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EBRD loan for the world's largest carrier of railway traffic - the Russian railway network
To bring about urgent improvements to Russia's extensive railway network, the European Bank for Reconstruction and Development (EBRD) is providing a thirteen-year loan worth approximately US$ 120 million to the Russian Federation for the benefit of Russia's Ministry of Railways (MPS), making the Bank the first international financial institution to assist Russia's railways.
"The EBRD's loan will help Russia's railways as they adopt improved asset management practices and management information systems," explained Jacques de Larosière, President of the EBRD. "In a country the size of Russia where rail has traditionally been the main form of transport, having an efficient rail network can make a huge difference to distribution costs and user satisfaction. A more reliable form of transport for commercial and private users also means a greater source of revenue for the Government."
Gennadi Fadeev, Minister of Russian Railways, said: "The signing of the loan agreement initiates the first stage of the Russian railway modernisation and at the same time lays down an excellent basis for future cooperation between the EBRD and the Russian railways. The implementation of the loan will open up good prospects for the integration of Russian railways into the overall European railway network."
The project, which will cost approximately US$ 192 million, focuses on priorities agreed between the EBRD and the MPS. Improvements to the track of high-density rail routes, especially the three strategic routes of Moscow-St Petersburg, Moscow-Nizhni Novgorod and Moscow-Samara, will be a top priority. Other routes will also be able to benefit from this demonstration of the use of modern technology and improved maintenance practices, and the MPS will make the track maintenance equipment available to regional railway enterprises.
Investment in data communications, an integral part of railway management, is another priority and will result in improved service management and use of rolling stock and better customer service. These improvements will create spare capacity on the data network, allowing the MPS to earn revenue from commercial customers.
The EBRD is also providing assistance to the MPS to develop an Environmental Action Plan, which will address the environmental issues associated with the project, particularly noise, the handling and disposal of waste including asbestos and replacement ballast.
A major technical cooperation programme has been extended to the MPS over the last three years for the purposes of project identification, preparation, appraisal and policy advice. Approximately US$ 3 million of grant funding has been utilised from Japanese, EU-Tacis, Canadian and French sources. Rail transport in Russia has a much higher market share of traffic than is common in Western economies and is the predominant form of transport. The Russian railway is the largest carrier of traffic in the world, handling 34 per cent of the world's total rail freight traffic and 15 per cent of rail passenger traffic. Following the 1995 Railway Act, the network is now administered by 19 regional railway enterprises, although their assets are owned by the MPS.
In April 1996 the EBRD signed a US$ 42 million financing package for SFAT, Russia's largest privately owned railway transportation company, for the purchase of railcars. SFAT is 40 per cent owned by the MPS.
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