The EBRD’s Board of Directors has approved a $500 million long-term loan to Russian Railways (RZD). This would allow the state-owned railway to restructure its balance sheet and support the completion of reforms of the world’s second largest rail system despite the economic crisis and market contraction.
The 10-year unsecured loan would be the largest single investment since the Bank was founded in 1991. The transaction brings the amount invested by the EBRD in nine Russian railway projects to nearly $1.2 billion following the government’s decision in 2001 to launch a structural reform of the system.
This loan would be closely tied to the ambitious reform goals that RZD and the government have set themselves, including restructuring of freight operations and improving sector regulation. The EBRD, as an institution which has long been deeply involved in the Russian reform programmes, is proud to participate in this process, EBRD Business Group Director for Infrastructure Thomas Maier said.
By providing these long-term funds to RZD, the Bank is contributing to a more efficient match between the assets and liabilities of Russian Railways, thus freeing up resources for the priority goal of upgrading the rail network, Mr. Maier added.
Furthermore, as one of Russia’s biggest energy users, RZD has agreed implement a sustainable energy strategy with EBRD support in order to reduce emissions of greenhouse gases and other pollutants.
Russian Railways is one of the world’s largest transport companies. With a staff of around 1.3 million, it is also Russia’s largest commercial employer. The railway system is a key driver of the Russian economy, accounting for some 85 percent of all freight movements (excluding pipelines). Its network is second only to that of the U.S.