinki-Vainikkala (Russian border) (2015)

2015

13 UK/Ireland/Benelux road axis 2013

14 West coast main line 2008

15 Galileo (not included in reference scenario, only mentioned here for consistency) 2010

16 Freight railway axis Sines/Algeciras-Madrid-Paris

- New high-capacity rail axis across the Pyrenees (2020)

- Railway Sines-Badajoz (2010)

- Railway line Algeciras-Bobadilla (2010)

2020

17 Railway axis Paris-Strasbourg-Stuttgart-Vienna-Bratislava

- Baudrecourt-Strasbourg-Stuttgart (2015)

- Stuttgart-Ulm (2012)

- Munich-Salzburg (2015)

- Salzburg-Vienna (2012)

- Vienna-Bratislava (2012)

2015

18 Rhine/Meuse-Main-Danube inland waterway axis

- Rhine-Meuse (2019)

- Lanaken lock (2011)

- Vilshofen-Straubing (2013)

- Wien-Bratislava (2015)

- Palkovicovo-Mohács (2014)

- Bottlenecks in Romania and Bulgaria (2011)

2019

19 High-speed rail interoperability on the Iberian peninsula

- Madrid-Andalusia (2020)

- North-east (2020)

- Madrid-Levante and Mediterranean (2020)

- North/North-west corridor, including Vigo-Porto (2020)

- Extremadura (2020)

2020

80


20 Fehmarn Belt railway axis

- Fehmarn Belt fixed rail/road link (2015)

- Railway for access in Denmark from Öresund (2015)

- Railway for access in Germany from Hamburg (2014

- Railway Hannover-Hamburg/Bremen (2015)

2015

21 Motorways of the sea

- motorway of the Baltic Sea (2010)

- motorway of the sea of western Europe (2010)

- motorway of the sea of south-east Europe (2010)

- motorway of the sea of south-west Europe (2010)

2010

22 Railway axis Athens-Sofia-Budapest-Vienna-Prague-Nürnberg/Dresden

- Railway Greek/Bulgarian border-Kulata-Sofia-Vidin/Calafat (2015)

- Railway Curtici-Brasov (towards Bucharest and Constanta) (2013)

- Railway Budapest-Vienna (2010)

- Railway Břeclav-Prague-Nürnberg (2016)

- Railway axis Prague-Linz (2017)

2017

23 Railway axis Gdansk-Warsaw-Brno/Bratislava-Vienna

- Railway Gdansk-Warsaw-Katowice (2013)

- Railway Katowice-Břeclav (2010)

- Railway Katowice-Zilina-Nove Mesto n.V. (2015)

2015

24 Railway axis Lyons/Genoa-Basel-Duisburg-Rotterdam/Antwerp

- Lyon-Mulhouse-Mülheim (2018)

- Genoa-Milan/Novara-Swiss border (2013)

- Basel-Karlsruhe (2015)

- Frankfurt-Mannheim (2015)

- Duisburg-Emmerich (2015)

- 'Iron Rhine' Rheidt-Antwerp (2010)

2018

25 Motorway axis Gdansk-Brno/Bratislava-Vienna

- Gdansk-Katowice motorway (2011)

- Katowice-Brno/Zilina motorway (2010)

- Brno-Vienna motorway (2013)

2013


81


26 Railway/road axis Ireland/United Kingdom/continental Europe

- Ireland road/rail modernisation (2010)

- Road/railway axis Hull-Liverpool (2020)

- Railway Felixstowe-Nuneaton (2014)

- Railway Crewe-Holyhead (2012)

2020

27 Rail Baltica axis Warsaw-Kaunas-Riga-Tallinn-Helsinki

- Warsaw-Kaunas (2010)

- Kaunas-Riga (2014)

- Riga-Tallinn (2018)

2018

28 Eurocaprail on the Brussels-Luxembourg-Strasbourg railway axis

- Brussels-Luxembourg border (2012)

- Luxembourg- French border (2013)

2013

29 Railway axis of the Ionian/Adriatic intermodal corridor

- Kozani-Kalambaka-Igoumenitsa (2012)

- Ioannina-Antirrio-Rio-Kalamata (2014)

2014

30 Inland waterway Seine-Scheldt

- Navigability improvements Deulemont-Gent (2016)

- Compiègne-Cambrai (2016)

