The European Investment Bank (EIB) has signed a €45m financing deal with Medway Rosco to expand rail cargo services in Portugal and Spain.

Medway Rosco, a subsidiary of private rail freight operator Medway Operador Ferroviário de Mercadorias (Medway OFM), is seeking to acquire 16 electric locomotives and 113 intermodal wagons.

EIB’s loan will support Medway Rosco in expanding rail freight transport services, including cross-border services, in Portugal and Spain.

EIB vice-president Ricardo Mourinho Félix said: “The new locomotives and intermodal wagons will improve interconnectivity within Spain and Portugal while reducing traffic, pollution and transport costs.

“As the EU climate bank, we are applying our knowledge and experience in the rail sector and project finance structures to successfully implement such operations to the great benefit of the people of Spain and Portugal.”

Medway’s operation is being co-financed by Banco Santander’s Portuguese subsidiary Banco Santander Totta. Santander is providing €77m.

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Santander Portugal CEO Pedro Castro e Almeida said: “The financing of Medway’s rolling stock expansion programme is further evidence of Santander’s strong commitment to supporting the Portuguese corporate sector, namely its export activities, while maintaining its mission to act as key player in a cleaner and more sustainable economy.

“Santander has led the financing of the €77m commercial debt facility through an innovative project finance structure, and we thank the European Investment Bank for once again trusting and cooperating with us in another successful transaction.”

Medway OFM’s new services will mainly target underdeveloped or transition regions in Portugal and Spain and will also promote sustainable transport.

During the implementation phase from 2022 to 2023, the project is anticipated to create around 940 jobs. Upon completion, 56 new jobs would be created.

Furthermore, the project is expected to support the development of electric rail transport, a zero direct emissions transport technology.

It will also facilitate cross-border traffic on the Iberian Peninsula, reduce transport costs for import and export goods, and improve the freight transport chains’ effectiveness.

The new locomotives will offer additional capacity for new services from the port of Sines to various destinations across the Iberian Peninsula.