The National Audit Office has carried out almost a dozen audits in the transport and mobility sector in recent years. For this thematic annual report, we looked at progress towards achieving the sector's targets and which issues identified in the audits are still relevant and unresolved.
A common theme regarding the transport and mobility sector is ambitious targets and costly commitments that cannot realistically be met within the financial means of the state.
At least EUR 1.35 billion of additional funding is needed to meet current transport and mobility targets.
At least EUR 1.35 billion is needed over the period of 2026-2030 to maintain state roads, build new roads and railways and improve rail safety. That amount is even higher if Estonia receives less than the EUR 1.2 billion it has hoped for from the new EU budget to complete the construction of the first phase of Rail Baltica. There are limited means for additional funding of such a scale for transport and mobility over the given period, and other areas also need funding, such as healthcare, social security, etc. The limitation of means is illustrated by the fact that the state budget deficit is projected to reach the maximum allowable 4.5% of GDP in the next two years and 3.6% in 2029.
Certainly, some of the bottlenecks in the transport and mobility sector can be addressed by restructuring within the sector. At the same time, the targets and commitments outlined in this report are those where progress cannot be made without substantial additional funding.
National development plans and the targets set out should not be based on self-deception but realistically represent the country's priorities and present means. The targets in this area should be critically reviewed in light of the country's financial resources, and an assessment should be made on whether it is possible to achieve the longer-term targets, and if so, at what pace. It also needs to be assessed whether the target remains necessary and reasonable. Decisions are needed for clarity, predictability and transparency, and it would be sensible to formalise them in sectoral development plans and strategy papers.
The National Audit Office assessed the targets set in the development documents in the transport and mobility sector and the commitments made by the state and compared them with the financial resources set for the sector in the state budget strategy. In doing so, the National Audit Office relied on the calculations of the ministries and the relevant agencies on how much it would cost to achieve their targets and fulfil their obligations, and on the results of previous audits.
1. Completing the core road network by 2030 is still not realistic
At least EUR 300 million is still needed to complete the construction of TEN-T core network roads by the end of 2030. This is if the European Commission accepts Estonia's request to apply a derogation allowing the construction of some sections to be delayed by 20 years.
According to the European Union's Regulation on the development of the trans-European transport network (TEN-T Regulation), Estonia has the obligation to ensure that the TEN-T core network roads meet the requirements of the Regulation by 2030. The core network in Estonia includes 353 kilometres of roads, of which as of autumn 2025 133 kilometres are compliant and 49 kilometres are under reconstruction. There is not enough money and now, not enough time to build the roads of the core network to meet the requirements.
For at least 34% of the road sections, or 121 kilometres, the Ministry of Climate is planning to ask the European Commission for a derogation that would allow the deadline for their reconstruction to be postponed to the end of 2050. Without the derogation, it would cost between EUR 1.3 billion and EUR 1.9 billion to bring the entirety of these roads into compliance with the TEN-T Regulation, depending on whether they are built partially or fully as four-lane roads.
2. State roads are deteriorating
At least EUR 300 million is needed over the period of 2026-2029 to maintain the “good” condition of state roads. According to road roughness indicators, the condition of national roads in 2025 is good. According to the Transport Administration, the situation will deteriorate in the coming years, as it was not possible to invest in the maintenance of state roads to the necessary extent in previous years, and the gap between the need and actual funding will persist in the coming years. The Transport Administration estimates that just over EUR 213 million would be needed each year to maintain the roads, but the state budget strategy for the period 2026-2029 foresees on average around EUR 80 million less each year.
3. Dusty roads are here to stay
At least EUR 145 million is needed to meet the Transport and Mobility Development Plan's target of making all state-owned gravel roads with traffic above 50 cars per day dust-free by 2030. As of 2024, there are 1758 km of gravel roads with a daily traffic volume of more than 50 cars. The estimated cost of making the roads dust-free is EUR 110,000 per kilometre. This translates into an average annual financing need of EUR 32.2 million from 2025-2030. However, an average of just EUR 9.7 million per year has been allocated or planned for the period of 2025-2029.
