Central and local government reach agreement on promoting large-scale rail projects

Central and local government authorities have reached agreement on establishing project companies for promoting the Finland Railway link and the high-speed rail link between Helsinki and Turku as well as on the financing shares of the parties involved. Financial support for both projects has been applied through the EU's Connecting Europe Facility.

The project companies would be responsible for the planning related to the projects and its funding until the construction phase.

"I am very pleased that the planning of these projects can be started and that so many municipalities have committed themselves to the projects. High-speed rail connections facilitate commuting and are absolutely necessary in the transfer to sustainable modes of travel. The agreement now reached will also make it possible to apply for financial assistance for the projects from the EU already during the present call for applications that will be closed at the end of February," says Minister of Transport and Communications Timo Harakka.

In order to be able to establish the project companies in cooperation with the central and local government, negotiations on shareholders' agreements of Finland Railway and Helsinki-Turku high-speed rail link were started in November 2019 under the leadership of the Ministry of Transport and Communications. The negotiation groups were attended by a representative of the Ministry of Finance. Participants in the negotiations on Finland Railway also included Finavia.  Now an agreement on the content of the shareholder agreements has been reached among the parties, and the negotiation result has been confirmed in memorandums. 

The final adoption of the shareholder agreements and the establishment of the project companies still call for the central and local government to take the matter to their decision-making bodies.  In terms of central government, the matter will be discussed at the Ministerial Committee on Economic Policy in March 2020.

With the present agreement, it is possible to apply for financial assistance for both projects through the EU's Connecting Europe Facility in the current call for applications. The call for CEF Transport 2019 was opened on 16 October 2019 and will be closed on 26 February 2020.

The Ministry of Transport and Communications has also initiated a comparative study on the routing of the high-speed eastern connection. That rail link will be promoted in cooperation with the operators in the area.

Railway projects benefit the whole of Finland

Altogether 25 cities and municipalities are participating in project companies.

"It's wonderful that the government and the cities have found each other in advancing important railway projects in such a historic manner. The cities are investing significant amounts in the planning of the projects. The Airport Line, which is part of Finland Railway, would enable faster connections to Helsinki Airport both from Helsinki and from other parts of Finland, and this would be very welcome in the growing international competition," says Jan Vapaavuori, mayor of Helsinki.

"The decision to establish a project company is the first concrete step towards increasing the rail capacity between Tampere and Helsinki and provides a starting point for developing the entire main railway. Developing the main railway is also an effort to combat climate change. The future of the main railway is a crucial question for the economic growth of our entire country. Almost half of the GDP of Finland is generated along the main railway. The economic growth of the entire country and its development is at stake. This is a concrete step towards future jobs. At the moment, the railway line between Tampere and Helsinki lacks the capacity for increasing rail traffic. In order to add, speed up and develop connections to cities located along Finland Railway as well as its connections to other parts of Finland, we need new capacity," stresses Lauri Lyly, mayor of Tampere.

"The planned Finland Railway is not only important for the transport connections of the City of Vantaa but also nationally. A fast rail link helps to merge the urban regions into a single employment area. In Vantaa, it would promote the development of the airport district," says Ritva Viljanen, mayor of Vantaa.

The One-hour Turku-Helsinki Rail Link would enable fast long-distance traffic between Helsinki and Turku and the development of regional traffic in the direction of Kirkkonummi and Lohja as well as Vihti. The Salo-Turku double-track railway line would add capacity for a larger number of trains and rail connections between Salo and Turku and make regional traffic between Turku and Salo possible.

"It's important to keep the One-Hour Train project going nonstop. With the special purpose vehicle, we can now proceed to the next stage. Cooperation between the One-Hour Train cities has been strong for a long time, which was significant for the realisation of the project company," says Minna Arve, mayor of Turku.

"The implementation of the One-hour Turku-Helsinki Rail Link starts with the Espoo city rail link, which would be an important step towards low-emission mobility in Espoo. The plans for the city rail link have been complete since 2014, and the link can start service in 4-5 years from the decision to build it. In this case, the benefits for the growth and climate goals of Southern Finland would start to come about fairly quickly," says Jukka Mäkelä, mayor of Espoo.

The project company for the Finland Railway

The estimated planning costs for the Finland Railway amount to EUR 150 million.

By signing the memorandum of understanding, the negotiators appointed by the parties confirm that they have reached a negotiation result regarding the content of the shareholders' agreement and the founding of the project company. Regardless of the result of the negotiations, it is noted for the sake of clarity that the acceptance of the shareholders' agreement and establishment of the project company will be decided in the internal decision-making processes of each negotiator's own organisation.

