Helsinki-Tallinn tunnel will get $17 billion in Chinese investment

The tunnel could eventually link Europe by rail with an Arctic port in Norway.

799
Peter Vesterbacka, co-founder of FinEst Bay Area Development, attends a news conference on the Helsinki-Tallinn undersea railway tunnel in Helsinki, Finland December 3, 2018. (Vesa Moilanen Lehtikuva via Reuters)

HELSINKI — A train tunnel linking Helsinki with Estonia’s capital Tallinn has got a provisional 15 billion euros ($17 billion) in financing from China’s Touchstone Capital Partners, the latest infrastructure investment in Beijing’s Belt and Road plan.

FinEst Bay Area Development said on Friday it had signed a memorandum of understanding providing a third of the funding in private equity, which will give Touchstone a minority stake in the planned 100-kilometer (60-mile) tunnel, and two-thirds in debt.

Beijing’s Belt and Road initiative seeks to link China by sea and land with southeast and central Asia, the Middle East, Europe and Africa, through a network along the lines of the old Silk Road as well as an Arctic route. The Helsinki-Tallinn tunnel could eventually link Europe to the Norwegian Arctic Coast via a proposed new rail corridor from Rovaniemi, Finland to Kirkenes, Norway. However, a Finnish-Norwegian group working on that plan last month declared that the project — which was the object of some controversy — wasn’t commercially viable and would be shelved for the time being.

[Arctic railway not commercially viable, report says]

Finland and Estonia have for years considered linking their capitals, which are divided by the Gulf of Finland and the subsea tunnel would cut the travel time to around 20 minutes from the two-hour ferry ride used by tens of thousands of Estonians who commute weekly to the Helsinki area.

“The long term vision for Finland includes that we can get through the tunnel to Tallinn,” Finland’s Prime Minister Juha Sipila said this week during a visit to Estonia, which is a popular tourist destination for Finns.

FinEst Bay Area, which had earlier estimated the total cost of the tunnel at 15-20 billion euros, said financial details will be thrashed out with Touchstone over the next six months.

The firm raised the first external funding of 100 million euros from Dubai-based construction company ARJ Holding in December and is seeking European investors.

“Now, the financing is sorted and we can move ahead,” project leader Peter Vesterbacka, a former executive at the Angry Birds game maker Rovio, told Reuters.

A feasibility study commissioned by the governments of Finland and Estonia and published in 2017 said the planned tunnel could open in 2040 but Vesterbacka reiterated that it would be built by the end of 2024.

The project is yet to secure backing from the two governments and the European Union.

Earlier this week Estonia’s prime minister Juri Ratas stressed the need for security reviews of the project, along with the environmental studies which have already been started by the relevant authorities.

(Reporting by Tarmo Virki; additional reporting by Johannes Hellstrom; Editing by Tom Brown and Alexander Smith)