The European Investment Bank (EIB) and Estonian national railway infrastructure manager AS Eesti Raudtee have signed a €45 million loan agreement to accelerate the country’s transition to sustainable transport.
The company will use the EIB financing to upgrade the rail network and the associated infrastructure, increasing the share of the country’s rail network powered by electricity at the expense of existing diesel traction.
The planned works, which cover key sections of Estonia’s rail network, will also improve the safety and punctuality of train services and develop a transport management system that complies with European Union requirements.
The upgrades are due to be completed by 2030.
The electrification of the final section near Tallinn — supported by the EIB loan — will enable Eesti Raudtee to complete its national electrification programme. Once finished, a total of 600 kilometres of railway, representing 50% of the network, will be electrified.
“This investment is a strategic boost for Estonia’s rail infrastructure, making transport faster, cleaner, safer and more efficient,” said EIB Vice-President Karl Nehammer, who took office on September 1, 2025, and is responsible for operations in Estonia.
“The loan agreement with Eesti Raudtee reflects how EIB financing drives climate action, strengthens regional connectivity and supports long-term resilience in cohesion regions.”
The project will improve rail connectivity for passengers across Estonia and green freight transport in the country. In addition to reducing emissions and bolstering safety, it will cut noise pollution.
“We have launched a very ambitious investment plan until 2030, which will take the quality and safety of our railways to a new level and help make rail transport even more environmentally friendly,” said Kaido Zimmermann, chairman of the Management Board of Eesti Raudtee.
“The EIB has been a good partner in achieving this goal and the new loan agreement will help us implement these plans even better.”
The EIB financing complements EU and national grants and offers flexible terms to accelerate implementation.
It builds on a €113.5 million EIB loan signed in 2020, bringing the bank’s total support for Estonia’s railway modernisation to nearly €160 million.