Road and Tunnel Construction to Begin Next Year Skip to content

Road and Tunnel Construction to Begin Next Year

The government is planning four transport projects next year, including widening the Sudurlandsvegur highway between Reykjavík and Selfoss and constructing a tunnel through Mt. Vadlaheidi in the north, improving transport between Akureyri and Húsavík.


From the opening of the Hédinsfjardargöng tunnel in north Iceland earlier this year. Photo by Páll Stefánsson.

Calling for tenders for the widening of Sudurlandsvegur will begin in February, Morgunbladid reports.

Director of the Icelandic Road Administration Hreinn Haraldsson said usually a few months pass after tenders have been called for and until operations can be launched, so he assumes the project will begin in April or May.

The goal is to start with the tunnel construction next summer.

The transport projects are estimated to cost almost ISK 40 billion (USD 351 million, EUR 262 million) and they will be funded with loans from the Icelandic pension funds.

“We have been negotiating the interest rate percentage down to an acceptable level,” commented Minister of Transport Ögmundur Jónasson. “When 3.5 percent interest rates are mentioned—the yield demand of the pension funds—we are talking about indexed loans. Globally, these are low interest rates given the current circumstances.”

Jónasson said it is of national importance to keep the interest rates low. “We are talking about a very safe investment for the pension funds,” he added.

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