The majority of construction projects planned by local governments will need to be postponed or scrapped due to the rising price of construction materials, supply chain difficulties and labor shortages, a deputy mayor of Tallinn said on Tuesday.
Deputy Mayor Andrei Novikov (Center) said construction prices have risen by 20 to 30 percent on average for all projects planned in the city's budget.
"In essence, local governments now have to answer the question of whether to cancel every fifth investment or find extra money," he said on Tuesday.
The official said decisions about postponing or canceling future investments must be made by the summer. He said the council understands the situation is difficult both in terms of finances and design.
A rise in construction prices and the fallout of Russia's invasion of Ukraine have made labor and supply shortages additional factors, further boosting prices.
Novikov said all of this means investments will need to be canceled and deadlines for existing projects must be extended.
Tallinn has the highest construction volume of any local government, but others will also be affected.
Deputy Mayor of Tartu Gea Kangilaski (SDE) told ERR the completion of the Tartu Cultural Center (SüKu) will be postponed from 2027 to 2029. The cost could also rise from €60 million to almost €100 million.
Projects must be abandoned
Novikov said Tallinn will make a list of short-term and long-term investments and make decisions in the near future. The city budget strategy will also be discussed.
He said there are already plans to postpone several investments, but did not give any more detail: "If agreed, we will let you know." Novikov said some of the outcomes will be known when tenders are submitted, as the offers will be too high. "In some cases, policy choices have to be made" he added.
An additional budget to finance investments has not been ruled out, the deputy mayor said.
"Before we decide, we have to look at the whole thing and say figuratively that today we are not buying two buses, we are buying one, but we are still repairing two kindergartens in its place," Novikov said.
The official said rising prices also strongly affect road construction.
"Considering that the metal component in road construction, especially in the construction of bridges, is very large, these objects are impacted the biggest today," he said.
Editor: Helen Wright