The negotiation result was reached by the following parties:

The Finnish Government, share of 51 per cent, i.e. EUR 78.90 million

Finavia Oyj, share of EUR 16.00 million

City of Helsinki, share of EUR 22.20 million

City of Tampere, share of EUR 11.10 million

City of Vantaa, share of EUR 11.10 million

City of Oulu, share of EUR 0.90 million

City of Jyväskylä, share of EUR 1.98 million

City of Lahti, share of EUR 3.37 million

City of Pori, share of EUR 1.19 million

City of Vaasa, share of EUR 0.95 million

City of Hämeelinna, share of EUR 1.89 million

City of Seinäjoki, share of EUR 0.88 million

City of Nokia, share of EUR 0.47 million

City of Ylöjärvi, share of EUR 0.46 million

City of Kangasala, share of EUR 0.44 million

City of Riihimäki, share of EUR 0.81 million

Municipality of Lempäälä, share of EUR 0.65 million

Municipality of Pirkkala, share of EUR 0.27 million

City of Akaa, share of EUR 0.47 million

Municipality of Janakkala, share of EUR 0.46 million

City of Orivesi, share of EUR 0.13 million

Municipality of Vesilahti, share of EUR 0.06 million

The rail link will be planned in several parts, which are the Airport Line from Pasila via Helsinki Airport to Kerava and the connection to Tampere. It is possible to implement the connection to Tampere either as a new railway line from Helsinki Airport or by developing the current main railway between Riihimäki and Tampere (the 3rd and 4th additional rail links and realigning the railway). The project company will prepare a preliminary study of both alternatives. After the studies have been completed, the general meeting of the project company's owners will decide which alternative should be planned for construction.

The estimated construction costs of the Finland Railway are EUR 4.6-5.75 billion, depending on which alternative is the selected for this connection.  At present, the parties have agreed to proceed to construction plans, but proceeding to the construction phase will require new negotiations.

The project company for the One-hour Turku-Helsinki Rail Link

The estimated remaining planning costs for the One-hour Turku-Helsinki Rail Link, the planning of which will be carried out by the project company, are around EUR 75 million, of which the planning costs for the Espoo-Salo direct railway line amount to around EUR 60 million and the Salo-Turku double-track railway line amount to around EUR 15 million.

By signing the memorandum of understanding, the negotiators appointed by the parties confirm that they have reached a negotiation result regarding the content of the shareholders' agreement and the founding of the project company. Regardless of the result of the negotiations, it is noted for the sake of clarity that the acceptance of the shareholders' agreement and establishment of the project company will be decided in the internal decision-making processes of each negotiator's own organisation.

The negotiation result was reached by the following parties:

The Finnish Government, share of 51 per cent, i.e. EUR 39.45 million

City of Turku, share of EUR 10.25 million

City of Espoo, share of EUR 10.25 million

City of Helsinki, share of EUR 5.80 million

City of Salo, share of EUR 3.74 million

City of Lohja, share of EUR 3.74 million

City of Vihti, share of EUR 3.74 million

Municipality of Kirkkonummi, share of EUR 0.38 million

The estimated preliminary construction costs for the One-hour Turku-Helsinki Rail Link amount to around EUR 2.76 billion in current prices. At present, the parties have agreed to proceed to construction plans, but proceeding to the construction phase will require new negotiations.

What next?

Financial support for the Finland Railway and the One-hour Turku-Helsinki Rail Link will be sought from the European Commission's Connecting Europe Facility (CEF) on 26 February 2020 at the latest. Before this, the funding applications will be processed by the Ministerial Finance Committee.

The Government will process the shareholders' agreements of the project companies in the Ministerial Committee on Economic Policy in March 2020.

The cities and municipalities will process the shareholders' agreements in their elected official bodies, and Finavia will process them in its general meeting in February-April 2020.

The project companies will be established as soon as possible after making the required decisions and signing the shareholders' agreements.

In addition, the Ministry of Transport and Communications is currently conducting a study and a comparison of a new fast rail line from Helsinki eastward. This rail link is being promoted in cooperation with the actors in the region. The estimated completion time is spring 2020.

Additional information:

Interview requests to Minister Harakka Matti Sadeniemi +358 (0)40 586 7234

Negotiation group Finland Railway: Sanna Ruuskanen, Director of Unit, Ministry of Transport and Communications, tel. +358 (0) 29 534 2 077

Negotiation group One-hour Turku-Helsinki Rail Link: Miikka Rainiala, Director of Unit, Ministry of Transport and Communications, tel. +358 (0)29 534 2051

Jan Vapaavuori, mayor of Helsinki: Inquiries via Maira Kettunen, Special Adviser to  the mayor, tel. +358 (0)50 3577197

Lauri Lyly, mayor of Tampere, tel. +358 (0)50 68293

Minna Arve, mayor of Turku, tel. +358 (0)44 907 5210

Jukka Mäkelä, mayor of Espoo, tel. + 358 (0)46 877 3953

Ritva Viljanen, mayor of Vantaa, tel. +358 (0)9 8392 2101