FINANCING, BUDGET AND PLANNING DEVELOPMENTS

As earlier described major Danish transport construction works have always been financed via the State Budget. The Storebælt fixed link represents a totally new concept in this field as its budget is procured by raising of loans in Denmark and abroad and subsequently repaid by road and railway users. In 1987 the Danish state contributed as share capital DKK 355 m to A/S Storebæltsforbindelsen, thus contributing a little over 1% of the anticipated total financing requirement. In relation to the original Construction Bill adopted in May 1987, which estimated the total construction costs at DKK12.9 bn, Storebælt's 1988-updating totalled DKK 17.4 bn. (1988-prices) plus financing costs. These were estimated at that time to at approximately DKK 12 bn. For a planned project completion in 1996. In 1992 A/S Storebæltsforbindelsen had to increase the construction budget to DKK 21.6 billion (1988-prices), mainly due to problems with the tunnel project. Despite several other substantial project budget excesses, the client has managed to maintain this construction cost level up till now (DKK 29 billion in 1998 prices). At the end of 1997 A/S Storebæltsforbindelsen's debt totalled DKK 37.7 billion, including financing costs. This excess is mainly caused by increases in interest cost due to prolongation of loan periods corresponding to the project completion time overruns. Generally, however, the A/S Storebæltsforbindelsen has been favoured by extremely attractive borrowing conditions and interest rate levels. When the fixed link is in full operation from June 1998, the yearly turnover for the operator is expected to amount DKK 2 billion, with DKK 1.45 billion contributed by the road link and DKK 525 million by the Danish State Railways. Assuming that the traffic forecasts are accurate, the operator will be out of debt by year 2038. sub-project contract sum bn DKK (1988/ 1990 prices) scheduled completion final budget bn DKK (1988-prices) completed West Bridge 3.1 January 1994 3.9 January 1994 East Tunnel 3.1 October 1992 4.9 August 1996 East Bridge (substructure) 2.5* October 1995 - October 1995 East Bridge (superstructure) 2.9* December 1997 - June 1998 Table 3 : Main Project Budgets Plans And Outcomes Source: Jyllands Posten, 20/03/97. Final budgets for East Bridge projects not available due to disputes.