CZECH Railways (ČD) is negotiating with the National Development Bank (NRB) regarding new funding for a fleet of 20 230km/h nine-car trains on order for its international and domestic long-distance routes.
The fleet is expected to cost Koruna 13bn ($US 607.6m). Each train will have 555 seats and will be built by a consortium of Škoda Transportation and Siemens Mobility. They will enter traffic gradually from 2024 until 2026.
“It is an investment in the future, because modern trains cannot be acquired overnight and their production takes several years,” says Mr Ivan Bednárik, chairman of the Board of Directors and CEO of ČD. “We will cover part of the investment from our own resources, we will try to obtain subsidies, and we must borrow the rest.
“So far, we mainly use bonds. However, we want to diversify the debt in the future and use the right tools to minimise the costs associated with servicing it.”
Bednárik says it is important to cooperate with the NRB: “Together, we would establish the joint-stock company ČD Finance, which will provide the necessary funds. The project will include the National Development Fund and Czech or European banks.”
The new fleet would be owned by the newly-established company, with each partner having a 50% share in it, and the vehicles would be operated together for 12 years.
“Of course, we have calculated everything thoroughly and this method of financing is more suitable than, for example, leasing,” says Mr Michael Kralet, director of CD’s Controlling and Treasury Department. “NRB is a suitable partner for us for several reasons. It has extensive know-how, experience with modern methods of financing, such as PPP projects, and at the same time it will be a stable merger of two entities, which are essentially about fulfilling the goal of investing meaningfully.”
“We assume that not only the bank itself, but also the National Development Fund, our subsidiary, will participate in financing the purchase of new trains” says Mr Jiří Jirásek, chairman of the Board of NRB. “Thanks to this, the funds of private investors will also be involved in financing.”. He adds that financing the fleet in this manner is one of the key ways not to postpone a project with a limited budget.
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