THE European Bank for Reconstruction and Development (EBRD) will lend €200m to Ukrainian Railways (UZ) to upgrade the country’s rail links with the European Union (EU). This follows €150m of emergency liquidity finance provided to UZ last year to help railway operations continue.
The EBRD says that since Russia’s invasion of Ukraine in February 2022, uncertainty over sea routes that traditionally carry most of the country’s imports and exports, including grain vital for global food security, has prompted improvements to rail, road and river links with other countries.
The sovereign loan, including €100m for emergency finance and €100m for working capital support, will mitigate the impact of the war by facilitating the expansion of cross-border capacity and improving rail connectivity with the EU. It will allow UZ to continue to provide vital services, to rehabilitate key rail corridors serving border crossings into the EU and to acquire rolling stock.
The EBRD loan will be supported by guarantees of up to 50%, with €60m coming from the United States and €40m from the Netherlands. France and the EU, through its European Fund for Sustainable Development, provided guarantees for EBRD’s earlier finance.
In addition, the project is expected to be financed by an investment grant of up to €10m from donors to cover investment in communications equipment, energy-efficient lighting and step-free access at several major stations.
On June 2, the European Investment Bank (EIB) and UZ signed an EU grant agreement in Kyiv worth €6.7m to cover UZ’s most urgent needs.
The grant was originally earmarked for the EIB Ukraine railway modernisation project to upgrade and electrify part of the rail system, but the war has now changed UZ’s needs. Following a decision from the European Commission (EC), the grant was repurposed to provide urgent emergency support to UZ so that it can continue freight and passenger operations.