EBRD promotes private investment in Ukraine’s railway sector

By Anton Usov

The European Bank for Reconstruction and Development is supporting private operations in Ukraine’s railway sector through a US$ 90 million senior loan to Interleaseinvest – a private rolling stock owner and operator incorporated in Ukraine. The Loan comprises an "A Loan" of up to US$ 45 million for the Bank’s own account, and a "B Loan" of US$ 45 million, which will be syndicated to Raiffeisen Bank International AG, Erste Group Bank AG and UniCredit Bank Austria

The first ever EBRD project with a privately owned provider of rail transportation services in Ukraine will finance part of Interleaseinvest’s programme of the acquisition of around 2,500 freight wagons. The wagons, which will be a mix of gondola and hot pellet types, will be used to provide services to corporate clients across the country.

The Ukrainian rail sector is one of the largest in Europe but most of the freight transportation services are provided by the State Administration for Railway Transport of Ukraine (UZ). The UZ existing wagon fleet is aging and the number of wagons in active service is declining.  This potentially creates a major bottleneck for the Ukrainian rail sector, which remains the dominant mode of freight transportation in Ukraine and accounts for about 56 per cent of the total freight turnover. By supporting private operators, like Interleaseinvest, as well as continuing to work with the UZ on implementing important sector reforms and financing critical infrastructure projects, the Bank promotes competition, efficiency and improvement in quality of the railway services for the Ukrainian economy.

The EBRD is the largest financial investor in Ukraine. As of 30 June 2011, the Bank had committed over €6.5 billion (US$ 9.3 billion) through 276 projects.