The company hoping to build an undersea train tunnel between the Finnish capital Helsinki and the Estonian capital Tallinn has in principle secured the bulk of the €20bn it believes it will cost from a Chinese group.
FinEst Bay Area Development said Friday it had signed a memorandum of understanding for €15bn ($16.8 billion) in financing with China’s Touchstone Capital Partners for the 100km link, reported Reuters. Â
A third of the money will be private equity investment, giving Touchstone a minority stake in the project, and two-thirds will be debt financing.Â
"Financial details will be negotiated over the next six months," FinEst Bay Area said in a statement.
In late 2017 the company published a feasibility study on the double tunnel, concluding that the project would cost between €13bn and €20bn – considerably more than preliminary cost estimates – and would take around 15 years to become operational.Â
But it said the economic benefits of linking the two countries by rail would justify its construction, assuming the EU pays about 40% of the cost.Â
In December the firm raised its first outside funding in the form of €100m from Dubai-based construction company ARJ Holding. It had been seeking more investors from Europe, but may not need to now.
"Now, the financing is sorted and we can move ahead," project leader Peter Vesterbacka, a former executive at the Angry Birds game maker Rovio, told Reuters.
The company maintains that a tunnel under the Gulf of Finland would boost Finland’s economy.
Reuters notes that tens of thousands of Estonians work in Helsinki, making a weekly commute by sea. A tunnel would cut the travel time to around 20 minutes from the two-hour ferry journey now.
Vesterbacka has claimed the tunnel could be built in a much shorter time than the feasibility study suggested – by the end of 2024, he said.
The tunnel project is yet to secure backing from the two governments and the European Union.
Image: FinEst Bay Area Development’s visualisation of the double tunnel