The Vaðlaheiði tunnel (Vaðlaheiðargöng) in North Iceland will end up costing between ISK 16 and 17 billion, (USD 160-170 million/EUR 130-138 million) or roughly double the estimated cost of ISK 8.7 billion, RÚV reports. This estimate comes from Friðrik Friðriksson, chairman of the board of VHG Ltd., the company responsible for the tunnel’s construction. Pirate Party MP Björn Leví Gunnarsson, however, believes the government loan taken to pay for the project will amount to ISK 33.8 billion (USD 340 million/EUR 275 million) by the time it is due for repayment.
Intended to shorten the driving distance between Akureyri and Mývatn lake by 16 km (10 mi), the tunnel is one of the most controversial infrastructure projects in Icelandic history. Construction began in 2013 and was originally expected to be completed by late 2016. Several complications pushed back the completion date nearly two years, to the fall of 2018.
The first few years of the tunnel’s operation will be used to evaluate the terms of repayment for government loans. Pirate Party MP Björn Leví Gunnarsson, who is a member of the parliamentary budget committee, argues the actual cost of the tunnel will be much higher than the VHG board’s estimate. Björn Leví states that if the loan were used in full and interest was calculated in accordance with state laws, it would amount to ISK 33.8 billion by the repayment due date of May 2021.
The proposed toll for the tunnel is ISK 1,250 (USD 12.50/EUR 10). Friðrik estimates income from tolls could amount to ISK 700-800 million per year. Others argue his estimates are based on unrealistic predictions of traffic growth.