If Sweden-Korea icebreaker deal stands, EU funds will support it
Some cry foul as the Swedish Maritime Administration plans to use EU funding to acquire an icebreaker from Hyundai Heavy Industries (HHI), a competitor of European shipyards.
This is a reproduction of an article that first appeared on Sixty Degrees North. If you would like to read more posts by Peter Rybski, you can sign up for his blog here.
Earlier this month, I reported that the Swedish Maritime Agency (SMA) had selected Hyundai Heavy Industries (HHI) of South Korea to build Sweden’s next icebreaker.
I then wrote an in-depth analysis of Davie’s appeal of the contract award, noting that while Davie’s appeal has merit, it may not be enough to overturn the award. This is because the SMA’s requirements for reference vessels were so broad as to be irrelevant to building a modern icebreaker.
In both of those articles I noted that Sweden was receiving funding support from the European Union (EU) to build its next icebreaker. I questioned if building the ship in South Korea would have any impact on the SMA’s ability to use the EU grant in this particular project.
On November 13th, Aleksi Kolehmainen, who has been following this story closely for Tekniikka&Talous, answered this question.
He reported that the SMA can and will use the almost 30-million-euro EU grant to purchase an icebreaker from HHI of South Korea (if the deal survives appeal):
The Swedish Maritime Administration (Sjöfartsverket) confirms to Tekniikka&Talous that the country has received EU funding for the acquisition.
“Yes, that is correct. We have received 30 million euros in EU funding from the Winmos III programme together with Finland and Estonia,” says Jonas Franzen, Deputy Director of Communications and Public Relations at Sjöfartsverket.
(Machine translated by Google. Original article behind paywall)
Franzen apparently did not provide the breakdown of the funding by country. Most of the grant is going to Sweden:
However, the Finnish Ministry of Transport and Communications specifies that Sweden’s share of the 30 million euros in funding is 98 percent, or in practice 29.58 million euros, and Finland’s share of the rest, or 1.42 million. Estonia has not been involved in the project.
The SMA sees no problem with using EU funding to purchase an icebreaker from South Korea, instead of a European shipyard:
Although the use of EU funds for ships purchased from outside Europe has been questioned in Finland, according to the Swedish Maritime Administration, there are no obstacles.
“We consider that we comply with the EU’s own laws and rules on international procurement, according to which we are not allowed to discriminate against countries outside the EU in procurement,” Franzen emphasizes.
According to him, the agency has also confirmed this with the European Union.
“We have confirmed this with the responsible persons with whom we are in contact regarding the WINMOS project,” says Franzen.
SMA hopes for quick resolution, sees potential for future cooperation with Finland
In an article for HBL, Patrik Harald, who interviewed me earlier this year, interviewed Erik Eklund, the Director General of the SMA:
[H]e says that every month’s delay is bad considering the need to replace the old icebreakers.
– We hope that the appeal will be decided in the first instance, the Administrative Court, before Christmas. But there is a risk that the decision will be appealed to the next instance and that we will have to wait many months for a final decision
(Machine translated from Swedish by Google. Original article behind paywall)
The project is already delayed, as an earlier tender for two icebreakers received no valid bids (reportedly because of cost), resulting in a second tender for only one icebreaker.
And the delays are getting expensive, as Sweden’s icebreakers are aging, resulting in a higher maintenance bill. Earlier this year, the SMA faced a budget crisis and was considering laying up an icebreaker to save money. In August, the EU granted Sweden funding to directly support icebreaker maintenance.
Of Sweden’s six state icebreakers, five were built in the 1970s and 1980s. According to Erik Eklund, the fact that the icebreaker fleet is old means that a lot of money is spent on maintenance. It is also riskier to operate old ships.
– The need for new icebreakers is greater than we have the money for right now.
Sweden’s national infrastructure plan includes a proposal to acquire another large A-class icebreaker. But no political decision has yet been made.
Thoughts and Comments
The first article I cited confirms that the Swedish Maritime Authority can, and intends to, use nearly 30 million euros in EU grant funding to purchase an icebreaker built in South Korea. I find it surprising, as it seems such funding should be used to support European industry. However, there are apparently no such restrictions on the grant, the purpose of which is to help Sweden acquire an icebreaker. Perhaps this is something to consider for future funding.
Reflecting on the original plan, it seems that Finland and Sweden have stumbled into a less efficient path. The Swedish icebreaker procurement initially began as a joint design project with Finland. If continued, this could have avoided some duplication and potentially saved the governments of Finland and Sweden time and money, even if the icebreakers in the end were not exactly the same. (They likely wouldn’t be the same, as there are some differences between icebreaking requirements in Finland/Sweden). Just how much would depend on the details, of course.
More to follow, and I’ll be watching. In other recent news (that I hope to cover soon), the governments of the United States, Finland, and Canada signed a Joint Statement of Intent on the Icebreaker Collaboration Effort (ICE) Pact on Wednesday.
Until next time.
All the Best,
PGR
Any opinions expressed in this article are those of the author and do not necessarily reflect the views of Arctic Today.
Peter Rybski is a retired U.S. Naval Officer who has been living in Finland since 2017. On his blog, he writes about subjects including military policies and capabilities, history and Nordic living.
