Study: Estonia must rent out at least 300 prison places to make Sweden deal viable
A PwC analysis commissioned by Estonia's Ministry of Justice found that renting prison places to Sweden only becomes economically reasonable at a volume of at least 300 places, a threshold that must be locked into the agreement regardless of how many prisoners Sweden actually sends.
Before starting negotiations with Sweden on a prison-rental deal, Estonia's Ministry of Justice commissioned PricewaterhouseCoopers (PwC) to analyze under what conditions renting out prison places would make economic sense. The analysis found the break-even threshold begins at 300 places.
Tiina Unuks, head of prison work organization at the Prison Service, said the goal was to get an independent expert's assessment to guide Estonia's pricing and negotiating position. The analysis showed a clear threshold below which the risk margin would be insufficient or the deal would be unprofitable for Estonia.
Because of this, the 300-place volume must be fixed in the international agreement, meaning Sweden must pay for 300 places regardless of how many prisoners it actually sends. Each additional prisoner beyond that threshold would cost an extra 8,500 euros per month.
The analysis also showed that prices must be indexed rather than the contract volume staying flat year after year. The current agreement includes 3.5 percent annual indexing. It has further been agreed that Sweden will always pay half of the total sum six months in advance — at a contract volume of 30.6 million euros a year, that means a 15.3 million euro advance payment.
Empty places have been growing
Estonia's prisoner population has fallen sharply, from about 4,700 in 2000 to roughly 2,100 in prisons and detention centers by the end of 2022, with the downward trend continuing. As a result, vacant prison places have been rising, reaching 1,443 by the end of last year. This has pushed Estonia to look for ways to optimize prison management costs, including renting out unused capacity to another country.
Sweden pays Estonia 30.6 million euros a year for the service, an amount that also covers the costs Estonia incurs running the rented facility, including expenses for other state agencies such as medical services, IT, internal security and the court system. This means housing Swedish prisoners does not burden Estonian taxpayers.
For 300 places, the estimated annual operating cost base is 26.77 million euros, though the difference cannot automatically be counted as revenue since risks and possible additional costs must also be factored in.
PwC's analysis is based on data and forecasts from 2024 and does not reflect current actual costs or the final financial terms of the signed agreement. Financial terms were refined during subsequent contract negotiations, though they remain within the originally agreed volume and principles.
