Kaunas Trolleybus Modernisation Project



Project number:


Business sector:

Municipal and environmental infrastructure

Notice type:


Environmental category:


Approval date:

23 Mar 2006



PSD disclosed:

06 Jan 2006

Project Description

The objectives of the proposed project will be to:

(i) finance 50 new trolley buses, spare parts and workshop equipment,
(ii) upgrade associated trolley bus infrastructure, and
(iii) provide continued support on the restructuring of the institutional and regulatory framework for public transport in Kaunas.

Transition Impact

  • Commercialisation: The Bank will assist the City and the Company to draft and implement a new Public Service Contract (“PSC”). The revised PSC for Autrolis will differ from the existing one between Autrolis and the City: (a) shifting the Company from an annual negotiated subsidy to a transparent, multi-year ‘payment-for-service’; (b) utilising targets and incentives to increase efficiency; (c) making the Company responsible for investment planning and financing. The PSC will provide for a performance-related service fee to be paid by the City to the Company, adjusted annually through a structured, transparent process, which will incentivise the Company to manage and reduce operating costs. Service quality will be monitored and payments linked to performance (e.g. punctuality, driving quality, conduct, information and cleanliness).
  • Strengthening of the City’s central public transport unit: To achieve sufficient authority and monitoring capacity to procure and monitor the services from the various public transport providers.
  • Support for outsourcing of services: The City and the Company plan to outsource the services for ticket control and enforcement to a private company.
  • Mobilisation of commercial funding: The sell down of up to € 5 million will constitute one of the first transactions on the commercial financial markets for long-term public debt in Lithuania, without recourse to a sovereign or full municipal financial guarantee. The operation will demonstrate that municipal utility companies in Lithuania can be financed on their own merits with the support of Municipal Support Agreements. The willingness of the Bank to provide instruments suited to such credit risk would encourage other similar operations.
  • Standards: The Bank’s procurement standards and assistance will enhance clarity and transparency. In addition, the PSC will improve corporate governance since it clearly defines and allocates responsibilities for service delivery, finances, safety, tariff setting, passenger control, traffic control, marketing, ticketing, fare evasion and handling customer complaints;
  • Regulatory framework: The project would also continue to support the ongoing Public Transport Regulation and Restructuring Advice Programme (the “PTRAP”) for which the Bank arranged funding as part of the previous project. The PTRAP seeks to address a number of issues associated with the weak regulation of microbuses: (i) safety: many microbuses are relatively old and are not in a good state of repair; (ii) lawlessness: microbuses are seen to compete unfairly with the public companies within the transport sector by “creaming” passengers (the practice of running just before a scheduled Company service) and because microbus owners are thought not to declare their full revenues and thereby do not pay full taxes; (iii) pollution: the current microbus fleet does not meet the City’s requirements concerning the use of ecologically-friendly vehicles in and around the city centre. The PTRAP would provide the basis for a regulatory framework of the microbuses.

The Client

The Kaunas Trolley Bus Company (AB Autrolis).

EBRD Finance

Up to €15.0 million senior loan to the AB Autrolis of which €10 million will be for the account of the EBRD and €5.0 million for the account of participants.

Project Cost

€ 18.0 million

Environmental Impact

Trolleybuses reduce air emissions and noise in the city centre. The modernisation of the trolley bus fleet will help develop public transport alternatives as well as improve the air quality in the city centre of Kaunas.

Technical Cooperation

  • The ongoing Public Transport Regulation and Restructuring Advice Programme (the “PTRAP”) to the City under the Kaunas Public Transport Project I (i.e. previous project). The PTRAP comprises (i) definition of the respective roles of large buses operated by the Company, trolley-buses and microbuses, (ii) advice on the corporate structure of the Kaunas public transport sector, including microbuses, and (iii) establishing an on-going route-tendering regime that encourages competition while enabling the City to achieve acceptable safety and environmental standards. The PTRAP is fully funded by the Swedish Trust Fund.
  • Business and Technical Advice Programme (the “BTAP”), comprising business and technical advice to evaluate the investment programme of the Company and compile a comprehensive business plan. The BTAP is fully funded from the Swedish Trust Fund.
  • The procurement of the buses will be supported by an experienced consultant financed by the loan and include prequalification of suppliers.

Business opportunities

For business opportunities or procurement, contact the client company.

For state-sector projects, visit EBRD Procurement: Tel: +44 20 7338 6794
Email: procurement@ebrd.com

General enquiries

EBRD project enquiries not related to procurement:
Tel: +44 20 7338 7168
Email: projectenquiries@ebrd.com

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