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ISK 372 Billion Needed To Repair Infrastructure

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ISK 372 Billion Needed To Repair Infrastructure

Melrakkaslétta.

Photo: Páll Stefánsson.

A new report released by The Federation of Icelandic Industries and the Association of Consultant Engineers (Félag ráðgjafarverkfræðinga; FRV) estimates that ISK 372 billion (USD 3.5 billion/EUR 3 billion) is needed to repair infrastructure in Iceland. Among the infrastructure considered in the report are sea ports, airports, roads, power plants, utility and waste infrastructure, and real estate owned by state and municipal governments. The estimated cost of repairs is equivalent to 11 percent of the entire value of the infrastructure itself, Kjarninn reports.

The report estimates the total net asset value of the infrastructure to be ISK 3,493 billion (USD 32.8 billion/EUR 27.9 billion), calculated based on the purchase price or cost of comparable infrastructure with the same production or service capacity. The report, however, states the true value of the infrastructure may well be much higher, considering its contribution to economic activity.

In an interview on RÁS 2 this morning, Vilhjálmur Hilmarsson, economist at international consultancy firm Mannvit, pointed to the cost of roads in particular. Public roads measure about 16,000 kilometres (10,000 miles) cumulatively, and their value is estimated at ISK 900 billion (USD 8.5 billion/EUR 7.2 billion), roughly equivalent to ISK 3 million (USD 28,000/EUR 24,000) per resident of Iceland.

In the report’s preface, Sigurður Hannesson, executive director of the Federation of Icelandic Industries emphasizes importance of making large investments in infrastructure immediately, writing that “today’s investment is tomorrow’s economic growth.” He also articulates his hopes that the report will help create an informed discussion on the state of infrastructure within the Icelandic economic system and lead to improvements in the area for the benefit of Icelandic society.

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