The City of Gothenburg opens new bridge

One day in early May the clouds hang heavy over Gothenburg when the city invites the Nordic Investment Bank, NIB, for a walk on the new Hisingsbron. With only a few days left until the grand opening on 9 May, one can almost feel the joy among the participants.

In the group we find Senior Banker Tore Emanuelsson from NIB, which has lent one billion Swedish krona to the project, and the city’s portfolio manager Fredrik Block.

“We are extremely grateful for the loan. The lender, NIB in this case, helps us to invest in the welfare of our citizens. Without the lenders, we would not have managed the city’s ambitious investment plans,” says Fredrik Block.

The new Hisingsbron, like the former bridge Götaälvbron, runs between the city of Gothenburg on the mainland side and the island of Hisingen. The guided tour starts at the bridge attachment on the mainland side. There, under the bridge, construction workers are looking after equipment in this final phase of the four-year construction process. A few steps further, the group walks up on the bridge via a staircase along one of the bridge pillars. The view is striking and all around it becomes obvious how much that is being built in Gothenburg.

Right next to the new white bridge, with its still fresh black asphalt, trams, cars, buses and the occasional cyclists passes over the old bridge. Parts of it will begin to be dismantled as soon as traffic is shut down on 9 May, and by next summer the entire bridge will be gone.

Tore Emanuelson from NIB asks the city’s project manager for the bridge, Mikael Nummerdal, what will happen to the material from the old bridge, and receives the answer that the contractor will recycle and sell it for new use at a steel plant.

“It´s important for us how the material from the old bridge is taken care of,” says Tore Emanuelsson.

“Sustainability in projects is one of our two basic requirements. Besides that, projects we participate in shall contribute to improved productivity for the economy, regionally and nationally.”

People moving to the city
According to the city, one of the main purposes of the bridge, and other projects that are underway in Gothenburg, is to be able to take care of an expected increase in population. The bridge is expected to help accommodate an estimated increase in public transportation of 26% over the next 20 years.

The new bridge will be lower than the previous one, which makes it less steep for pedestrians and cyclists, with wide cycle- and footpaths in both directions on both sides of the roadways. During all the years with the old bridge, it has on each side only been possible to cycle or walk in one direction.

The flatter inclination frees up land areas about 70,000 square meters in central Gothenburg that can be used for housing, offices, department stores and the development of the central station.

“This means that the city can use its land resources more efficiently, which contributes to our productivity goal for the economy,” says Tore Emanuelsson.

Ships and sailboats, however, will find it more difficult to pass under the bridge. After debates and court decisions, a sail-free height of twelve meters has been decided. The middle section will be lifted to a sail-free height of 28 meters when bigger merchant ships arrives and at a determined schedule for all vessels. The midsection is lifted by machinery suited in what is one of the bridges hallmarks, the four 53-meter-high pillars.

Getting to business
After the tour, the group settles down in an airy and spacious atrium in a conference center close to the bridge. Gothenburg’s portfolio manager, Fredrik Block, says that the entire project costs is around 3,5 billion Swedish kronor at the price level of 2009. Two billions comes from the state of Sweden and from congestion tax from motorists in Gothenburg. The city has borrowed one billion Swedish kronor from NIB and solves the remaining part within its regular budget.

The loan from NIB to Gothenburg has been signed with an initial interest period of seven years, with an extension option to a total of 20 years. Fredrik Block says that the city is happy to cooperate with NIB and similar institutions when the city is in need of long-term financial solutions.

“The advantage of having bilateral loans from a bank is that we can get a long capital and interest rate commitment,” says Fredrik Block.

By bilateral loans, he means those that take place in collaboration with a lender on a specific project.

“When the institutions lend money to us, they want specified projects. Unlike when we use bonds when we can use the money for what we want for municipal operations,” says Fredrik Block.

Now are good times for borrowers. Lenders compete to lend their money. Fredrik Block says that Gothenburg has the second highest rating that can be obtained, AA +, right after the Swedish state at AAA. Last week, the city signed loan in which they get paid to borrow. But this situation can change, and then, Fredrik Block says, the city fronts a challenge to take care of its total debt of 50 billion Swedish kronor.

“In periods when it is not so easy for us to borrow, it becomes extra important to balance between, and use, different sources of financing. In that situation it´s a security for us to have an established relationship with the Nordic Investment Bank,” says Fredrik Block.

Tore Emanuelsson says that the new bridge is a well-defined project.

“Our bank like projects where people understand what it’s about. It is difficult to take a picture of loans for research and development. A bridge is something people can relate to. It has a good story.”