E LECTRIFICATION OF L ATVIAN RAILWAY NETWORK 1

O PERATIONAL P ROGRAMME FOR THE EU F UNDS P ROGRAMMING P ERIOD «G ROWTH AND EMPLOYMENT » 6.2. I NVESTMENT PRIORITY : D EVELOPING AND RESTORATION OF COMPREHENSIVE, QUALITY AND INTEROPERABLE RAILWAY SYSTEMS, AND PROMOTING NOISE REDUCTION MEASURES SPECIFIC OBJECTIVE : P ROVIDE COMPETITIVE AND ENVIRONMENTALLY FRIENDLY TEN-T RAILWAY NETWORK BY CONTRIBUTING ITS SAFETY, QUALITY, AND CAPACITY S PECIFIC OBJECTIVE ACTIVITY : «E LECTRIFICATION OF L ATVIAN RAILWAY NETWORK » 2

Current situation: Electrified km of railway lines The currently existing DC 3 kV network covers 4 line sections:  Riga – Skulte;  Riga – Tukums;  Riga – Jelgava;  Riga – Aizkraukle. 3

Results to be achieved: improving internal and external connections to increase efficiency of railway operation and competitiveness of East – West railway corridor to reduce driving time to reduce traction rolling stock operating costs to improve efficiency of use of infrastructure reduced environmental pollution due to emissions created by diesel fuel. Initial environmental impact assessment concluded that the project will reduce noise generated by electric locomotive engines in comparison to diesel engines, thereby reducing noise levels received in the areas adjacent to the rail corridor. 4

E LECTRIFICATION OF L ATVIAN RAILWAY NETWORK O UTCOME INDICATOR OF SPECIFIC OBJECTIVE ACTIVITY :  T OTAL LENGTH OF RECONSTRUCTED OR UPGRADED RAILWAY LINES KM. R ESULT INDICATOR OF SPECIFIC OBJECTIVE ACTIVITY :  D ECREASE OF CO2 EMISSIONS IN RAILWAY TRANSPORTATION IN COMPARISON WITH 2012 – 49%. C OHESION FUND CO - FINANCING :  346,63 MLN. EUR (76 % FROM THE SPECIFIC OBJECTIVE FINANCING ) I NDICATIVE BENEFICIARIES : S TATE J OINT -S TOCK COMPANY “L ATVIAN RAILWAY ” 5

E LECTRIFICATION OF L ATVIAN RAILWAY NETWORK F ULFILLED ACTIVITIES WITHIN PROJECT FRAMEWORK - I 6 1)Initial evaluation has been carried out. Initial total costs of project have been assessed as an amount of 549,2 million EUR. 2)Environmental impact assessment has been carried out in )Sketch project has been designed in Evaluation of project total costs (I and II phase) reached 1,5 billion EUR. 4)JASPERS experts carried out repeated analysis of project costs. Evaluation of possible project cost reduction has been evaluated as 10-20%. 5)SJSC LDz technical experts carried out evaluation of the project volume and railway network routes that should be electrified during the 1 st phase. Conceptual support has been given to the 3 rd alternative. 6)Technical solution conditions of JSC “Pasažieru vilciens” (“Passenger train”) tender on purchase of new rolling stock with 3kV have been taken into account in the 3rd alternative.

E LECTRIFICATION OF L ATVIAN RAILWAY NETWORK F ULFILLED ACTIVITIES WITHIN PROJECT FRAMEWORK - II 7 7) Meetings with JASPERS expert on the supported evaluation alternatives were organized on October 30 th and November 3 rd, ) During the meeting with JASPERS expert on November 3rd, 2015 it was decided to carry out Multi Criteria Analysis (MCA) of LDz proposed alternatives in order to choose another comparable alternative to the 3 rd one. Cost - Benefit Analysis (CBA) will be performed to justify the 3 rd alternative as the most feasible one. 9) A more detailed description of LDz proposed alternatives shall be elaborated, emphasizing technical and technological characteristics of alternatives and their impact on the 2 nd phase, and sent to JASPERS experts for evaluation until November 23 rd, ) Terms of Reference shall be developed for elaboration of MCA and CBA and sent to JASPERS experts for evaluation until mid of December The tender shall be launched until the end of year ) Project application with supportive documentation package will be developed and submitted for evaluation after elaboration of MCA and CBA until October 2016.

