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Finance & Economics

Infrastructure is financed through the state guarantee model

The state guarantee model means that the Danish state underwrites the loans used to construct the Storebælt facilities and the Øresund landworks. The Danish and Swedish states are jointly and severally liable for the loans for the Øresund facilities between the Danish and Swedish coast.

It would not have been possible to complete the projects if they had been funded by the public purse in Denmark and, in the respect of the Øresund Fixed Link, also from Sweden. Both projects rest on a sound financial footing and are within their planned repayment period. The same state guarantee model is being used for the upcoming fixed link across the Fehmarnbelt.

With the state guarantee model, financing is based on the company raising loans on financial markets or from the state. The state guarantees the loans in return for a guarantee commission and because of the Danish state’s high credit rating, the loans are raised on favourable terms. User fees are charged which – after payment of operating and maintenance costs – are used to service the loans.

A key element in the state guarantee model is that the revenue from the user payment is used to meet the obligations entered into in connection with the preparation and establishment of the facility. Besides the value of the guarantees, the project company receives no state support, but in most instances will pay a fee to the state for the guarantee.

PPP: Public - Private Partnership

PPP is an organisational model where public and private parties work together on large projects, eg infrastructure projects. Sund & Bælt has published a report which gathers knowledge and experience with PPP in Denmark (only available in Danish).

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Report on the Danish state guarantee model

Sund & Bælt has published a report entitled ‘The Danish state guarantee model’, which describes in detail the mode of operation and the effects of the Danish state guarantee model for financing major transport infrastructure projects. The report also looks at the experiences that Denmark (partly together with Sweden) already has with this model.

The state guarantee model supports societal development

The state guarantee model was used to realise the fixed connections across Storebælt and Øresund. It would not have been possible to realize these projects if they had been financed with funds from the public budgets in Denmark and Sweden. Both projects are currently on financially solid ground and stay within their planned payback period

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Language: English

Language: English