The EBRD provides a loan of €200 million to UZ

EBRD has approved a loan of €200 million to Ukrainian Railways (Ukrzaliznytsya or UZ) for the purpose of upgrading the railway links between Ukraine and the European Union, according to the railway journal Railway Supply citing EBRD.

This loan follows a previous emergency liquidity finance of €150 million provided to UZ last year to ensure the continued operation of trains in Ukraine.

Since the invasion of Ukraine by Russia in February last year, concerns about the uncertainty of sea routes, which traditionally handle a significant portion of the country’s imports and exports, including vital grain exports for global food security, have led to efforts to improve rail, road, and river connections with other nations.

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The sovereign loan, consisting of €100 million for emergency finance and €100 million for working capital support, aims to mitigate the impact of the war by facilitating the expansion of cross-border capacity and enhancing railway connectivity with the European Union. This funding will enable UZ to continue offering essential services to individuals and businesses, as well as rehabilitate key rail corridors along its border with the EU and acquire rolling stock.

To share the risks associated with its investments in Ukraine, the EBRD will provide guarantees of up to 50 percent for this loan, with €60 million coming from the United States of America and €40 million from The Netherlands. France and the European Union, through the European Fund for Sustainable Development, previously provided guarantees for the EBRD’s financing of UZ.

Furthermore, the project is anticipated to receive additional financing of up to €10 million as an investment grant from bilateral or multilateral donors. This funding will cover investments in communication equipment, energy-efficient lighting, and the establishment of step-free access at major railway stations, aligning with the project’s goals of resilience and inclusivity.

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Despite the challenges posed by the war, Ukrzaliznytsya has maintained its cargo and passenger transportation operations, albeit at reduced capacity. The EBRD has been working closely with UZ since before the conflict and has consistently supported the railway company since the invasion by Russia.

The loans provided to UZ are part of the EBRD’s comprehensive approach to supporting Ukraine’s real economy. This approach focuses on crucial infrastructure development, energy and food security, trade finance, and support for the private sector. As Ukraine’s largest institutional investor, the EBRD has committed to investing €3 billion in Ukraine in 2022-23. In 2022 alone, the EBRD deployed €1.7 billion and mobilized an additional €200 million through partner financial institutions.

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