EBRD Bolsters Ukrainian Railways' Infrastructure Development
By Strategic Research Institute on Jun 13, 2023 08:00 am
In a significant move to improve Ukraine's railway connections with the European Union, the European Bank for Reconstruction and Development (EBRD) has granted a €200 million loan to Ukrainian Railways (UZ), commonly known as Ukrzaliznytsya. This financing follows a previous emergency liquidity finance of €150 million provided by the EBRD last year to ensure the continuity of Ukraine's train services.
The ongoing uncertainty surrounding traditional sea routes for Ukraine's imports and exports, exacerbated by Russia's invasion last February, has prompted the country to focus on enhancing its rail, road, and river links with other nations. To mitigate the impact of the war, this sovereign loan, divided into €100 million for emergency finance and €100 million for working capital support, aims to facilitate the expansion of cross-border capacity and enhance railway connectivity between Ukraine and the EU.
UZ will utilize these funds to continue delivering essential services to the people and businesses while rehabilitating crucial rail corridors along the EU border and acquiring rolling stock. This strategic investment will play a pivotal role in maintaining vital trade connections and ensuring smooth transportation between Ukraine and its European partners.
To further mitigate risks associated with these investments, the EBRD shares the burden with its donors and shareholders. This loan will be backed by guarantees of up to 50 percent, with contributions of €60 million from the United States of America and €40 million from The Netherlands. France and the European Union, through the European Fund for Sustainable Development, have previously provided guarantees for the EBRD's financial support to UZ.
Additionally, the project aims to secure an investment grant of up to €10 million from bilateral or multilateral donors. This grant will be allocated for investments in communication equipment, energy-efficient lighting, and accessibility improvements at major railway stations. Such endeavors align with the project's objectives of resilience and inclusivity, ensuring the rail infrastructure is sustainable and accommodating for all passengers.
Despite the challenges posed by the ongoing war, Ukrzaliznytsya has diligently continued its cargo and passenger transportation operations, albeit at reduced capacity. The EBRD has been a steadfast partner to UZ even before the conflict began and remains committed to supporting the rail company throughout this difficult period.