The tunnel, which is supported by both countries’ governments, would connect the Finnish capital of Helsinki with the Estonian capital of Tallinn – cutting a two to three hour ferry crossing to just 20 minutes by train.
If completed the infrastructure would be the longest undersea tunnel in the world, eclipsing the Channel Tunnel that connects England with northern France.
The new funding comes from Chinese investment Touchstone Capital Partners, with one third provided as private equity and two thirds as debt financing, according to a memorandum of understanding signed with developers. Late last year the project also secured a €100m investment from Dubai-based ARJ Holding.
A feasibility study on the project conducted last year estimated the cost of the project at €13-20bn but found it would have a huge positive impact on the economies of both countries – effectively creating a major metropolitan area spanning the Baltic sea.
As well as bringing the two cities closer together, the scheme would also link Finland to Rail Baltica – an EU-backed plan to build a high-speed rail line through the Baltic states to link them to the European network.
“We are very pleased with the negotiations and the agreement reached. Touchstone has extensive experience in financing similar large private infrastructure projects,” says Kustaa Valtonen of FinEst Bay Area Development.
“Our goal is to also secure European, Nordic and Finnish capital investments in addition to the already agreed financing arrangement. We are looking for a sustainable and fully balanced financing solution for the project.”
Finland’s minister of transport and communications Anne Berner last year said of the project: “The tunnel would together with the Rail Baltica railway project and the Arctic railway line connect the Arctic region with the heart of Europe via Finland.
“The tunnel could thus be a significant project for all of Finland and Europe, not only for Helsinki and Tallinn.”
Planners envisage direction connections from Helsinki-Vantaa Airport in the Finnish capital's northern suburbs, a station at Pasila the city's second largest station, and a stop at Helsinki central. In Tallinn the train would stop at Ulemiste, near the city's airport, where it would link to Rail Baltica.
Overland journeys between the two cities currently require a significant detour around the Baltic Sea, via Russia.