Fljótsdalshreppur wants to recover an old debt and says it may be owed up to ISK 200.000.000 by Vegagerðin (Icelandic Road and Coastal Administration).
Fljótsdalshreppur wants to recover an old debt and may be owed up to ISK 200.000.000 by Vegagerðin (Icelandic Road and Coastal Administration).
Fljótsdalshreppur lent Vegagerðin substantial sums after the 2008 financial crash to enable road works in the valley to go ahead.
The municipality now wants to attempt to recover up to ISK 200.000.000 that went into roads the state should have funded.
A lawyer for Fljótsdalshreppur is examining whether and how it is possible to recover the old debt and the substantial sum the municipality believes it has outstanding with Vegagerðin. The money was lent to speed up construction projects in the area.
After the 2008 banking collapse, funding for road building was scarce. Fljótsdalshreppur therefore lent Vegagerðin significant funds for works in Fljótsdal.
According to information obtained by RÚV, the municipality fully financed projects over several years after the crash, while Vegagerðin mainly handled design and tendering for road improvements to lay sealed surfaces on roads in the municipality. These were either roads under the municipality’s responsibility or stretches that should at least partly have been funded through the national transport plan.
Such an arrangement might be considered unusual today, but Gunnþórunn Ingólfsdóttir, who was mayor of Fljótsdal at the time, says Vegagerðin had very limited funds for construction after the crash. The arrangement was intended to secure transport improvements that otherwise would not have happened.
At the time, fast-track funding was viewed positively because there was a need to stimulate the economy through increased road construction.
She says the money was lent without certainty about whether or when it would be recovered. Under the loan agreements, neither interest nor indexation was specified. The loans may have meant that road works in Fljótsdal were brought forward compared with what would otherwise have happened.
According to RÚV’s information, the municipality has made a rough assessment of how much of these works should have been funded by the state and believes it may be owed up to ISK 200.000.000 from Vegagerðin.
The municipality’s lawyer has been tasked with assessing the legal status of the loans.
Source: Ruv.is
