Finland to Set Aside USD 1.25bn for Icebreaking Fleet Renewal

Finland’s Cabinet Committee on Economic Policy has outlined the future of the wholly state-owned company Arctia Shipping Ltd., saying that all of the company’s vessels must be replaced by 2029 for the total investment of EUR 1 billion (USD 1.25bn). 

The outline is based on a joint draft by the Prime Minister’s Office, the Ministry of Transport and Communications, the Ministry of Employment and the Economy, and the Ministry of Finance.

The renewal will be the most important factor contributing to the cost-effectiveness of icebreaking and to the cost of icebreaking services on the Baltic Sea. To be able to reduce upward price pressures in icebreaking and to finance new icebreakers, the company must find ways of increasing the utilisation rate of its vessels.

Surveys indicate that, despite their higher acquisition price, polar icebreakers with a 30-year life cycle will cost EUR 20–30 million less than traditional icebreakers with low utilisation rates. This requires that the icebreakers participate in sea service in the polar region for several months each year. According to the surveys, the current market situation and Arctia Shipping’s know-how in polar operations create the conditions for such operations.

The utilisation rate of the Baltic Sea icebreakers is 31 per cent whereas the multi-purpose icebreakers have a utilisation rate of 85 per cent. The investments to ensure the necessary vessel capacity and the utilisation of the company’s top expertise in the polar region will promote the economical effectiveness of Arctia Shipping’s operations. It will provide a sound basis for supporting domestic industries in Finland’s changing marine conditions and for maintaining the state’s security of supply.

“It is most important to secure icebreaking and winter navigation in Finland’s marine areas. With the agreed arrangement, this can be achieved cost-effectively and without burdening the public economy. The activities of state-owned companies operating on a commercial basis, such as Arctia Shipping, must turn a profit and, at the same time, see to the State’s strategic interests through maintaining security of supply and providing services to the business life,” said Sirpa Paatero, minister responsible for ownership steering.

The Finnish Ministry of Transport and Communications will begin preparations for the selling of the icebreaker commissioned for the Finnish Transport Agency. Owning of icebreakers is not part of the agency’s main responsibilities, which relate to securing the prerequisites of winter navigation by purchased icebreaking services. The core business of Arctia Shipping is to provide icebreaking services and, for that reason, the state has a strategic interest of ownership in the company.

“Polar operations afford great opportunities but also risks which must not endanger the operational availability of icebreakers or increase the cost for businesses due to icebreaking on the Baltic Sea. The Ministry of Transport and Communications will determine the Baltic Sea icebreaking needs in cooperation with the Government Ownership Steering Department at the Prime Minister’s Office, the Ministry of Employment and the Economy, and the Ministry of Finance,” said Minister of Transport and Local Government Paula Risikko.

Press Release