Constructing four-lane highways will no longer be paid for by European Union funds, economics affairs minister Taavi Aas (Center) says.
This means that Estonia will need to either borrow to continue its roadwork, most notably on the Tallinn-Pärnu highway, and the Tallinn-Tartu highway, which is being widened and modernized in sections to two lanes, referred to in the Estonian media as a "2+2" configuration, or up the state budget.
While the EU has signed off on a €750-billion recovery package in the wake of the coronavirus pandemic, member states may not use these funds for road construction, partly due to environmental considerations.
"That EU money comes with a lot of strings attached to it. Mostly these are to connected with climate issues, hence cannot be used for road construction, unfortunately," Aas said.
The only exceptions to this are more environmentally-friendly transport projects, he went on.
"There are exceptions, such as non-motorized traffic routes, public transport, and of course train services. The EU no longer favors the construction of 2+2 highways, and it will no longer be possible to get money for these."
The principal authority responsible for roads and transport, the Road Administration (Maanteeamet) has a budget of €270 million per annum, but would require almost as much again to carry out the full improvement and 2+2 construction works, Aas said.
Aas also said a public-private partnership (PPP) project is in the works, regarding the Tallinn-Pärnu highway, which came with fewer domestic political strings attached, he said.
The time-frame for the switchover to non-EU funding bases either way is within the next couple of years, Aas said.
Current projects only run through to 2024, he added. The EU's new budgetary period starts next year and runs to 2027.
Estonia is in a transitional period, having crossed the 75 percent threshold of average EU purchasing power per resident during the 2014-2020 budgetary period, meaning cohesion policy funds available will fall in line with that, and significantly higher co-financing ratios will apply in the use of EU monies than had been in any case, even aside from the environmental issues affecting highway construction.
Brexit will also leave a hole in the union's budget.
Editor: Andrew Whyte