UZ Electrification

Location:

Ukraine

Project number:

45782

Business sector:

Transport

Notice type:

Public

Environmental category:

B

Target board date:

13 Dec 2017

Status:

Signed

PSD disclosed:

04 Jul 2017

Translated version of this PSD: Ukrainian

Project Description

Provision of a sovereign guaranteed loan to JSC Ukrzaliznytsia (the "Ukrainian Railways", "UZ", "Company") in the amount of up to €150 million for the electrification of 253 km railway line Dolynska- Mykolaiv-Kolosivka, in south Ukraine, its connection to the high voltage grid and the installation of a second track on single track sections of the line (the "Project"). The Project aims to increase the efficiency of the railway operations and the capacity for port hinterland traffic in the Odessa region.

Project Objectives

The main purpose of the Project is to improve the efficiency of the railway operations and to support the ongoing railway reform process through: (i) providing financing to electrify and double track the railway line, thus reducing energy consumption and removing the capacity bottleneck at three of Ukraine's main gateways for grain exports, (ii) providing institutional strengthening support to the Ukrainian Railways and the Government of Ukraine to implement best corporate governance practices, and (iii) providing further support to reduce energy consumption in the rail sector in Ukraine.

Transition Impact

Good

The transition impact of the Project is expected to come from (a) Green Economy Transition (the "GET") through significant reduction of CO2 emissions and policy dialogue to accelerate adoption of the advanced energy efficiency technologies and practices in the railway sector; and (b) integration through increased capacity for port hinterland traffic in the Odessa region.

Client Information

UKRZALIZNYTSIA

The Borrower is the Ukrainian Railways, a vertically-integrated railway company fully owned by the Government of Ukraine. The Company was established as a public joint stock company in October 2015, via reorganisation of the former State Administration for Railway Transport of Ukraine, as part of the ongoing railway sector reform.

EBRD Finance Summary

EUR 150,000,000.00

A senior loan of up to €150 million, consisting of:

  • Tranche 1: up to €124.5 million for the electrification of Dolynska-Mykolaiv railway line (148 km), double tracking of the single-track sections on the line, and construction of a high voltage line;
     
  • Tranche 2: up to €25.5 million for the electrification of Mykolaiv-Kolosivka railway line (105 km).

Total Project Cost

EUR 367,300,000.00

The total Project cost is estimated to be in the amount of up to €367.9 million, expected to be cofinanced by the European Investment Bank in an amount equal to the EBRD loan, the Company's own contribution and grant funding of the technical cooperation assignments.

Environmental and Social Summary

Categorized B (ESP 2014): An Initial Environmental and Social Examination (the "IESE") confirmed the project categorisation and that the Project is not expected to have adverse impacts on protected areas or to cause physical resettlement. Environmental or social impacts associated with the Project are not considered to be significant and can be mitigated.

An Environmental and Social Due diligence (the "ESDD") of the Project was carried by an independent consultant. The ESDD covered the Project and its associated facilities (notably the 150 kV lines required for the connection to the grid), with a focus on the acquisition of land required for the construction, as well as on environmental sensitivities in the Project area. The ESDD also considered the occupational and public health and safety risks associated with the electrification of existing and future lines. The ESDD also reviewed the studies required under the national regulatory requirements.

The Project will be built in rural and agricultural areas. There is no legally protected or internationally recognized area in the vicinity of the proposed Project. The Project does not require works on or close to sensitive habitats such as wetlands or water bodies. Transmission lines alignment will be defined so as to avoid or minimize potential significant impacts, notably by avoiding inhabited areas or forested land. Most of the works will be implemented along the existing railway lines, on land owned by UZ. Land acquisition will be needed locally, either permanently for the footprint of transmission line towers or temporarily for access roads, storage sites and the like.

The main environmental risks associated with the Project are related to potential impacts on birds, in particular migrating birds, generated by the construction of additional transmission lines.

The main social risks associated with the Project are related to the land use and land acquisition processes, and to the safety risk for the public associated with the presence of additional railways and electric lines. In order to mitigate these risks, a Land Acquisition and Compensation Framework is being prepared and will have to be implemented by UZ. A Stakeholder Engagement Plan will incorporate a program to raise awareness of the population, including school children, regarding the risks associated with the electrified railways.

Greenhouse gas (the “GHG”) calculations were performed according to the EBRD Methodology for Assessment of GHG. A net reduction of GHG emission by 140,000 tCO2eq/year will result from switching locomotives from diesel to electric traction.

An Environmental and Social Action Plan was prepared for the Project and agreed with UZ.

The Project is structured to comply with EBRD Performance Requirements. The Project will be subject to standard monitoring  requirements by EBRD's Environmental and Social Department

Technical Cooperation

Technical cooperation support for the Project includes:

  • Assistance in tendering and implementation of the Project;
     
  • Corporate governance assignments, to undertake: (i) a Corporate Governance Review of the Company and its subsidiaries, define and agree the CGAP, and assist the Government of Ukraine and JSC Ukrainian Railways in its implementation; (ii) a Legal Review of the legislative and regulatory framework managing the Company's corporate governance and (iii) an Executive Search for independent members of the Company's Supervisory Board;
     
  • Assessment of opportunities for Energy Efficiency project preparation under the Sustainable Transport Advisory Programme; and
     
  • Implementation of the Energy Efficiency Programme.

The TC programme is subject to further amendments and confirmation.

Company Contact Information

Mrs. Kateryna Golovach, Head of the Project Implementation Unit
leur@uz.gov.ua
+380 (44) 465 00 69
+380 (44) 465 37 87
www.uz.gov.ua
2 Protasov Yar Street, Kyiv, 03150, Ukraine

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

Public Information Policy (PIP)

The PIP sets out how the EBRD discloses information and consults with its stakeholders so as to promote better awareness and understanding of its strategies, policies and operations. Please visit the Public Information Policy page below to find out how to request a Public Sector Board Report.
Text of the PIP

Project Complaint Mechanism (PCM)

The Project Complaint Mechanism (PCM) is the EBRD's accountability mechanism. It provides an opportunity for an independent review of complaints from individuals and organisations concerning EBRD-financed projects which are alleged to have caused, or are likely to cause, environmental and/or social harm.

Please visit the Project Complaint Mechanism page to find information about how to submit a complaint. The PCM Officer (pcm@ebrd.com) is available to answer any questions you may have regarding the submission of a complaint and criteria for registration and eligibility, in accordance with the PCM Rules of Procedure.