8 B EFORE DESIGNING SKETCH PROJECT ( FEASIBILITY STUDY 2011): 549,2 MLN. EUR A FTER DESIGNING SKETCH PROJECT (2015): P OSSIBLE PROJECT IMPLEMENTING MODEL IN TWO PHASES : 951,4 MLN. EUR ( THE FIRST PHASE 950 KM ) 539,8 MLN. EUR ( THE SECOND PHASE 550 KM ) 3 RD ALTERNATIVE OFFERED BY S TATE J OINT -S TOCK COMPANY “L ATVIAN RAILWAY ” AFTER SKETCH PROJECT EVALUATION 465 MLN. EUR ( TOTAL COSTS OF THE FIRST PHASE ) P LANNED ELIGIBLE PROJECT COSTS :

E LECTRIFICATION OF L ATVIAN RAILWAY NETWORK 9 Alternatives evaluated by SJSC LDz Presented to the representatives of JSC LDz, Ministry of Transport, Ministry of Finance, State Railway Technical Inspectorate, and JSC “Pasažieru vilciens” on October 21 st, 2015

E LECTRIFICATION OF L ATVIAN RAILWAY NETWORK ALTERNATIVE SUPPORTED BY SJSC LDZ BASED ON PREVIOUSLY LISTED ALTERNATIVE EVALUATION 10 3 RD ALTERNATIVE 2 X 25 K V OVERHEAD SYSTEM WILL BE CONSTRUCTED IN DISTRICTS R IGA -J ELGAVA, R IGA – T UKUMS, AND R IGA – S KIROTAVA ACCORDING TO THE PRELIMINARY DESIGN PROJECT WITHIN THE SIZE OF THE EXISTING OVERHEAD SYSTEM, THUS PROVIDING OPERATION OF 3 K V DC ELECTRIC PASSENGER TRAIN TRAFFIC IN THE INITIAL PERIOD. C ONSTRUCTION OF THE OVERHEAD SYSTEM WILL BE PERFORMED IN THE FULL SIZE SPECIFIED IN THE PRELIMINARY DESIGN PROJECT IN THE DISTRICT S KIROTAVA -K RUSTPILS -D AUGAVPILS : ELECTRIFIED CARGO TRAIN TRAFFIC AND DUAL 3 K V DC/25 K V AC PASSENGER TRAIN TRAFFIC IS FORECASTED IN THIS DISTRICT. N EW 110/2 X 25 K V TRACTION SUBSTATION WILL HAVE LOWERED POWER CONVERTER CAPACITY AND WILL BE EQUIPPED WITH REDUCED BALANCING DEVICE.

E LECTRIFICATION OF L ATVIAN RAILWAY NETWORK P ROJECT TIME FRAME : planned vs actual

E LECTRIFICATION OF L ATVIAN RAILWAY NETWORK Initial project implementation schedule has been prepared using the feasibility study on JSC “Latvian railway” electrification developed by ETC COWI GRE in year 2011, where planned project costs were evaluated as million euro. The delay in project implementation schedule occurs due to significant increase of project costs, which reached 1.5 billion euro according to the project costs evaluation made within preliminary design project development in December, The Ministry of Transport has requested JSC “Latvian railway” to make a conceptual decision on the further implementation of the project, cost and implementation volumes, and electrified railway network route directions, as well as to organize the necessary consultations with Jaspers experts on selection of a relevant solution and on project application development. SJSC “Latvian railway” organizes monthly meetings on project monitoring, thus contributing into information exchange on project progress and mutual synergy of transport infrastructure projects. Representatives of the Ministry of Transport and JSC “Pasažieru vilciens” also participate in these meetings. 12