Länsimetro Oy’s Report of the Board of Directors 2018 – construction targets achieved

Länsimetro Oy is jointly owned by the City of Espoo and the City of Helsinki. The City of Espoo owns 84.4% and the City of Helsinki owns 15.6% of the company. The company’s task is to build, own, maintain and develop the West Metro.

The West Metro project is divided into two construction phases: Phase 1 Ruoholahti–Matinkylä, and Phase 2 Matinkylä–Kivenlahti. The owner cities have agreed that each co-owner is responsible for financing the investments in their own area, as well as for any maintenance costs arising from them. Costs that cannot be allocated according to that principle are generally shared in proportion to the geographically allocated costs.

The rail line and stations of the first phase were handed over to HKL on 3 October 2017. Länsimetro Oy owns the now-operating metro system, meaning the stations, rail line and related technical systems, and is responsible for its asset management, and for maintaining and developing its value.

HKL is responsible for the service and maintenance of the stations and rail line owned by Länsimetro, and also reports on these activities to the owner (Länsimetro Oy). HKL is also responsible for the metro traffic, operating two metro lines in the West Metro area, from Vuosaari to Matinkylä and from Mellunmäki to Tapiola. HKL furthermore owns the rolling stock, i.e. the metro trains.


Länsimetro Oy handed over the stations and rail line to HKL on 3 October 2017, and by HSL’s decision, passenger traffic to Matinkylä began on 18 November 2017. Eight stations and the rail line, including the technical systems for these, remain under the ownership of Länsimetro Oy. HKL reports to Länsimetro Oy on the management and maintenance costs, and is accountable to Länsimetro Oy for the use of the rail line and stations and for related service and maintenance tasks. The operations are based on a co-operation agreement between Länsimetro and HKL that is steered by an agreement, co-operation, technical and finance group.

In 2018, HKL and Länsimetro jointly developed maintenance processes and reinforced the maintenance and asset management organisation. At Länsimetro, a maintenance organisation that employs two maintenance managers is responsible for operations. Life-cycle modelling was devised in 2018 for the maintenance function in order to optimise maintenance costs, and the drawing up of an operational strategy was initiated.

Work on phase 1 of West Metro continued in 2018 in Tapiola and Matinkylä, where accessibility to both metro stations was improved by building a second entrance to the station. For both Tapiola and Matinkylä, the new entrance is closely linked to the developing urban environment. In Tapiola, the entrance links to the shopping centre expansion and the new bus terminal, and in Matinkylä, the entrance will be connected to a new hotel project, and later to also to a swimming hall.

The stations currently in use were also improved. During the reporting year, five new kiosks were opened in the stations and vending machines were installed. Several development projects are also under way to improve, among other things, access control at the stations, technical surveillance systems and data transfer systems on premises.


In the course of 2018, work advanced from excavation to construction on West Metro’s Matinkylä–Kivenlahti section. Construction contracts were tendered out in several stages over the year, and construction began on schedule at the five stations and on the rail line. The construction of the Sammalvuori depot has progressed to work on HVAC and electricity. In addition to the schedule targets, the cost targets were also achieved. The excavation contracts came in at approximately EUR 14 million below budget.

Other goals were also achieved. During the year, a total of 13,400 construction and production plans were completed. The key building permits needed to begin the construction work were obtained from the construction supervision authorities. Phase 2 includes a total of 24 subcontracts, 17 of which were tendered out during the year. The tendering process for the contracts that will be carried out later will continue until the summer of 2019. Occupational safety remained at a good level.

In March 2018, the City of Espoo approved an adjusted project plan for the Matinkylä–Kivenlahti section. The adjusted cost estimate for the project is EUR 1,159 million, not including financing costs and adjustments for inflation. The aim is to hand over the seven kilometres of rail line and the five stations and depot to the operator, Helsinki City Transport (HKL), during 2023.

The project as a whole is progressing within the cost estimate. All the construction contracts procured remained within budget. The subcontracts procured also remained within budget as a whole, although some exceeded their budget and others came in below budget. The cost forecast for planning has been updated.

The procurement of construction contracts was completed according to the procurement plan, and the procurement of subcontracts is also proceeding according to plan.

The construction work is mainly progressing according to schedule. At several sites, the work of contractors has begun slower than scheduled, due to insufficient resources or preparatory tasks, for example. These delays are expected to have no impact on the overall schedules of the sites.

Company finances in 2018

Länsimetro Oy’s permanent business activities are financed with charges collected from its owners, and construction activities are financed with external financing secured by its owners. The financial stability of the company’s operations depends on the reliable planning of operations financed with charges, and on forward-looking financing of construction operations.

Länsimetro Oy became the asset owner of West Metro’s first phase and covers its project-related maintenance and debt-servicing costs using charges collected from its owners. The stations and rail lines have been handed over to HKL, which operates the metro and maintains the metro system. HKL receives compensation from HSL for operating the metro traffic.

Administrative charges collected from the owners are used to cover the company’s permanent operations. In 2018, Länsimetro Oy collected EUR 2.8 million in administrative charges and 18.8 million in maintenance charges.

The company’s overall result was negative. This is due to two reasons: firstly, in 2017 more charges were collected than costs were charged. This lowered the income from charges for 2018, because part of the 2018 operations were financed with funds saved from 2017.

Secondly, the company’s loan repayments have not begun in full yet. For that reason, the loan repayments financed with charges are, for the time being, less than the planned depreciation, and as a result, the total depreciation and financial items are at a deficit. This will be corrected once the loan repayments begin in the coming years, and the current losses will be covered.

State subsidies related to the first phase of the metro have been paid in full. For phase 2, the State has committed to cover construction costs linked to the cost index of civil engineering works to a maximum of EUR 240 million, or a 30% contribution. State contributions in 2017 related to phase 2 were paid in spring 2018; the sum paid was EUR 35.8 million. The State contribution for 2018 will be paid in 2019, and the amount of the subsidy is approximately EUR 35.4 million.

The company finances investments primarily with loans that are guaranteed by the cities. A total of EUR 1,035 million in loans for phase 1 (Ruoholahti–Matinkylä) were withdrawn by the end of 2018. The first loan repayments began in stages in 2016.

By the end of 2018, EUR 305 million in loans was withdrawn from financial institutions for phase 2 (Matinkylä–Kivenlahti).

The purpose of Länsimetro Oy is not to produce a profit for shareholders. The company does not distribute dividends or assets in any other form than what is referred to in Chapter 13, Section 1, Subsection 1 of the Limited Liability Companies Act.

Contact information:

Olli Isotalo, Chairman of the Board of Länsimetro Oy

Ville Saksi, CEO of Länsimetro Oy