Eastern border to require €320 million

Photo: PPA

Development of Estonia’s eastern border, price of which was already adjusted up by €100 million in February, will require a further €60 million, putting the final sum at €250 million. Another €70 million will have to be spent on maintenance, the border project set to land on the government’s desk today reveals.

It is the third estimate for the border development. The project’s cost was estimated at €80 million a few years ago. News that the border will cost a hundred million euros more than planned released a storm of indignation in the media this February.

At the time, the Police and Border Guard Board (PPA) put the cost estimate at €188 million that caused Minister of the Interior Andres Anvelt to put on hold the procedure of appointing PPA Director General Elmar Vaher for a second term.

Price subject to change again

Anvelt and Vaher settled the communication error between the agencies; however, a State Real Estate Ltd. (RKAS) expert analysis set to reach the government today finds that the border development will end up costing more: €320 million. The latest estimate includes average price advance in the construction sector for the past five years at 7 percent.

But even that might not be the final figure. “The forecast might be uncontrollably changed by other major projects in the coming years, such as Rail Baltic and construction of national roads,” an internal document at the disposal of news agency BNS suggests. “Bigger expenses might also be caused by rising fuel and labor costs.”

RKAS finds that the effect of price advance is lower on the border project compared to buildings as mechanisms and filling make up a big part of total costs prices of which will likely not grow as quickly as those of buildings.

A simplified view of RKAS’ expert analysis suggests that if the border project was previously estimated to cost €25.4 million in 2019, it will actually cost €31.8 million.

By 2020, the difference would be more than €20 million etc., provided other projects do not hike construction prices even more. The final price of eastern border infrastructure also depends on other construction tenders.

With the forecast in mind, the Ministry of Internal Affairs will ask the government for an additional €179.3 million for the project. That is just €40 million short of Estonia’s total alcohol excise duty receipt for last year. The same money could be used to construct two four-lane sections of the Tallinn-Tartu highway between Kose and Ardu (€50 million) and two more between Kose and Võõbu (€38 million). Politicians have referred to the latter as Estonia’s project of the century in roadbuilding.

More than a million a month to maintain

However, completion of border infrastructure would not be the end of pressure on the state’s wallet. A modern border sports considerable maintenance costs: €15-16 million a year beginning in 2027.

The government has set aside a maintenance budget of €25.8 million until 2026. It is clearly too little for the next eight years which is why the ministry is also applying for an additional €44.2 million for maintenance before 2027.

All this comes to a total price tag of €320.3 million for the eastern border. Sources for covering development, service and maintenance costs only exist for €96.8 million today, BNS reports. That is around €220 million short of what the expert analysis estimates is needed.