The European Bank for Reconstruction and Development (EBRD) is repurposing a further EUR 98.8 million of an existing loan to Ukraine’s state railway cargo and passenger transport operator Ukrzaliznytsya (UZ). The funding is expected to be supported by up to 50 per cent guarantee coverage from a G7 donor.
In June, the bank agreed to repurpose an initial EUR 50 million of the loan, which was supported by the European Union’s European Fund for Sustainable Development (EFSD) as part of a common programme with the EBRD that focuses on municipal, infrastructure and industrial resilience in the EU’s eastern and southern neighbours.
The original EUR 150 million loan to Ukrzaliznytsya was for a project to upgrade and electrify a part of the railway system in Ukraine, which was not disbursed.
Having disbursed EUR 50 million to support the company’s liquidity in August, the EBRD will now repurpose EUR 73.3 million of the existing undrawn commitment and EUR 25.5 million uncommitted financing to extend its emergency liquidity support. The loan will remain sovereign guaranteed.
Despite the impact of the war, Ukrzaliznytsya has maintained cargo and passenger transport operations if at reduced capacity. As of August, UZ had evacuated more than 3.8 million people from areas affected by military hostilities and delivered around 180,000 tonnes of humanitarian aid.
The closure of Ukrainian ports due to a Russian naval blockade further highlighted the importance of rail transportation for maintaining Ukraine’s agricultural exports logistics, a key sector of the national economy. Ukraine is an agricultural producer of global importance and its exports are needed to maintain global food security.
The EBRD has pledged to invest EUR 1 billion this year in supporting the Ukrainian economy, with risks shared with donors and partners
The EU is committed to integrate Ukraine’s transport system which has amended the TEN-T Regulation since Russia’s aggression against Ukraine has redefined the geopolitical landscape highlighting the EU’s vulnerability to unforeseen events beyond the Union’s borders. The EC proposed the extension of the European Transport Corridors (ETCs) to Ukraine and Moldova including the ports of Mariupol and Odesa in an effort to improve the transport connectivity and rebuild the infrastructure connections to the two countries.
The EC plans to build a standard-gauge railway system towards Ukraine which will increase the interoperability. Funding is expected to be provided from the Connecting Europe Facility.