Russian railway modernisation with EBRD funding

Modernizing Russian railways

The EBRD's support for a private freight operator has helped develop and modernise the Russian rail sector, a major element of the country's cargo transport industry.

Russia's rail network is vast. It covers eight time zones, stretches across 86,700 km and includes more than 127,000 km of railway lines. It is easy to see why the rail sector is key to the Russian economy.

Raising funds for modernisation

The Russian railways handle 93% of the country’s cargo transportation. To finance improvements, the Russian government opened up the rail sector to competition in the late 1990s.

Since then, private railway operators and owners of rolling stock have attracted a large share of the market by offering better services. Over 34% of the total wagon fleet is now privately owned, compared with less than 20% in 2003.

Helping the private sector

But even the private sector needs finance for investments, in particular in the midst of a global economic downturn.

In 2008 Globaltrans Investment, one of Russia’s leading private rail freight operators, received €31.9 million from the EBRD to buy new rolling stock, including open-top wagons and cement hoppers. The EBRD also acquired a 3.2 per cent stake in the company as part of its initial public offering (IPO) on the London Stock Exchange. This is the first IPO by a private rail operator active in Russia’s rail freight market.

The EBRD is a long-term investor in Russia and it has helped to develop the Russian rail network by investing about €413 million in seven projects since 2004.