2016

CH1 Gotthard axis

- Zimmerberg tunnel (2011)

- Gotthard tunnel (2015)

- Ceneri tunnel (2015)

2015

CH2 Lötschberg tunnel 2015


82

Figure A.1. The TEN priority projects

83

Annex B: Accessibility “red flag” analysis

To determine the need for transport investments, the SASI model was used to assess the

present and future situation of the road and rail systems in each country without the

national transport projects to be examined later. For this the accessibility provided by the

road and rail systems in each country was evaluated from both a national and a European

perspective in order to identify regions with serious accessibility deficits that should be

addressed by European transport policy taking account of the stated EU goals

competitiveness and territorial cohesion. In the SASI model accessibility, which is

directly influenced by transport policy and investments, is judged to play a crucial role in

promoting the realisation of the cohesion objectives.

Figure B.1 Main structure of the SASI model

SASI Model

To determine the appropriate assessment of transport investment need from the cohesion

policy perspective an agreement on the indicator of accessibility to be used is required.

Traditional accessibility indicators are not useful for this. They measure the total effect of

both geographical location (periphery v. core) and quality of transport provided by the

transport system and therefore always show a steep gradation in accessibility from the

84

core to the periphery. However, public policy cannot change the fact that some regions

are central and some are peripheral, i.e. provide the same level of accessibility to all

regions. Public policy can only alleviate disadvantages through unequal transport

provision.

This distinction is relevant for European transport policy. To invest only in transport in

the most peripheral regions with the lowest accessibility according to such an indicator

would benefit only the relatively few people living there and would ignore the needs of

the densely populated central regions to combat traffic congestion and so endanger the

competitiveness goal of the Lisbon Strategy of the European Union. On the other hand, to

invest only in transport in the most densely populated central regions with the greatest

congestion problems would not only lead to ever more traffic but also widen the existing

gap in accessibility between the central and peripheral regions and would so run counter

to the territorial cohesion goal of the European Union.

To avoid this dilemma, a new accessibility indicator was defined which distinguishes

between geographical location and quality of transport. This indicator assumes that

people in the peripheral regions cannot expect to enjoy the same level of accessibility

(measured in traditional terms) as the central regions but that they can demand to be able

to reach relevant destinations with the same travel speed ("as the crow flies") as the

people in the central regions. In addition the indicator recognises the utilitarian principle

of the happiness of the greatest number, i.e. that the transport needs of densely populated

regions should be given more weight than those of regions with only few inhabitants. And

finally, the indicator recognises that economically lagging regions with severe deficits in

accessibility may offer greater potential for stimulating economic effects by transport

investments than regions which enjoy already high accessibility.

These three principles avoid the pitfalls of both an extreme egalitarian view, which

postulates that all regions in Europe enjoy the same level of accessibility and a purely

efficiency-oriented view which postulates that accessibility in the already highly

accessibly central metropolitan areas should be further strengthened because they bring

the largest economic benefits. In other words, the three principles aim at a rational trade-

off between the stated EU goals of competitiveness and territorial cohesion.

The Accessibility Problem Index

The indicator to be developed should have a number of properties to make it easy to

understand and communicate to policy makers and stakeholders:

- It should be a "problem indicator", i.e. high values should indicate large deficiencies in

regional accessibility, whereas low values of the indicator indicate above-average levels

of accessibility.

- It should be standardised in order to be comparable between regions and countries, i.e.

should not reflect the size or affluence of regions or countries.

- It should be independent of the arbitrary or historically subdivision of the territory into

regions, i.e. its magnitude should not change if a region is subdivided into two or more

regions or if two or more regions are consolidated to one region.

- It should be scalable, i.e. it should be possible to vary the impact of the weighting by

population and inverse GDP to reflect different political priorities.

85

- It should allow measuring the development of accessibility over time.

