The European Investment Bank (EIB), the lending arm of the European Union, has inked its largest loan arrangement in the Czech Republic, with the Ministry of Finance signing a CZK 24 billion (€992m) contract to fund the country’s rail network improvement.

According to EIB, the loan is set to support the modernisation and retrofit of trans-European networks (TEN-T) railway lines across the country.

Alongside this, the loan will further support the deployment of the European Rail Traffic Management System (ERTMS), which will be managed by Správa eleznic, the national railway infrastructure administrator.

EIB VP Kris Peeters emphasised how this agreement will promote a modal shift from road to rail: “It is a pleasure to know that our meeting in October last year has had this important outcome. This will be the largest EIB loan ever signed in the Czech Republic and the funds will greatly benefit rail transport usage in the country.”

“We expect the increased quality of rail services to promote a modal shift from road to rail, which will reduce the negative impacts of the transport sector on the local environment. Decreasing emissions means the project contributes to sustainable transport in line with EU objectives. In addition, better and more rail connections will facilitate access to EU Cohesion Priority Regions, thus supporting regional development.”

As stated by the EIB, Správa eleznic will increase the safety of network-level crossings, update maintenance trucks with ERTMS equipment and boost the company’s cyber-security as part of the wide initiative.

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By GlobalData

The investment also includes improvements to train stations and facilities to make them more accessible to those with limited mobility and those travelling with children.

Czech Minister of Finance Zbyněk Stanjura added: “The use of a loan from the EIB is the most economical and efficient solution to obtain funds for a strategic investment such as the digitalisation and automation of railway transportation, given the current level of the general government budget deficit.

“We can therefore finance long-term investments of a strategic nature through a favourable loan from the EIB with a lower interest rate, while at the same time using funds from the general government budget for other, equally important, priorities.”

This agreement follows the MoU signed in November 2022, which was set to form cooperation to finance the modernisation of the Czech Republic’s railway network.

The funding is anticipated to boost the adoption of rail transportation, which has significant environmental advantages over typical road transportation.

This agreement follows a large range of financial contributions from the EIB to the Republic. In 2022, the EIB granted over €1.7bn for Czech projects surrounding EU policy goals.