"Our goal was to get an assessment from an independent expert on what Estonia should base its pricing on during negotiations and what our position could be," said Tiina Unuks, head of prison work organization at the Prison Service.

The analysis showed that the pricing of prison places should depend on volume. "There is a clear threshold below which there would not be a sufficient risk margin for providing the service, or the deal would be unprofitable for Estonia," Unuks noted.

Renting out prison places is reasonable for Estonia only if at least 300 places are rented out. This must also be fixed in the international agreement. Regardless of how many prisoners Sweden actually sends to Estonia, payment for 300 places must be guaranteed.

Over time it will become clear how many prisoners Sweden actually sends. "They will pay for 300 places anyway, and each additional prisoner beyond that costs 8,500 euros per month," Unuks explained.

According to her, the analysis showed very clearly that Estonia must index prices and that the contract volume cannot remain the same year after year. "The current prison‑rental agreement also includes indexing of 3.5 percent per year, which we agreed on with the Swedes," Unuks said.

It has also been agreed that Sweden will always pay half a year in advance, meaning half of the total amount. If the contract volume is 30.6 million euros, then 15.3 million must be paid six months in advance.

Number of Estonian prisoners has decreased

While in 2000 there were about 4,700 prisoners in Estonia's prisons, at the end of 2022 there were about 2,100 in prisons and detention centers. In recent years the trend has been downward.

As a result, Estonia has an increasing number of vacant prison places. At the end of last year, there were 1,443 such places. Because of this, Estonia has been looking for ways to optimize the management and associated costs of its prisons, one of which is renting out vacant places to another country.

Sweden pays Estonia 30.6 million euros per year for the prison service, but this amount also covers the costs Estonia incurs from operating the rental prison, including costs of other state agencies.

Costs considered included medical services, IT, internal security, the court system and other state institutions. Therefore, the cost of housing Swedish prisoners does not fall on Estonian taxpayers.

For 300 prison places, the estimated annual operating cost base is 26.77 million euros. However, this difference cannot automatically be considered Estonia's revenue, because risks and possible additional costs associated with the service must also be taken into account.

According to the analysis, the economically reasonable number of rented places is at least 300. Such a volume allows more efficient use of existing prison infrastructure and reduces the risk that with a smaller rental volume the fixed costs of the prison would remain too high.

The impact of the agreement is assessed across the entire Estonian prison system, not only through the budget of Tartu Prison. Estonian prisoners remain in Estonian prisons, and resources are still needed for their placement and enforcement of sentences. At the same time, the workload of other prisons has increased, which means additional labor and other costs.

Analysis provided cost base and break‑even point

The analysis was a negotiation tool for Estonia. It helped calculate costs, revenue potential, volume effects and risks, and shape Estonia's negotiation position.

The analysis was carried out by PricewaterhouseCoopers Advisors (PwC), and the Ministry of Justice and the Ministry of Digital Affairs commissioned it before deciding to begin official contract negotiations with Sweden.

PwC's analysis is based on data and forecasts known as of 2024. Its calculations do not reflect today's actual costs or the final financial terms of the agreement, and they cannot be considered indicators of the actual financial outcome of the contract signed between Estonia and Sweden.

After the analysis was completed, financial terms and amounts were refined during contract preparation and negotiations. These adjustments still remain within the agreed volume and principles of the contract.

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