4. Rail Baltica financing has many loose ends
At least EUR 500 million is needed to complete the first phase of the Estonian part of the Rail Baltica railway. This is if Estonia manages to get EUR 1.2 billion from the new EU budget for 2028-2034. If less is received, the funds missing for the completion of Estonia's part of the first phase will increase further. If Estonia were to finance the completion of the whole of its first phase of Rail Baltica, there would be around EUR 1.7 billion missing. Last year, the estimated cost of the construction of the Estonian part of Phase I of the Rail Baltica project was estimated at EUR 3.1 billion (2023), but the Ministry of Climate now estimates the total cost of Phase I at EUR 3.6 billion. In addition to construction, this money is used for buying regional trains and the equipment needed to maintain them, to build a depot for the rolling stock and to pay the salaries of the people working on the project. The final verdict on how much Connecting Europe Facility funding will be available will be known by 2027 at the latest.
According to the project parties, the date for when the railway can be completed depends on whether sufficient funding can be secured on time. The timetable shows that the trains should start running in the year 2031, as confirmed by the parties.
Even though the construction of Rail Baltica has begun in Estonia and is progressing better than in Lithuania and especially Latvia, the completion of the entire Rail Baltica for full working order is unlikely by 2031. There is a greater chance of launching the Estonian part on time. The organisation of international freight and passenger transport along the entire Rail Baltica main line depends not only on the work done in Estonia, but also on the construction of the railway in Latvia and Lithuania.
5. Delay in safety investment holds back stable rail speeds of 160 km/h
At least EUR 90 million is missing from the investment needed to allow trains to run at speeds of up to 160 km/h between Tallinn and Tartu and Tallinn and Narva. Between 2024 and 2029, the infrastructure maintenance company AS Eesti Raudtee has made or planned investments of around EUR 570 million, which have been used to, among other things, upgrade safety systems and straighten the railway line.
However, making trains faster across the board poses additional demands on rail safety, which will not be met with the available funding. In order to allow trains to run at speeds of up to 160 km/h on the entire Tallinn-Tartu and Tallinn-Narva lines, level crossings are required to be brought up to date with the Technical Regulation of Railways, waiting platforms should be reconstructed and the railway should be renovated. Just over EUR 90 million is missing for that. Allocating that sum before 2033 doesn’t seem feasible at the moment.
6. Shortage of construction mineral resources allowed to be extracted may put pressure on the cost of infrastructure project
The problem is the shortage of reserves of extractable construction minerals, in particular the scarcity of limestone of suitable quality for road construction, in existing quarries. According to forecasts made by the Ministry of Climate in 2025, the security of supply of some construction minerals in Harju, Rapla, Järva and Pärnu County remain below critical levels, but to date, not enough mining permits have been granted to extract the reserves in the necessary volume and at the rate needed for road and railway construction. At the same time, there is a shortage of alternative solutions to replace construction minerals. However, reserves of Estonia's construction minerals can only be used for infrastructure construction to the extent that they are allowed to be extracted.
In order to complete the already planned infrastructure in time, it is necessary either to open new quarries, to expand existing ones or to use more alternative solutions in the coming years. Otherwise, there is a risk that to complete infrastructure projects on time, construction minerals will have to be imported into Estonia, which would raise construction prices.
7. Maintenance of existing railways increasingly needs state funding
The difference between costs and revenues paid from the state budget to AS Eesti Raudtee in order to maintain the existing railway infrastructure has increased year on year. The reason for the increase in the subsidy paid by the state is that AS Eesti Raudtee's revenues, which are mainly from freight transport, have decreased significantly compared to a decade ago due to the decline in freight transport. At the same time, however, costs have increased, mainly due to higher speeds, electrification and increased passenger traffic. While just over EUR 17 million was granted in 2020, the forecast for 2030 is EUR 42 million.
Although the transport and mobility development plan aims to increase the share of rail freight compared to road freight to 40% by 2035, the 2024 transport results report states that this target will not be met. Rail freight volumes have been declining rather steadily over the last decade, falling to 12% in 2024.
8. Public transport is becoming increasingly expensive for the state
The state budget strategy for 2026-2029 foresees at least EUR 210 million in additional funding for the period of 2027-2029 to ensure that state-funded public transport services are maintained at their current level. Although the state target has been to increase the share of working people among public transport users, according to Statistics Estonia, their use of public transport has decreased over the last decade. According to satisfaction surveys, the main problem for people using public transport is that the timetables and routes do not match their real needs. Unfortunately, little research has been done on the needs of people who do not use public transport at all.
