Lithuania

Klaipeda Port.	Lithuanian railways	Breakwater works in Klaipeda Port

Due to Lithuania's geographic location, the transport sector, particularly freight transit, plays a key role in the country’s economy. Freight shipments between the East and the West are the core of the transit industry. Lithuania has only one major seaport, the Port of Klaipeda, which is the hub of the transit industry. Transit services for freight flow are provided along three main corridors: (i) East-West (major): to/from Russia and other CIS countries, via Belarus, Vilnius and Kaunas to Port of Klaipeda, and on to Scandinavia and Western Europe; (ii) North-South: to/from Finland, via Estonia, Latvia, Kaunas and Sastokai, on to Poland, Germany and Central Europe (road section is known as Via Baltica); and (iii) East-West (minor): to/from Russia and other CIS countries, through Kaunas, on to Kaliningrad.

Lithuania inherited from the FSU an adequate transport system in all modes. However, since independence, transport infrastructure has not been appropriately maintained or rehabilitated due to lack of resources, resulting in transport cost increases. Reorganization of industry, the collapse of FSU structures and liberalization of energy prices have eliminated uneconomic movements, leading to a complete transformation of trade and transport needs in the region. This caused initially a drop in traffic of at least 50% of pre-independence levels. Ministry of Transport and Communications (MOTC) is responsible for the general transport policy in Lithuania. The transport and transit industry is an attractive activity for the private sector. However, because of the perceived strategic importance of transport enterprises, the Government decided to keep key companies such as Lithuanian Railways and the Klaipeda Seaport as semi-public enterprises. Privatization in the sector has mainly been significant in logistic services, road transport, and port operations.

Ports.  Lithuania’s major seaport Port Klaipeda has several advantages in cargo shipment over other ports in the region: it is ice free year round; it has a four lane European standard motorway to Vilnius and rail connection to the East and Moscow; and it offers a faster transport route to Russia from the West, compared to land transport through Poland, avoiding rail transshipment before entering into Poland and bottlenecks at border crossings. Despite this favorable position, the port still needs to improve its current infrastructure to remain competitive in the future. 

Roads. Lithuania’s total road network is 69,067 km. The network size and its reach are adequate but the quality is not. National Government owns and maintains 21,335 km of roads. 376 km of European standard motorways serve the highest density routes of Vilnius-Kaunas-Klaipeda and Vilnius-Panevezys. In the late 90s,under the Government's stringent stabilization program to reduce inflation, Lithuanian Road Administration’s (LRA) had to cut its budget for pavement maintenance operations leading to deterioration of physical infrastructure. Since then, the road sector financing situation has significantly improved with the creation of a road fund (already closed) and the provision of loans by IFIs, including IBRD. These resources have enabled LRA to address maintenance needs and partially the maintenance backlog.  Road construction companies have been privatized, and road maintenance is contracted out to the private sector on a competitive bidding basis. 

Road safety in Lithuania has improved but the situation is still one of the worst in Europe, with 202 deaths and 2080 injuries per million of population in 2003.  In an effort to curb the accident rate trend in Central and Eastern Europe, a strategic alliance has been formed between the Dutch program Partners for Roads and the World Bank to jointly contribute to development of safe road design. As a result, A Practical Manual on Safe Road Design was published.

Railways. The Lithuanian rail network consists of 1775.3 km with 557 km of double track. Lithuanian Railways (LR) is a profitable state owned company (in 2003 profit was USD 5.1 mln). The main rail corridor is situated on the route Russian mainland–Kaliningrad – Corridor IX –Klaipeda – Kaunas – Belarus.  The present railway sector is rather backward in technical, economic, technological and organizational terms in relation to the modern interacting railway systems of EU Members. Insufficient funding for maintenance and development has led to obsolescence of the rolling stock, lack of spare parts, and limited train speed. These difficulties are unlikely to become a bottleneck in the near future, given the existing spare capacity of LR.  Railway restructuring needs to continue in the following: separate commercial operations from rail administration, reduce over-capacity, rationalize tariffs, raise safety levels, and improve railway services. Infrastructure should be modernized to such extent that average speed on the Lithuanian railways is increased to at least 120 km/h. (Single Programming Document for Lithuania 2004-2006).  Lithuania plans to invest in several reconstruction, development, and technical improvement projects in the railway sector financed through national and EU funds.

Aviation. Lithuania has an oversupply of airports. It inherited from the FSU three large airports: (i) Vilnius; (ii) Kaunas; and (iii) Siauliai, plus many smaller ones, which were designed largely for military purposes. Air infrastructure management remains in the public sector. However, major national carrier Lithuanian Airlines was privatized by a local consortium in 2005. The subsidiary airline of the national flag carrier was privatized earlier. Passenger traffic has doubled after EU accession. 

Urban Transport. In Vilnius and Kaunas, buses and trolley-buses are the main modes of urban transport.  There are 46 bus companies and 2 trolley-bus lines in Lithuania, all municipal. In addition, private bus companies licensed by municipalities provide services both within and beyond urban centers where public transport services are not sufficient or non existent. Lack of public funds for urban transport is the main obstacle to increased effectiveness of services.  The MOTC attempts to reach a fair balance between municipal and private companies in the provision of urban transport services.  The principal needs are to overcome the continuing deterioration of public transport facilities, alleviate traffic congestion on city streets and secure a stable source of funding for urban passenger transport companies.

World Bank Studies. The World Bank has recently completed and published the results of the Trade and Transport Facilitation Study in the Baltic States. The study provides a review of international trade and transport, identifies difficulties and necessary measures to enhance trade in the region such as improving procedural and documentary requirements and quality of services and infrastructure to traders. The Third Seminar on Restructuring of the Transport Sector in the Baltic States was held in Vilnius, Lithuania, in February 2005. In addition, two dissemination seminars of the World Bank Toolkit for Public-Private Partnership (PPP) in Highways were held in Riga (September 2004) and in Tallinn (October 2004), focusing on main risks of PPP highway projects. 

World Bank Projects. Klaipeda Port Project is currently under implementation. The main objective of the project is to strengthen the long term competitiveness of Klaipeda port and to improve environmental conditions by preventing spills, upgrading waste reception facilities, and monitoring environmental conditions. The World Bank-financed highway project completed in 2000 assisted the Government of Lithuania in preserving its road network and improving the efficiency of its road maintenance operations.  Currently, the World Bank is discussing the assistance strategy to Lithuania with the Lithuanian Government.

Updated February 10, 2006