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Infrastructure in Greenland

Limited partnerships

Nuuk hopes that private funding can set its infrastructure plan in motion, but the options for investors are looking limited
Major investment needed here (Photo: Boegh)

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Plans to build a new network of as many as 12 airports and a series of hydroelectric dams in Greenland have already been sketched out in black and white. What Nuuk must now find is more than 3.5 billion kroner ($510 million) it will take to build it all.

A deal, reached on December 2, outlining terms of an agreement between the parties making up the governing coalition, recognises the size of both tasks.

The construction, it states, will require “major investments that cannot be funded solely by infrastructure funding in the national budget”.

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Instead, the best way to come up with the money, it suggests, is by operating as many of the projects as possible as ‘public-private partnerships’, a form of joint investment that gives a privately run firm the right to provide a public service in exchange for an initial investment.

That, however, will not get lawmakers far. The government reckons that, of the list of projects included in the agreement, just three, two new international airports, one in Ilulissat and one in Nuuk (valued at a total of 1.8 billion kroner), and a hydroelectric dam near Disko Bay (which has yet to be given a price tag), have the potential of turning a profit for a private firm.

Further, given the likelihood that upgrading Nuuk’s airport would see it take over as the nation’s primary point of entry, the agreement suggests that “caution should be exercised” when considering whether to offer operation of the facility to a private investor.

As the most commercially viable projects in the plan, construction of the three projects would be prioritised over regional airports and smaller dams. Once completed, their profits could be used to fund operation of other projects on the list that are likely to run at a loss.

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How to pay for their construction remains unanswered, however. By conservative estimates, those projects amount to 1.7 billion kroner (and may run as high as 2.7 billion kroner) that must be found by 2022, if the plan is to stick to its timeline.

This week, Torben Andersen, the head of a independent panel of economic advisors to the Greenlandic government, told KNR, a broadcaster, that borrowing the money, was likely out of the question.  

The government, for its part, appears to recognise this: in the plan put forward by the coalition, two futher methods for obtaining funding are proposed: hoovering the budget for unused infrastructure funding (estimated to yield as much as 300 million kroner, or the cost of building three regional airports) or selling off nationally controlled firms.