EBRD contributes to Ukraine’s freight wagon fleet upgrade

By Anton Usov

The EBRD is continuing its efforts to improve freight transportation services in Ukraine and in the region by investing in the manufacturing of components for freight wagons. Via this financing, the Bank is helping to address the issue of an ageing wagon fleet in a region that still relies heavily on rail transportation. 

The Bank is providing a senior loan of up to US$ 13 million to JSC Lugcentrokuz (LCK), a privately owned manufacturer of key components for rail freight wagons and locomotives, such as shock absorbers, axles, wheelsets and springs.

Loan proceeds will be used to improve LCK’s product range, strengthen its traditional sales markets of Ukraine and the CIS, as well as to increase its competitive position in Europe, North America and India.

As a result of an energy efficiency audit, funded by the EBRD Regional Energy Efficiency Programme for the Corporate Sector, LCK will implement several energy efficiency initiatives. When fully implemented, they will allow LCK to achieve electricity savings in the range of 4,000 MWh per year and natural gas savings of about 100,000 GJ per year, leading to an overall greenhouse gas (GHG) emission reduction of about 7,000 tonnes of CO2 equivalent per year. The company will also implement a water recycling system, which will significantly improve its environmental standards.

André Küüsvek, EBRD Director for Ukraine, said: “By supporting Lugcentrokuz we are promoting energy saving investments, which will set a new benchmark and will have a strong demonstration effect in the industry. We are also glad to contribute to the Ukrainian corporate sector recovery and support its export capacity.”

The EBRD is the largest financial investor in Ukraine. As of 15 November 2011, the Bank had committed over €7 billion (US$ 9.3 billion) through 287 projects.