EBRD supports modernisation and restructuring of HZI

By Axel  Reiserer

The EBRD is providing a €40 million loan to Hrvatske Željeznice Infrastruktura d.o.o., HŽ Infrastructure, the national railway infrastructure company, for the acquisition of track maintenance machinery and to support the company’s labour restructuring programme. The loan will be sovereign guaranteed and linked to the on-going reform programme of the company.

The investment was preceded by an energy efficiency audit funded by the EBRD’s Shareholder Special Fund and will see HŽ Infrastructure investing in an Energy Management Information System as part of the project to help focus its efforts on energy saving measures. France will provide further technical co-operation and additional support is being sought to assist with the corporate capacity strengthening and implementation of the labour restructuring plan.

The EBRD loan will assist financing priority investments in the mechanisation of HŽ Infrastructure’s track maintenance equipment and in part of its labour restructuring programme. The loan will be linked to sector reform in important areas, including restructuring of the organisation, improving track access and strengthening the company’s commercial orientation.

Sue Barrett, EBRD’s Transport Director, welcomed the agreement. Speaking from the Bank’s headquarters in London she said: “With this investment the EBRD is focusing on improving the efficiency and sustainability of the rail network, which are important elements of the current railway reforms in Croatia. The rationalisation of the company’s operations will strengthen the position of Croatia’s railways, facilitating the successful integration with other European rail networks and helping to prepare for greater private sector involvement.”

“This is a very important transaction because it is part of the Government’s efforts to modernise and reform Croatia’s railway operations and services”, added Vedrana Jelušić Kašić, EBRD Director for Croatia, at the signing in Zagreb today. “The reorganisation aims to put the company on a sound and viable commercial basis, reduce its dependence on the state and support economic growth. The EBRD strongly supports these goals.”

Siniša Hajdaš Dončić, Minister of Maritime Affairs, Transport and Infrastructure, stressed the importance of the EBRD’s financing of transport infrastructure projects: "The financing provided by the EBRD is of great importance for the Croatian transport sector. This is the second EBRD financing that not only supports the further development of railways and its modernisation in Croatia, but the funds will also be used to support the restructuring of HŽ Infrastructure. To date, the EBRD has invested in numerous transport infrastructure projects including roads, ports and airports”, said Minister Hajdaš Dončić.

Darko Peričić, President of the Management Board of HŽ Infrastructure, said: „Today's signing is of exceptional importance to us because this loan will provide a significant source of funding for the continuation of the restructuring and modernisation of HŽ Infrastructure and will contribute to increasing the competitiveness of the national railway infrastructure. The EBRD loan in the amount of €40 million will assist in the implementation of the modernisation and restructuring project with the goal to integrate HŽ Infrastructure and Croatia into regional and European traffic corridors.”

This loan is the second loan the EBRD has provided to Croatian Railways as a support for the changes in its system. The first loan in the amount of $35 million was successfully implemented in the period between 1998 and 2004.

The loan is the first under the EBRD’s new transport sector strategy which is placing a high priority on raising environmental and social standards and increasing the role that the private sector plays in the industry. The strategy aims at achieving secure, reliable and sustainable systems of transport which embody market principles, balance economic, environmental and social needs and are responsive to the requirements of industry and of the public.

In Croatia, the EBRD to date has invested some €2.77 billion in almost 149 projects. The Bank’s activities cover all sectors of the economy and are especially strong in infrastructure, corporate, financial institutions and energy.