Analysis: No one knows the price of the tunnel

Anyone can see for themselves that a tunnel is being built from Rødbyhavn to Puttgarden. Work began in earnest – after some German hesitation – in 2019. Today, the element factory is almost fully operational, and the first two tunnel elements are nearing completion. In any case, they are so far in the process that they can no longer be in the casting halls, so they have already stuck their noses out. Work on the tunnel portals (the entrance to the tunnel) is also in full swing in both Rødbyhavn and Puttgarden.

We know that today
We also know that the work from 2019 to today has largely gone according to plan. There are minor delays in the work of excavating the tunnel trench into which the elements must be lowered, due to a surprisingly large number of rocks on the seabed and other marginal geological trifles. But the large excavators can soon be sent out into the world for other heavy offshore digging tasks. And that’s pretty much what we know.

From the last report from the Ministry of Transport to the Norwegian Parliament’s transport committee, we can also see that as of July 1, 2023, the project has spent a good 18.3 billion Danish kroner since April 1, 2009. Or at least approximately that. Maybe. Because we actually don’t know for sure.

2015 prices have increased 18 percent
As soon as it comes to concrete amounts – whether they are calculated in kroner or euros – then the whole thing becomes somewhat more difficult to deal with. The reason is that all amounts in all official Fehmarn documents are calculated in 2015 prices.

This kind of thing can be afforded, one might object. Statistics Denmark calculates an annual price index, so that it is relatively easy to calculate what a given amount in a given year corresponds to in another year. If you use that method, the December 2015 index is 99.8, or as close to 100 as you can get. November 2023, the index is 117.8.

Thanks to COVID, Russia’s invasion of Ukraine, blockage of the Suez Canal and so on, today you have to pay 117.8 kroner for an item that cost just under 100 kroner in 2015. The 18 kroner is probably manageable, but converted to Fehmarn connections, it becomes something.

The buffer is used
In the Construction Act on the Fehmarn Connection from 2015, the budget for the project is stated at 55.1 billion Danish kroner. To this must be added a buffer for various eventualities of DKK 9.8 billion. Converted to November 2023, which is the latest figure published by Statistics Denmark, it comes to 65.04 billion. In other words, the price trend has already increased the cost of the Fehmarn project by nearly ten billion kroner (corresponding to the budget for two new Storstrøm bridges in round numbers) and the buffer has already been used up – well and good even.

Cannot be converted to index
FemernReport has asked both the Ministry of Transport, Sund & Bælt and Femern A/S about how the price development affects the project, and the answer from all three is that it cannot be answered simply. All three agree, however, that you can’t just use the price index as a rule of thumb. And when we ask why not, the answer is a variation on the theme that “you just can’t.”

According to all three official sources, the problem is that expenses are incurred at the price that applies when they are paid. This means that, for example, consultancy services purchased in 2010 must be converted to 2015 prices. But the same applies to screws and nuts purchased in 2023. In one place something must be added – in another place something must be subtracted. And the final calculation can only be done when the tunnel is finished, goes the argument. At that time, everything will be recalculated to 2015 prices, and it is thus also only at that time that we can see whether the budget has been met, says the official team.

The schedule is challenged
When the calculations for the Fehmarn project can finally be settled is also somewhat uncertain. According to the report from the Ministry of Transport to the Norwegian Parliament’s transport committee, the plan remains that the tunnel can be opened in 2029 – one year later than calculated in 2015. “Overall, it is the company’s current assessment that it will still be possible to open the tunnel in 2029, but the schedule is challenged,” as it says. But how challenged – and what this means in practice – it is not possible to get an answer to. However, the general opinion – outside quotation – among FemernReport’s sources is that 2030 is a more likely opening year than 2029 – and 2031 is not entirely out of the question either.

In summary, one can say that the Fehmarn project is underway and in progress, and that it will be expensive. When it’s finished and what it’s going to cost, we’ll know once it’s complete. It is elastic in meters measured in volatile currency. But so far it has cost DKK 18.356 billion. In 2015 prices.