Objectives in regard to both Rail Baltic and the core network of roads (the Tallinn-Tartu section of the Tallinn-Tartu-Võru-Luhamaa highway, and the Tallinn-Pärnu-Ikla highway) have already been diluted, but substantial investment is needed in order to meet commitments to the European Union and to achieve the targets set in the National Development Plan. However, nowhere is it clear where the money is supposed to come from to meet even the diluted targets.
“The state’s development plans and the targets they set should not constitute a form of self-deception, but realistically address the state’s priorities and present affordable choices,” Holm remarked. “The objectives in this sector should be reviewed in the cold light of day, considering the state’s financial possibilities, and assessing whether it is even possible to achieve these ambitious goals – and if so, at what pace and to what extent. Decisions are needed for clarity, transparency and predictability, and it would make sense to enshrine them in sectoral development plans and strategy papers.”
At least 300 million additional euros is needed to bring the core network roads up to standard by the end of 2030. Estonia is obligated to do this by the European Union’s regulation on the development of the trans-European transport network, but there is no money and, at this point, no time to meet these requirements. As such, the Ministry of Climate plans to request an exemption from the European Commission to postpone the fulfilment of this obligation on 121 kilometres or on 34% of the required roads until 2050. Without the exemption, it would cost between 1.3 and 1.9 billion euros to bring the entirety of core network roads up to standard. That being said, it is no longer be possible to meet requirements of this scale by 2030 even if the money were available. Even is the exemption is granted, however, there are around 50 kilometres of road sections for which an exemption cannot be requested and there are also no funds (ca 300 million euros) allocated or planned to bring them to the required standard.
At least 300 million euros is also lacking to maintain national roads in ‘good’ condition from 2026-2029. Despite national roads being in good condition as of 2025 according to road performance indicators, the Transport Administration warns that their situation may deteriorate in the coming years. The reason for this is that it has not been possible in recent years to invest in the volume needed to maintain the condition of national roads, and the gap between the amount of funding required and actual funding will persist in the years to come. The Transport Administration estimates that just over 213 million euros would be needed each year to maintain roads, but on average, the national budget strategy provides for around 80 million euros less each year.
At least 145 million euros is lacking to pave all state-owned gravel roads with a traffic volume of more than 50 cars per day by 2030 as per the Transport and Mobility Development Plan. As of 2024, there were 1758 kilometres of such state-owned gravel roads. Assuming a cost of 110,000 euros per kilometre for paving, an average of 32.2 million euros would be needed each year for the period from 2025-2030. In reality, not even a third of that amount has been planned or allocated for 2025-2029: on average, just 9.7 million euros per year.
At least 500 million euros is lacking to complete the first phase of the Estonian section of Rail Baltic. Moreover, this is contingent on Estonia obtaining the 1.2 billion euros it hopes to receive from the new EU budget for the period from 2028-2034: any less and the amount needed to complete Estonia’s part of Phase I will increase further. If the state were required to finance the completion of the whole of the first phase of the Estonian section of Rail Baltic, there would be a shortfall of nearly 1.7 billion euros. The amount of funding available from the Connecting Europe Facility will become clear by 2027 at the latest.
Last year, the cost of the Estonian section of Phase I of Rail Baltic was estimated at 3.1 billion euros, but the revised cost for the whole completion of the first phase is 3.6 billion euros. This money is earmarked not just for the construction of the railway, but also for the purchase of regional trains and the equipment required to maintain them, for the construction of a depot for the rolling stock and for paying the salaries of those working on the project.
According to the parties involved, the completion date of the railway depends on whether sufficient funding can be secured at the time when it is needed. According to the project timeline, Rail Baltica trains should start operating in 2031. Although construction of the Estonian section of Rail Baltica has gained momentum and is making better progress than in Lithuania and in particular Latvia, it is unlikely that the entire Rail Baltica line will be operational by 2031.
At least 90 million euros is lacking for the investments needed to enable trains to consistently travel at speeds of up to 160 km/h on the Tallinn-Tartu and Tallinn-Narva routes. For the period from 2024-2029, AS Eesti Raudtee has made or planned investments of around 570 million euros. These have been used, among other things, to upgrade safety systems and straighten railway lines. However, making trains faster across the board will add to safety requirements, and the available funding is insufficient to meet them. It is estimated that a currently lacking 91 million euros would have to be spent on upgrading level crossings on the Tallinn-Tartu and Tallinn-Narva routes to meet the requirements of the technical rules for the use of the railway, and on rebuilding platforms and renovating the railway lines.
In addition to the shortfall in funding, there are a number of areas within transport and mobility in which the need for funding is increasing year on year.
Public transport subsidies from the national budget have been increasing every year and will continue to do so without amending the existing network or increasing ticket revenue. In the national budget strategy 2026-2029, at least 210 million euros in additional funding is planned for the period from 2027-2029 to ensure that the state-funded public transport service is maintained at its current level. Although the national target has been to increase the number of commuters among public transport users, Statistics Estonia data show that this figure has been on a downward trajectory over the last decade. While a total of 72 million euros was spent on the organisation of regional bus transport in 2024, this is expected to reach 87 million euros in 2029, and subsidies for all other modes of transport will also need to be increased in the future.
The core problem is that the Ministry of Regional Affairs and Agriculture has not defined what constitutes a sustainable public transport service that meets the mobility needs of passengers while respecting the public purse. Decisions ought to be taken as to where and how many people public transport should reach, and how often those people should be provided with at least a minimum level of service.
The number of fatalities and serious injuries in traffic accidents has not decreased as expected, but the actions predicted to have the greatest impact on road safety have not yet been implemented to the extent or at the pace planned. Whereas targets have been set to improve road safety by reducing the three-year averages of fatalities and serious injuries year on year, these figures have not improved as expected since 2020 – in fact, the gap between targets and reality has widened, with 2024 proving to be one of the worst years for road fatalities in the last decade.
In its current form, the Road Safety Programme has been hollow. Over the years, it has set out measures and actions to achieve its objectives, but in many cases the actions have lacked financing and have therefore not been followed up to the extent foreseen. There have also been actions in the programme’s plans that lacked political support and have not been implemented as a result. In a situation where there is no financial or political support for measures, decisions should be taken, alternative measures proposed or ways to improve the effectiveness of existing measures sought, while showing how replacing the measures will affect the objective to be achieved.
Year on year, the compensation paid from the state budget to AS Eesti Raudtee for the difference between costs and revenue to maintain the existing railway infrastructure has increased. The reason for this is that the company’s revenue, which derives mainly from freight transport, has decreased significantly compared to a decade ago, because of the decline in such transport. At the same time, expenditure has increased, primarily due to investments. Whereas just over 17 million euros in support was granted in 2020, the forecast for 2030 is 42 million euros.
Given the available funding and the state’s capacity, it is clear that not all of the objectives that have been set can be achieved. As such, it is important that the government, in cooperation with the Riigikogu, decide which goals must be achieved, by when and with what money, and what could be further reduced or postponed and how. It is also important to determine what these decisions will mean for our roads, railways, public transport and traffic in a year or 10 years’ time, and what the effects of implementing or not implementing the measures will be on Estonia’s development (including regional development), employment and competitiveness.
Background
The National Audit Office has conducted almost a dozen audits in the transport and mobility sector in recent years. For this annual report, the National Audit Office examined progress in the achievement of objectives in the sector, as well as problems identified in the audits which remain topical and unresolved.
