Taavi Aas: Nuclear plant would be nice but we lack necessary specialists

Minister of Economic Affairs and Infrastructure Taavi Aas. Photo: Sander Ilvest

Minister of Economic Affairs and Infrastructure Taavi Aas (Center) keeps Nordica as backup in ongoing aviation crisis.

You were in favor of using the PPP (public-private partnership) financing model for the construction of four-lane highways as a member of the previous government, while you seem to have changed your stance in the new one. Whence this about-turn?

I couldn’t tell you where this notion that I have completely changed where I stand comes from. I answered questions regarding PPP in the Riigikogu and pointed to cost. I added that the most expensive option socioeconomically would be not to construct these highways at all. I still believe that PPP is one available option.

We have funding for the construction of four-lane highways until 2024, while we need to think about what comes next. Whether we need to borrow or whether our fiscal situation will allow us to fund these projects from the state budget. Or whether to use the PPP option. Estonia lacks experience regarding the latter, which is why I still believe it would be good to see one PPP project through to get there. To put together all the source material, documents and contracts to have it as an option in the future. I’m not ruling out the possibility that loan money is the most sensible way to build roads. I believe it is sensible to borrow for infrastructure investments. All private businesses do it and it is normal process. Of course, it would need to be accompanied by budgetary funds.

It is said that Estonia finds itself in a very poor fiscal situation. Things are not all that bad in reality because past forecasts fail to take into account the fact our economy did better than we feared last year. Secondly, fiscal forecasts today do not include money freed up from people leaving the second pension pillar. It was impossible to consider before the reform took effect, while we are now getting a picture of what we can count on from there. While we used to forecast public sector debt for 2024 at 30-31 percent, it will be closer to 27 percent based on what we know today. More accurate figures will become clear in the spring fiscal forecast.

Let us be honest and admit that we cannot afford to build these highways with state budget funds alone, especially in the conditions of a pandemic.

I agree completely. However, a part of it will need to come from the budget. Even if we opt for PPP, we need to start making payments eventually. It needs to be paid for through the state budget one way or another. The same goes for loan payments.

Which road section might we be talking about? We have been discussing the Libatse-Nurme section today. Whether it will be that section of highway or another, what matters is having a PPP road project in the works by 2024-2025. It requires having worked through all the necessary documentation by then. Looking at how things have progressed so far, just finding a consultant has taken six months longer than planned. We wanted to have a consulting contract in place by August. We can say that the procurement for a consultant for the Libatse-Nurme section has been completed today. Next, we need to decide whether to take it forward or decide in favor of a different section of highway.

The first section could be nearing completion in 2024?

I believe that rather we can start building in 2024. That is the realistic timeline here.

What about the Saaremaa bridge? Will there be one?

The Saaremaa bridge needs further surveys and will boil down to the environment. If environmental surveys say that it is possible to build the bridge there without considerable environmental damage, we can move forward with the project. While it would not be feasible to proceed if it is found to be impossible or senselessly expensive. That would constitute a different situation and make it impossible for us to talk about a bridge to Saaremaa. The environment is key.

The coalition agreement makes mention of nuclear energy. Can we say the government is in favor of building a nuclear power plant?

It is something on which we need a public debate. Are people ready? If not, we can just leave it there. But if society is ready, the next thing would be to pursue increased competency because one cannot even study it in Estonia today. Where would we get the specialists to work there? We also need experts who can exercise supervision and handle support functions, such as training new engineers. We do not even have people who could train future teachers at this point. Another fact is that next generation nuclear power plants are still in the development phase. Work on them is just beginning. I think we need a public debate, while we also need to know a little something about what we will be debating. These discussions should not take place on the level of, “Look what happened in Chernobyl.”

There is considerable risk. The term “nuclear plant” constitutes a red flag for a lot of people.

That’s just the problem. In order to have a discussion, we need to know what we’re talking about. We are talking about next generation molten salt reactors that work on an entirely different principle. We need people who are capable of talking about it and explaining these things. Alas, I think that if we can find some measure of clarity by the middle of the next decade, we will already be well on our way. These things will take a very long time in Estonia.

There was a fair bit of confusion in aviation last year. Additionally, Estonian national airline Nordica complained of not receiving aid from the state and said they are looking at having to close doors. What will happen there?

Aviation restrictions were an agreement between the Baltic countries. We wanted to create a so-called Baltic bubble to keep travel between the three countries as open as possible. This also required agreements on how to treat people coming from outside the Baltics. Hence the restrictions.

By the way, different countries still maintain such restrictions, even though the EU directive that allowed for temporary border closures expired this year. It is no longer in effect, while we can still see European countries sporadically laying down restrictions.

As concerns Nordica and the state aid package, I must admit it was not easy to sell the government on it. We all know what has happened in the past, as do members of the cabinet, and it has left people cautious. Telling the government that Nordica will do fine in the future is just impossible. It took a lot of convincing. We can say today that Nordica – just like Estonia in general – has done better than we feared. I still believe that we need Nordica as a backup option as there are no signs of the aviation crisis ending today.

What will air traffic look like in the coming months? Has last year’s confusion begun to dissipate?

I believe it will not be solved in the coming months. It will not be solved before a critical mass of people have been vaccinated in Europe to facilitate freer movement. When will people be vaccinated everywhere and free travel be restored? It is practically impossible to say today as even wealthy countries do not have enough vaccine. Only the uberwealthy can afford to pay for vaccination outside of queues. And it is virtually impossible to say when third world countries will get access to vaccines.

Will airlines want to return to tiny Estonia after last year’s confusion?

I believe they will return, and if not, we have Nordica.