Helme: Public focusing too much on PPP implementation costs
When it comes to public-private partnerships (PPP) in the widening of highways into four-lane roads, the public is focusing too much on the cost of their implementation and not taking into account the advantages they offer, Minister of Finance Mart Helme (EKRE) said.
"In the case of a PPP, the current public debate is focused too narrowly on the cost of implementation, forgetting that costs should always be considered in comparison with the achieved results and benefits involved," Helme told ERR on Tuesday.
ERR had asked the finance minister to comment on Road Administration Director of Strategic Planning Martin Leng's estimate that widening an additional 340 kilometers of Tallinn-Tartu Highway, Tallinn-Narva Highway and Tallinn-Pärnu Highway would cost €1.7 billion and take approximately 15 years to complete.
"First of all, the use of a PPP allows us to implement projects significantly faster than if we were to continue using current methods, and it will certainly help stimulate our economy and, through that, increase our wealth," Helme stressed. "Second, people tend to forget when it comes to roads, for example, that if a PPP partner takes on the responsibility of long-term road maintenance in addition to the commitment to build, then we can expect a significant increase in road quality."
Helme explained that maintenance obligations will comprise of two parts: one will involve snow clearance and de-icing, and the other, more important, will consist of technical maintenance, meaning road repairs for the entire period, which will likewise be shouldered by the developer.
"If we're talking about 25-30 years in the case of infrastructure, then the state will not have to address roadwork and maintenance separately on top of that," he said. "So a PPP may indeed seem like an expensive development, but in the long term, it may even end up cheaper. The private sector would also take on the organization of all of this work, saving state resources, even just on labor costs."
Such projects also don't fall under the government sector's budget, meaning that the government doesn't have to take out any loans to finance them, and they won't affect any budget balance figures, he added.
"The widening of the entire primary network of highways into four-lane roads will definitely end up costing a great deal of money, but for the budget this means a long-term lease or loan payment in an amount that wouldn't exceed the current cost of the section-by-section construction of four-lane roads and expenses for the maintenance of these same sections," Helme explained. "The utilization of the opportunities provided by PPP in such a manner is a new opportunity in Estonia, the framework of use for which the Ministry of Finance is currently developing. Buildings in Estonia have previously been built using a PPP, but not infrastructure."
Annual expenses can be assessed and commented on once the finance ministry's framework for the implementation of PPP projects is complete and the results of the first procurements are in, he added.
Commenting on the fact that road work under the first PPP cannot begin before the end of the current government's term, Helme noted that it's natural for large-scale infrastructure projects to take longer than one election cycle.
"Your question may hint at why our previous governments haven't been capable of launching projects of critical importance to the state and move forward with them fast enough," the minister noted. "Perhaps they have thought too much about the government's mandate and less about the interests of the state. The current government has clearly taken a different approach."
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Editor: Aili Vahtla