Costly stretch of highway becomes a hit after all
Järvenpää - Lahti motorway came with a price tag of over three million euros per kilometre
By Juha Salonen
A success story.
A growth corridor.
The stretch of motorway on Highway 4 between Järvenpää and Lahti is being praised in flattering terms seldom heard when the talk is about something as prosaic as a piece of road.
So, there must be something special about this 70-kilometre strip of dual carriageway asphalt.
This despite the fact that at first glance the piece of Finnish highway that is being travelled by Järvenpää resident Maarten Odde de Bonniot seems to look quite ordinary.
“In my view, this has been a good investment from the perspective of Finnish tax-payers”, Odde de Bonniot declares from behind the wheel of his car.
Odde de Bonniot is not budged from his opinion even by the exceptionally high asking price.
The first-ever Nordic motorway that has been built with private money has cost a lot more than similar stretches financed through traditional budget funding.
“One of the signs of a civilised country is a good and functioning road network”, Odde de Bonniot reckons.
In the summer of 2012, the government will buy out the Lahti motorway that has been realised by using the so-called life-cycle model.
By then the stretch of road will have cost the society a modest EUR 237 million.
Before the handing-over ceremonials, one more winter’s snows will be ploughed off the surface of the motorway. This will be done by Nelostie Oy, a company responsible for the construction and maintenance of the road.
The company’s EUR 210 million investment will be paid back based on the amount of traffic using the road.
Nelostie Oy will cash in on every kilometre that Odde de Bonniot has driven on the road.
When the contract period between the two parties draws to close, the motorway will have earned Nelostie Oy an estimated EUR 27 million in profit.
Evenly distributed, this translates to EUR two million per each contract year.
“In the early years the profits failed to cover the costs. The first time the balance sheet showed a positive result was in 2005”, explains Nelostie Oy CEO Tom Schmidt.
”After the balancing of the accounts turned profitable we have been able to pay dividends.”
Ultimately the Finnish tax-payers will have been the ones to pick up the tab.
Each kilometre of the motorway between Järvenpää and Lahti will have cost them more than EUR three million.
This also includes the construction of 88 new flyover bridges, 8.5 kilometres of noise prevention walls, and around 130 kilometres of fencing to deter elk from straying onto the highway, where they would present a serious threat to life and limb.
Juhani Tervala, Director-General of the Finnish Transport Agency, reckons that with regular budget funding the total price could have been halved.
“The state gets cheaper loans and it would have been paid back more quickly. Now the loaned money came with a higher price, but we achieved more with it”, Tervala reasons.
Tervala points out that the road was completed about a year ahead of schedule in the autumn of 1999. In spite of the growing traffic volumes, the road fatality figures in particular have gone down considerably.
Tervala also notes that at the time the road was ordered the country’s public economy was in a bad shape after the recession. There was no money on the table for large projects like this.
“In those circumstances this road would not have been built at all. The post-funding model was the trick that allowed us to get the stretch completed at least five years earlier than would have been possible otherwise.”
The life-cycle model was in use also in the Lohja-Muurla motorway project on Highway 1 between Helsinki and Turku.
Private money will next be used to build the motorway stretch between Kotka and Koskenkylä, on Highway 7 between Helsinki and the Russian border at Vaalimaa.
Helsingin Sanomat / First published in print 24.10.2011
Previously in HS International Edition:
Opening of new motorway puts end to Heinola traffic jams (15.11.2005)
Highways in Finland (Wikipedia)
Finnish Transport Agency
FTA: Highway 7 from Koskenkylä - Kotka using life-cycle method
Highway 4 (Wikipedia)
JUHA SALONEN / Helsingin Sanomat