The European Bank for Reconstruction and Development (EBRD) has agreed to provide a $62.5m loan to the State Administration for Railway Transport of Ukraine (UZ) for the purchase of freight wagons as part of the country’s rolling stock modernisation programme.
The proceeds will be used by UZ to finance the purchase of general purpose freight wagons to enhance the transport infrastructure that supports Ukraine’s economy and accounts for 56% of its total freight turnover.
The EBRD-supported rail projects in Ukraine have been intended to encourage sector reforms, including the separation of infrastructure and operations, divestment of non-core activities and the reduction of cross subsidies between freight and passenger operations.
EBRD hopes its work with the Ukrainian rail network will encourage private sector investment and promote competition in railway services.
Since 1999, EBRD has provided around $400m to the Ukrainian railways sector through five separate transactions, including the new loan.
EBRD provided another loan of $62.5m to UZ in 2009 to replace old freight wagons as part of a fleet renewal programme.
The bank also offered a loan of $13m in December 2011 to JSC Lugcentrokuz (LCK) in Ukraine to improve freight transportation services, as well as manufacturing of components for freight wagons.
LCK produces components for rail freight wagons and locomotives, including shock absorbers, axles, wheelsets and springs.