Norwegian Budget Includes Money to Construct World's First Ship Tunnel

In an unexpected development, Norway's new government budget has revived hopes for the construction of the world's first ship tunnel. While approval is not yet final, the move marks a significant turnaround, coming approximately eight months after the government concluded the project was too costly to proceed.

About the tunnel

Proponents of the plan succeeded in securing approximately $15.8 million in the new government budget. The amount is a small portion of the estimated total construction cost of $900 million, but it would be sufficient to allow the project to select a main contractor and place early contracts. Preparatory work would include demolition of buildings at the selected site and the award of contracts for new water pipelines on both sides of the tunnel.

The idea of boring a tunnel through the Stad peninsula, on the west coast of Norway, has been under consideration for many years. The tunnel is proposed as a means for coastal vessels to bypass one of the most exposed stretches of the Norwegian coastline and its challenging weather conditions. The planned tunnel would be approximately one mile long, 50 metres high and 36 metres wide, large enough to accommodate coastal vessels including the passenger ships that operate along the Norwegian coast.

"Simply too expensive"

Planning gained momentum in 2024. The Norwegian government initially indicated it would support a construction cost of approximately 3 billion NOK (around $315 million). However, by the time plans were finalised, the Norwegian Coastal Administration (Kystverket) had revised the estimated cost upward to 9.6 billion NOK (just over $1 billion).

In October 2025, Prime Minister Jonas Gahr Støre told Norwegian broadcaster NRK that the project was simply too expensive. Proponents continued to push for the project, and by early 2026, the Coastal Administration reported it was revising the plans with the aim of reducing costs. Three groups; AF Gruppen, Eiffage Génie Civil, and the Skanska/Vassbakk & Stol consortium, submitted bids, and work continued with the bidders to refine the plans.

At the request of the government, the Coastal Administration submitted revised plans in early March. The estimated cost has since been reduced to approximately 8.6 billion NOK (just over $900 million). Construction had previously been estimated to take five years.

Still waiting for final approval

The inclusion of initial funding in the budget proposal, released on June 7, came as a surprise to many. As recently as last month, both the Prime Minister and the Finance Minister had stated that no funds had been set aside for the tunnel.

The Norwegian Parliament (Stortinget) is scheduled to give final approval of the budget by June 19.

The Norwegian Coastal Administration says that if funding is maintained, it can announce the final contract, having already completed its evaluation of bids from the three groups. Additional contracts, including demolition and water pipeline works, are ready to be tendered.

The project aims to begin construction in 2027, according to project manager Harald Inge Johnsen, provided government funding remains in place.

"We are ready as soon as we receive instructions from the Ministry of Trade, Industry and Fisheries," said Eirar Vik Arset, Director General of the Norwegian Coastal Administration (Kystverket).