Estonia

Tallinn-Tartu road works	Port of Tallinn

Transport Infrastructure. Of the major transport infrastructure in Estonia, the ports and air transport facilities are considered adequate and not in need of public investment at this time. The railway system, now mostly privatized, has received assistance from the European Bank for Reconstruction and Development (EBRD). For the road infrastructure, the government has identified major roads supporting its transit and development strategy as Via Baltica in the western part of the country, the Tallinn-Narva road connecting Tallinn to St. Petersburg in Russia, and the Tallinn-Tartu-Luhamaa road connecting Estonia's two largest metropolitan areas and extending east to Moscow. Via Baltica has received financial support from the European Union (EU) because of its link to other European states, and funds from the IBRD-supported Highway Maintenance Project were used to improve the Tallinn-Narva road to an acceptable standard. The 2004 work program under the IBRD financed Transport Project included rehabilitation and safety improvements of road sections of Tallinn-Tartu-Luhamaa road, upgrading of which was considered by the government as high priority due to heavy traffic levels.  In 2005, Ministry of Economic Affairs and Communications (MoEAC) signed a contract with Ramboll A/S Danmark to conduct financial and environmental analysis for building Saarema fixed link (financed from EU ISPA and Cohesion Funds).

Roads.  Estonian Road Administration (ERA), a non-profit governmental organization established in 1990, is responsible for the national road network of 16,430 km. (Please see the World Bank analysis of Road Administration reform.) It operates under the Ministry of Transport and Communications (MOTC). The ERA operates in accordance with the Roads Act (February 17, 1999), and the Statute of the Road Administration (January 10, 1997). The ERA has been undergoing reforms since 1998. It was the implementing agency for the World Bank's Transport Project in Estonia, under which it made much progress in reforming financial management and maintenance contracting systems. ERA has also strengthened its environmental capability through including the Environmental Management Plan provisions in road works contracts and adopting Environmental Memorandum for locally-financed projects in compliance with Estonian legislation.  Estonia has also progressed in privatizing its maintenance operations, thus helping to stabilize financial needs and partially transfer the risk and responsibilities to the private sector. Road construction companies have been privatized entirely. During colder winters, Estonia has made good use of Ice Roads, as documented by a World Bank team following a visit to the ice road linking the main land to Hiiumaa Island in February 2003.

Road traffic safety has improved in Estonia but the situation is still among the worst in Europe.  Between 1999 and 2002, the absolute number of fatalities declined slightly from 232 people to 224, but the number of injured increased from 1691 to 2852. In 2003, the number of fatalities fell to 164. The growth in motorization will substantially increase the risk of death and injury for all groups of road users. The MOTC has delegated the responsibility for road traffic safety development to the ERA (read more on the overview of measures taken by Estonia.) As a result of a strategic alliance between the Dutch program Partners for Roads and the World Bank, A Practical Manual on Safe Road Design was published for the countries of Central and Eastern Europe. 

Railways. Estonia’s railways have been privatized: Edelaraudtee was transferred to private ownership by February 2001, and Eesti Raudtee (Estonian Railways) was privatized in 2001 with the Government retaining a 34% share.  Major maintenance and reconstruction works on the track are carried out by outside contractors. For overhauls and repairs of the rolling stock, the railway companies have their own depots but those works are partly contracted out as well. Total length of rail lines is 968 km. The main problems are insufficient capacity of main railway lines and border stations, and serious backlog in the technical condition of infrastructure and rolling stock, resulting in very low travel speed, problems with traffic safety and environmental protection. Since Estonia's Eastern border is also an EU border with Russia, it is necessary to reconstruct and enlarge the existing railway border station in Narva and build a new border station in Southeast Estonia (Koidula). In addition, reconstruction of the branching point of railroads entering Tallinn main railway station is foreseen. Another big project is to connect Paldiski port to the Tallinn-Narva railway line and form a Tallinn railway bypass, which would allow trains to run to Paldiski passing Tallinn. Since 66% of the shares of Estonian Railways Ltd are privately owned, a suitable form of partnership between private and public sectors must be found in order to modernize railway transport.

Aviation.  In Estonia, the aviation infrastructure and management remains the responsibility of
the public sector. The provision of scheduled air transport services has been partially privatized, by transforming the airlines to joint ventures with established international carriers and other investors. The State owns over 34 % of major airline Estonian Air. Passenger traffic has doubled after EU accession.

Trade Facilitation. Foreign trade represents a major part of Estonia's GDP: exports exceed 75% of GDP and imports exceed 80%. Transport, transit, and trade play significant roles in the Estonian economy, accounting for about 30% of GDP, compared to about 20% from manufacturing during recent years. The recent reorientation of trade towards processing of EU inputs for re-export enables Estonia to reach a new category of clients, more demanding quality-wise but also more rewarding in terms of value added. As illustrated by the trade statistics, the dependence on Russia has sharply decreased. Estonia has made progress in the privatization of its transport services and modernization of Customs procedures. ..... read more

World Bank Studies. The World Bank has completed and published the results of the Trade and Transport Facilitation Study in the Baltic States in February 2005. 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. In late 2003, the Ministry of Finance (MOF) decided to cancel all IBRD, EIB and NIB undisbursed loans because of the country's significant budgetary surplus. The World Bank's strategy in Estonia has given considerable emphasis to non-lending services. The WB-financed Transport Project completed in December 2005 led to rehabilitation of 240 km of roads thus reducing transport costs, improving road safety performance, strengthening of road administration, and improving competitiveness of trade supporting infrastructure and services.  The Bank also completed a project in highway maintenance that assisted the Government in preserving the Estonian road network, thereby avoiding the need for costly rehabilitation later, and helped improve the efficiency of road maintenance program in the future.

Updated March 15, 2006