The European Bank for Reconstruction and Development is providing additional loan funds of up to US$ 62.5 million to the State Administration for Railway Transport of Ukraine (UZ) to finance the purchase of freight wagons as part of its programme to renew rolling stock.
This funding increases the loan to one of a similar size and purpose provided by the Bank in 2009. This latest transaction between the EBRD and UZ demonstrates the progress of the sector reform achieved by the national rail operator with the Bank’s support. This funding will enable UZ to continue with the implementation of its modernisation programme.
UZ will use this loan to finance the acquisition of general purpose freight wagons, an important step in helping to improve the underlying transport infrastructure that supports Ukraine’s economy and accounts for approximately 56 per cent of the total freight turnover.
With the signing of this additional funding, the EBRD has now committed over US$ 400 million to the Ukrainian railways sector through five separate transactions since 1999.
All EBRD projects with UZ and private railway operators in Ukraine over this period support wide-ranging sector reforms, including plans to separate infrastructure and operations, divest non-core activities, review tariff policy and reduce cross subsidies between freight and passenger operations, as well as open up the sector for private investments and promote competition in railway services.
The EBRD is the largest financial investor in Ukraine. As of the end of October 2012, the Bank had committed over €8 billion (US$ 10 billion) through 327 projects.