The European Investment Bank, the European Union's financing institution, is providing an initial loan of DEM 100m(1) to help fund construction of a 3.1 km long fourth motorway tunnel beneath the Elbe in Hamburg, which will run alongside the existing triple-bore tunnel complex.
The Elbe Tunnel forms part of the A7 motorway which passes through Hamburg on its way from Würzburg in southern Germany to Scandinavia. The A7 is a key component of the trans-European road network. The new tunnel bore will boost the capacity of the motorway and at the same time considerably relieve traffic density in the centre of Hamburg, specifically reducing traffic jams and therefore vehicle emissions. The project will thus simultaneously help achieve two of the EIB's goals, namely expanding the TENs and improving the urban environment.
Practical implementation and financing of the project both mark a new departure in German infrastructure development. The fourth Elbe Tunnel bore is one of a limited number of major projects selected by the Federal Government for private financing involvement. The precise arrangements are as follows:
- The project promoter is the Free Hanseatic City of Hamburg, whose building inspectorate and civil/underground engineering department will jointly issue the necessary permits, oversee construction, act as co-ordinator and conduct negotiations with the consortium of building contractors (ARGE).
- The ARGE will have sole responsibility for planning and construction as well as financing during the seven years the project will take to complete. The aim of this approach is to shorten the construction period and so achieve lower final costs. The ARGE consists of the renowned building firms Dyckerhoff & Widmann AG, Bauunternehmung Heitkamp GmbH, Bilfinger + Berger Bau AG, Hochtief AG, Philipp Holzmann AG, Wayss & Freytag AG and Ed. Züblin AG.
- The project will be funded through a banking consortium led by Deutsche Girozentrale - Deutsche Kommunalbank and including Bayerische Landesbank, Hamburgische Landesbank, Kreditanstalt für Wiederaufbau (KfW) and Landesbank Berlin. The banking consortium will provide the ARGE with the funds needed to cover the costs of building the tunnel, including interest during construction.
- On completion, the banking consortium will acquire the ARGE's payment claims against the federal government, making the government the banks' debtor.
The EIB's contribution towards the project is taking the form of long-term funds for the banking consortium. The EIB already has many years' experience of financing motorways, bridges and tunnels throughout Europe, offering tailor-made funding facilities. Since 1993, the EIB has financed approximately one third, i.e. ECU 33bn, of the construction costs of the major trans-European transport projects.
The EIB anticipates that the financing arrangement selected for the Elbe Tunnel, as well as variants thereof, will be adopted for other projects in the future. As Wolfgang Roth, EIB Vice-President, commented during signature of the finance contract: "The need for infrastructure is there and projects cannot be delayed indefinitely even if the public purse strings are tight. Since there is little prospect of any permanent easing of budgetary constraints anywhere in Europe for the time being, public-private partnerships will increasingly become the only avenue for expanding infrastructure. In the long run, public opinion is going to have to become accustomed even to completely privately financed and operated infrastructural facilities, including in Germany, in situations where use of the relevant infrastructure is subject to a charge which makes it possible to achieve a financial return."
(1) On 30 June 1997, ECU 1 = GBP 0.68, IEP 0.75, DEM 1.97 and USD 1.13.