Estonian govt approves cover for price hikes of construction projects with EU funding

TALLINN - The Estonian government has decided to redirect resources from Cohesion Policy Funds for the 2014-2020 period between various measures to ensure the completion of construction projects, including those for schools and hospitals, under the conditions of rapid increase in construction prices.

Additional funding is needed first and foremost for the schools and hospitals funded from the European Regional Development Fund (ERDF), spokespeople for the government said.

The government decided to redirect 6.7 million euros from ERDF funding that has remained unused due to efficient management and redistribute it between schools and hospitals in equal parts to compensate for the increase in their price of construction. With the Viljandi Hospital project being under great time and budgetary pressure, the government has decided to exclude the project from the operational program for 2014-2020 Cohesion Policy funding and apply for funding for the project from the health care and social protection component of the Recovery and Resilience Facility (RRF). As a result, an additional 20.7 million euros will be freed up in ERDF funding, which can be redirected to compensate for the increase in the construction price of hospitals and schools.

The resources to be redirected from ERDF funding will cover price increases in the construction of the Narva, Rakvere and Tallinn state gymnasiums and in health care centers, particularly the Hiiumaa Hospital. Transferring the Viljandi Hospital project under RRF funding will enable to complete the project and also cover funding for state gymnasiums and the East-Viru Central Hospital.

"Construction prices have gone up considerably but EU funding for the previous period has to be used up by the end of 2023, which means we cannot allow any delays in the completion of crucial projects. With this decision we've found a solution for covering the hike in construction prices of Viljandi, East-Viru and Hiiumaa hospitals and the state gymnasiums. That way these extremely important projects will be completed," Minister of Finance Keit Pentus-Rosimannus said in a press release.