Although passenger traffic to the Port of Tallinn has steadily increased over the past few years, cargo traffic has been decreased since before the crisis due to increased competition for neighboring ports.

TALLINN — The Estonian government approved a €50 million loan to the state-owned Port of Tallinn Friday to pay for improvements to the Muuga Harbor.

As part of an Eastern Baltic shore race to increase port capacity as competition for traffic heats up between the three Baltic states and Russia, the Port of Tallinn is planning on increasing the berths, loading areas at Muuga Harbor as well as additional rail transport and an industrial part in a bid to increase capacity.

“The purpose of this loan is to finance the building of the infrastructure of the Muuga Harbor. This is one of the most important infrastructure projects for the state,” Piret Seeman, spokeswoman for the finance ministry, told Baltic Reports. “Tallinn is one of the biggest Estonian port complexes … a lot of merchandise goes through. The merchandise is approximately 29 million tons, seven million people pass through the port in the last year.”

The money will be loaned out over 15 years with a three percent interest rate.

“The state is expecting this money back for business,” Seeman said. The state can only give a loan to finance something that is very important.”

The loan for the enlargement of Tallinn port is the latest of a series of port expansion projects in the Baltic. Riga, the Lithuanian port of Klaipėda and the Russian port of Ust-Luga are all being enhanced over the next few years to carve larger shares of the Baltic Sea shipping traffic.