Dubai-based construction firm ARJ Holding is investing €100 million (Dh416.2m) in the world's longest undersea railway tunnel connecting Finland to Estonia, becoming the first external financier of the project.
Construction on the €15 billion project linking the two European capital cities of Helsinki and Tallinn will begin in 2020 and the tunnel is scheduled to be operational by December 24, 2024, Kustaa Valtonen, a partner at FinEst Bay Area Development Oy, the company leading the project, told The National on Monday.
"This funding will be used for example for tunnel design, structural design and environmental planning," Mr Valtonen said. "It has a very big impact."
Finland and Estonia, the Baltic sea neighbours separated by the Gulf of Finland, see more than eight million commuters and 1.2 million cars travel between Helsinki and Tallinn every year by boat. Tens of thousands of Estonians work in Helsinki and commute by ferry while Tallinn is a popular tourist destination for Finns. The planned tunnel will span 103 kilometres, making it by far the longest undersea tunnel in the world, and includes the construction of new terminals and artificial islands.
An online ticket shop on Monday began selling tickets for passenger trips at a cost of €50 per ride for "audience engagement," Mr Valtonen said.
ARJ Holding, established in 1964, has subsidiaries with operations spanning contracting, water pumping, engineering and hospitality. Finest Bay Area Development, the Finnish tunnel company led by Peter Vesterbacka, an ex-executive at Angry Birds game maker Rovio, is a bootstrap start-up.
"We are now a dominant player across [the] GCC and aspire to explore new horizons in the coming years,” ARJ Holding chief executive Shahab Juma said in the statement.
The Dubai-based company could not be reached for further comment during the National Day holiday.
The funding secured from ARJ Holding represents under one per cent of the total project cost.
Mr Valtonen declined to comment on whether further financing is expected from Arabian Gulf or Middle East investors.
The company is "very confident" it will complete the project on time, Mr Valtonen said, despite having little government or European Union backing.
The governments of Finland and Estonia said on Friday they will work toward securing European Union funding, which can only account for 40 per cent of total costs, according to Bloomberg. That means required private financing will be "significant," Estonian Economy Minister Kadri Simson said. To be eligible, the tunnel needs to become part of the Rail Baltica project.
"The arrival of the first outside investor is a significant milestone in the entire project," Mr Vesterbacka said in the statement. "This has signalled the high level of interest and attractiveness of this region beyond Finland and Estonia."
The greater Helsinki-Tallinn metropolitan area will be one of the fastest growing urban areas in all of Europe, he said.
The railway tunnel could decrease the travel time of passengers and freight between Helsinki and Tallinn from two hours on the fast ferry ride now to 30 minutes, according to the FinEst Link feasibility study. The railway, terminals and stations would cost an estimated €13 to €20bn.
"The financial prospect of the tunnel appears challenging because of the small sizes of the Finnish and Estonian economies," the report said.
However, the growing markets in Eastern-EU, Black Sea area and Asia may "remarkably increase" the business case of the tunnel, it concluded.