At the same time, support for public transport from the state budget has been increasing year by year and will continue to grow in the future. In 2024, the state subsidised regional bus transport from the state budget with approximately EUR 72 million, but according to the forecast of the Ministry of Regional Affairs and Agriculture, this will increase to approximately 87 million euros by 2029, and in the future, subsidies for all other modes of transport will also need to be increased.
Subsidies paid by the state for rail passenger transport have also increased. Between 2020 and 2024, passenger numbers have increased by almost 32%, whereas subsidies have increased even faster, by more than 50%.
From 2031 onwards, Rail Baltica should offer passenger transport on new railways as well. According to preliminary estimates by AS Eesti Liinirongid, regional passenger transport on the Rail Baltica will need EUR 10-15 million in subsidies every year. According to the calculations carried out by Rail Baltica Estonia which were based on the data from the cost-benefit analysis of the project, the costs of the infrastructure manager also need to be subsidised by a similar amount, i.e. EUR 10-15 million per year, at least for the first three years.
The core problem is that the Ministry of Regional Affairs and Agriculture has not defined what a sustainable public transport service should be in the sense of meeting the mobility needs of passengers and being reasonable in relation to the state budget. Decisions should be taken on where and how many people should be reached by the public transport service, and how often should at least a minimum level of transport service be offered.
9. Road safety has not improved as much as expected recently
The number of fatalities and serious injuries on the roads is on the rise, but the preventative actions expected to have the greatest impact on improving road safety have so far failed to be implemented at the scale and pace planned. The year 2024 stands out as one of the worst years for road fatalities in the last decade. While targets have been set to improve road safety by reducing the three-year average of fatalities and serious injuries year by year, these figures have not improved as much as expected since 2020.
The road safety programme ending this year has not seen results so far. Although measures and activities have been included in the implementation plans over the years to achieve the targets of the programme, in many cases there has been no financial coverage to carry them out as planned. Consistently, the plans have also included actions that have lacked political support and have therefore also not been implemented. In situations where measures to improve road safety have not been financially or politically supported, other measures should be proposed or ways to improve existing measures should be sought.
10. Construction of new ferry delayed, costs rising
There is still a lack of competition in the procurement of ferry services to our bigger islands, and delays in the construction of a new ferry increase service costs. In 2022, the state decided not to buy four ferries from a subsidiary of the Port of Tallinn. At the time, the Ministry of Economic Affairs and Communications was convinced that "the maritime industry was undergoing the biggest change in technology since the invention of the steam engine", and decided that there was no point in buying the ferries, which would have needed electric and hydrogen conversion due to more rigorous environmental requirements.
Already during the discussions on the ferry buy-outs, the National Audit Office drew the Ministry's attention to the fact that the information provided to the government did not really allow for an overall assessment of the costs of the alternatives and was not sufficient to decline to buy the ferries. For example, in its calculations, the Ministry had made the alternative of the buy-out right significantly more expensive by including unreasonable assumptions.
We are now in a situation where there are no state-owned ferries and no competition for the ferry service (the recent tender did not bring any new service providers), as the too short contract period does not encourage outsiders to build new vessels or rebuild existing ones.
Another problem is that the fifth ferry, Regula, which is currently used as a back-up, will reach the end of its service life in 2027. The new fifth ferry, procured by the state, was due to be completed by the start of the new contract period in 2026, but its procurement has repeatedly failed. The Ministry of Climate Action estimates that the fifth ferry will start sailing in 2028 at the earliest. In the meantime, however, a back-up vessel will have to be provided, either by repairing the Regula or hiring a ferry from elsewhere. All this increases the price of the ferry service.
In summary
It is clear that not all the targets set can be achieved with the available funding and given the state's capacity. Therefore, it is important that the Government of the Republic, in cooperation with the Riigikogu, decides which goals must be achieved, by what deadline and with what funding, where expenses can be cut and how more time can be bought regarding this issue. It is also important to determine how these decisions will affect our railways, public transport and traffic in a year or ten years' time. Furthermore, the effects of implementing or not implementing the measures on Estonia's development, including regional development, employment and competitiveness, must also be determined.
Janar Holm
Auditor General