The European Investment Bank (EIB) and the European Commission (EC) have agreed to provide €82m to modernise railways in Kosovo.
The amount will be used to fund a €195.5m project to upgrade the 148km north-south corridor between the Serbian and Macedonian borders.
Of the total €82m, the EIB has awarded a €42m loan to modernise the Kosovo section of the European Route 10 Rail network, while EC will provide €40m for project preparation and implementation.
The EC noted that an additional €40m grant could be allocated for the project’s later stages.
Route 10 is 250km-long, 148km out of which is in Kosovo and the rest in the former Yugoslav Republic of Macedonia and Serbia.
The modernisation work is scheduled to be initiated late next year and is expected to be completed by the end of 2020.
EIB deputy director general Romualdo Massa Bernucci said: "This is the first EIB loan ever to the public sector in Kosovo.
"The loan contributes to the bank’s commitment to support ‘climate action’ as a result of the expected overall reduction of greenhouse gases arising from the modal shift of freight and passengers due to the project."
Kosovo Railways (HK) infrastructure subsidiary Infrakos will be responsible for implementing the project, which is divided into three phases, namely Fushë Kosovë – Hani i Elezit, Fushë Kosovë – Mitrovicë, and Mitrovicë – Leshak.
Kosovo/EU Special Representative EU Office head Samuel Žbogar said: "Through this project, Kosovo benefits from a significant investment grant from the EU, as a part of the EU’s concrete delivery to the connectivity agenda for the Western Balkans and its commitment to the region’s European perspective within the framework of the Berlin process.
"The rehabilitation of the railways network will bring direct benefits to the Kosovo people. The rail connection will result in passenger and cargo rail capacity and travel time significantly improved, with reduced CO2 emissions.
"The money granted by the European Union is expected to bring at least double that amount into the local economy in the long term."
The Western Balkans Investment Framework (WBIF) has also contributed towards the railway modernisation project, which was included in the investment package approved at the Western Balkan summit in Vienna in August.
The project will integrate the rail network in Kosovo into the Orient/East-Mediterranean Corridor, linking the Western Balkans to Austria, Greece and Bulgaria, as part of the Core Network Corridors of the Trans-European Transport network (TEN-T).
With the contributions from the EC and EIB, the Kosovo Government has so far secured €122m for the project. This includes contributions from the EC and EIB, as well as a €40 loan from the European Bank for Reconstruction and Development (EBRD) in September.