Based on these requirements, an indicator called Accessibility Problem Index was

developed. The calculation of the Accessibility Problem Indicator proceeds in three steps:

Average regional airline speed

The first step in the development of the Accessibility Problem Index is the calculation of

average regional airline speed. Average airline speed vrm of all trips frsm from a region r to

all other regions s in Europe by mode m in year t is defined as

[ ]

[ ]∑

∑

−

−

=

srsmrsms

rs

s

rsms

rmtctftP

dtftP

tv60/)()(exp)(

)(exp)(

)(β

β (1)

where Ps(t) is regional population in year t, crsm(t) is travel time in minutes between

regions r and s by mode m in year t, β is the impedance parameter and drs is airline

distance in km between the central cities in regions r and s calculated from their

geographical coordinates xr, yr and xs, ys by

( ) ( )22

rsrsrsyyxxd −+−= (2)

Standardisation

Next average regional airline speed, regional population and regional GDP are

standardised as fractions of the average of all regions in the country (national perspective)

or the average of all regions in Europe (European perspective). To neutralise the effect of

region size, population is replaced by population density and GDP is replaced by GDP

per capita. The benchmark for the standardisation of average regional airline speed is

always the average of the base year t0 = 2006 to show changes in accessibility:

)()(

)()(

)(00

0

tPtv

tPtv

tvr

rrm

rrrm

rm

∑

∑=′ (3)

∑

∑=′

rrr

rrr

rtPA

AtP

tp)(

)(

)( (4)

∑

∑=′

rrr

rrr

rtGtP

tPtG

tg)()(

)()(

)( (5)

where Ar is the area of region r and Gr(t) is the GDP of region r. The v'rm(t), p'r(t) and

g'r(t) then are the relative airline speed, relative population density and relative GDP per

capita of region r in year t, respectively. Values below one indicate below-average airline

86

speed, population density and GDP per capita and values above one indicate above-aver-

age airline speed, population density and GDP per capita of the region.

Index

With these relative indicators, the Accessibility Problem Index qrm(t) of region r by mode

m in year t can be formulated:

[ ] [ ] [ ]γα −−

′′′= )()()()(1

tgtptvtqrrrmrm

(6)

where α and γ are weights indicating the relative importance of population density and

GDP per capita, respectively. Note that average regional airline speed and GDP per capita

have negative weights, i.e. the Accessibility Problem Index expresses deficits in average

regional airline speed relative to the national or European average weighted by population

and economic weakness. The index has the following properties:

- The higher the index the more severe is the deficiency in accessibility.

- The influence of weights of population density and GDP per capita can be changed by

changing α and β: values below one imply less influence, zero no weighting.

- Regions with average airline speed, population density and GDP per capita have an

index value of one.

- Index values are independent of region size and are therefore comparable between

regions and countries.

- The index shows improvements in airline speed over time (and not only relative shifts

between regions).

Sensitivity tests with different values of α and γ showed that α = γ = 0.05 gave the most

plausible results and a reasonable level of responsiveness of the Accessibility Problem

Index to changes of accessibility due to European integration and European transport

projects over time.

The application of the Accessibility Problem Index for the evaluation of accessibility

deficits in the country policy briefs use these values of α and γ throughout. The regions

analysed were the NUTS-3 regions or equivalent regions in the 25 countries of the

European Union plus the accession countries Bulgaria and Romania. The overseas

regions of France and the island regions of the Azores and Madeira of Portugal and the

Canary Islands of Spain were excluded from the analysis.

The spatial distribution of the resulting values of the Accessibility Problem Index are

presented in maps using a colour scale resembling that of a traffic light: green shades

indicate average regional travel speeds above the national or European average, yellow

values indicate speeds slightly above the national or European average and red shades

indicate speeds significantly lower than the national or European average. Regions

shaded in red are the targets of the "red-flag" analysis.

For each country first for road and then for rail the national and the European perspective

are presented for the current situation (2006) and for 2016. The situation in 2016 is based

87

on a base scenario of the SASI model without the national projects, i.e. only with the

TEN priority road and rail projects and selected transport projects in Switzerland. The

assumed opening times of the individual projects are those of the 2004 TEN guidelines

(European Union, 2004) which in a few cases differ from the dates notified by the

individual countries (European Commission, 2005).

References:

European Union (2004): Decision No 884/2004/EC of the European Parliament and of

the Council of 29 April 2004 amending Decision No 1692/EC on Community guidelines

for the development of the trans-European transport network. Official Journal of the

European Union L 201 (Corrigendum to L 167), 1-55.

European Commission (2005): Trans-European Transport Networks. TEN-T Priority

Axes and Projects 2005. Luxembourg: Office for Official Publications of the European

Communities.

Transport Investment Priorities under Structural and ... · ISPA. One of the prominent initiatives in the European Union in this respect is the development of the Trans-European transport

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