Danish model for Infrastructure Governance delivers great results

In Denmark, since the establishment of the infrastructure mega project the Storebælt fixed link, we have developed a strong model for financing and managing mega infrastructure projects. The state guarantee model combines state ownership and state-guaranteed loans with user fees. The latest knowledge on the subject was presented yesterday at an online conference with international participation.

Sund & Bælt Holding A/S and the Department of Organization at Copenhagen Business School (CBS) have just completed a research project, supported by Innovation Fund Denmark, which has investigated the Danish way of financing and managing large infrastructure projects – for example bridges and tunnels. The Danish model is known as the state guarantee model and combines state ownership, state-guaranteed loans in private markets and user fees with infrastructure design, build, maintenance and operations by a state owned enterprise.

The results of the research were presented on Tuesday 13 April at a conference where international experts from the OECD, the Netherlands and Canada also presented their knowledge on infrastructure governance. Head of the research project is industrial post.doc. and PhD Lene Tolstrup Christensen from the Department of Organization at CBS.

“The state guarantee model is a model that makes it possible to realise mega infrastructure projects outside the state budget, but with state ownership. From the first bridge until today, the invention of the state guarantee model has created a new political way of organizing and introduced market-based mechanisms in the governance of the Danish transport infrastructure,” says Lene Tolstrup Christensen.

CEO of Sund & Bælt, Mikkel Hemmingsen, has followed the work closely, and the results are in line with practical experience.

“The Danish way of financing large infrastructure projects has made state ownership of, for example, the fixed links across Storebælt, Øresund and the Fehmarnbelt possible without burdening the state budget – and at the same time, the cost of financing has become as low as possible,” he says.

In many other countries – for example the Netherlands and Canada – models for public-private partnership (PPP) have been introduced where elements such as design, build, finance and maintenance of infrastructure are the responsibility of private actors. However, according to the OECD, other ways of governing may also be relevant and inspiring for others – for example, the Danish state guarantee model, where ownership is state-owned.

“The OECD has moved from talking only about financing models to talking about infrastructure governance more broadly. Here, i.a. the state guarantee model is interesting”, says Professor Carsten Greve from the Department of Organization at Copenhagen Business School.

Due to Covid-19, the conference was conducted virtually with about 100 participants from all parts of the infrastructure sector.

Please contact below-mentioned to hear more or to schedule an interview:
Head of Communications Lene Gebauer Thomsen, + 45 21704450, lgt@sbf.dk
Business Researcher, Lene Tolstrup Christensen, +45 40411990, ltc.ioa@cbs.dk

Presentations from the conference are available here

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