The project will finance the purchase of track maintenance machinery and track improvement materials for the major rail corridor between L'viv and Kiev.
The project will assist UZ by:
- improving maintenance on the Kyiv-L'viv rail line, UZ's main transport link to Europe;
- reducing life-cycle costs of track by modernising UZ's maintenance methods; and
- improving financial performance by aiding commercialisation measures.
The investments will assist UZ to improve track maintenance. As a result UZ will be able to offer faster, more reliable rail freight transport services at lower cost; track maintenance costs will be reduced substantially. Policy reforms will promote improved financial performance, better management and commercialisation.
Phasing out the cross-subsidy from UZ's freight services to cover passenger losses will permit UZ to contain freight tariffs, making Ukraine's goods more competitive in the international market place. The project will help UZ to develop a commercialisation programme, to implement it through a rolling five-year business plan, and to plan for the commercialisation of UZ's non-core businesses, which could eventually lead to privatisation.
The client is the State Administration for Railway Transport of Ukraine (UZ), an entity wholly owned by the state.
Loan (sovereign guaranteed) of US$ 51.9 million (EUR 50 million) with a 15-year term.
US$ 110.9 million (EUR 96.2 million)
The project was categorised as B/0, requiring an environmental analysis. The investment was preceded by a pre-investment study, which developed an Environmental Action Plan (EAP). This identified environmental issues that must be addressed during project implementation. During the operation and maintenance phase, adequate provision will be made for disposal of hazardous and non-hazardous solid wastes, water run-offs and possible increased noise along the railway corridors. As a condition of the effectiveness of the project, UZ will need to approve an EAP satisfactory to the Bank.
EU-Tacis (Bangkok Facility) has provided EUR 500,000 for project preparation and EUR 750,000 for project implementation. Further TC funding may be sought to assist UZ to improve its financial management and accounting systems.
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