Ukrzaliznytsia obtains WB grant for rail infrastructure

Ukrainian railway infrastructure The World Bank will provide a USD 25 million grant to support the reconstruction of Ukrainian railway infrastructure and the increase of freight transport, Ukrzaliznytsia has announced on May 26, 2023, following a cooperation agreement signed with the United Nations Office for Project Services (UNOPS) in Kyiv.

“Ukrzaliznytsia is expanding its portfolio of cooperation with international institutions. For the first time, we have financial support from the World Bank, and with this grant funding, we expect to supply equipment and rolling stock already this year. I am sure that the implementation of this project will allow us to expand our partnership to further strategically important projects for Ukrainian railway infrastructure,” Anton Mishin, a member of the board of Ukrzaliznytsia said.

The agreement between UNOPS and the Ukrainian Railways provides for the purchase of equipment for the restoration of critically important railway infrastructure facilities that have suffered damage. UNOPS will contribute to the organisation of procurement procedures according to the best global standards. Through the procurement of flat wagons, the company’s freight fleet will increase and will contribute to the expansion of the capacity to provide containerised transport services, including for transport of humanitarian aid and export of agricultural products.

“The railway connection is of exceptional importance for the economy of Ukraine both now and in the context of post-war reconstruction. As the central resource of the UN system in matters of procurement and infrastructure development, UNOPS considers it a priority to provide assistance to the national railway carrier, because this will facilitate the population’s access to necessary goods, create new opportunities for enterprises and strengthen the resilience of the whole world in the face of new challenges,” the Director of the Office UNOPS in Ukraine Tim Lardner said.

In February 2023, the World Bank announced a USD 50 million grant financing for a project to repair and restore Ukraine’s transport network to support immediate humanitarian relief and recovery, and increase capacity of import and export corridors. The financing for the project is provided by the Ukraine Relief, Recovery, Reconstruction and Reform Trust Fund (URTF), with additional funding of up to USD 535 million. This was the second scalable World Bank supported emergency operation approved at the end of 2022 and beginning of 2023 that mobilises partner resources through an innovative framework approach.  The first one was approved in December and focuses on repairing health infrastructure and health services.

The Repairing Essential Logistics Infrastructure and Network Connectivity (RELINC) project supports the restauration of essential bridges and railways to reconnect the communities and improve westward transport linkages to mitigate impacts of Black Sea shipping disruptions. The project covered the purchase of modular bridges, equipment, and materials to urgently repair damaged road-to-bridge connections and vital rail lines. It also helps to finance the purchase of flatbed wagons and additional rolling stock to expand the railway’s capacity to move cargo in containers.

According to an analysis of World Bank, more than 2,100 villages, 51 towns, and 35 cities in areas that have returned to Government of Ukraine control are experiencing disrupted transport networks due to war. Direct damage to Ukraine’s transport network is extensive totaling more than USD 29.9 billion and economic losses from disrupted transport total an additional USD 26.1 billion as of June 1, 2022. Since February 2022, working with development partners, the World Bank has mobilised more than USD 34 billion in financial support to Ukraine, of which over USD 21 billion has been disbursed. The investment supports and is part of the World Bank’s contribution to the EU-Ukraine Solidarity Lanes initiative. The project will better align Ukraine’s rail lines to EU logistics chains and support agricultural exports through EU ports.

On May 16, 2023, the United States Agency for International Development (USAID) handed over 105 diesel generators worth USD 2.7 million to Ukrzaliznytsia. The funding helps Ukrainian Railways to provide back-up electricity supply to more than 100,000 consumers and contributes to the smooth transport of passengers and cargo within Ukraine.

The 45% of the 20,000 km Ukrainian railway infrastructure is electrified and the generators provided by USAID are installed at key stations on the main passenger and freight train routes. Thus, “the generators provide a safe back-up power supply for traction substations, signalling and telecommunication devices and maintain uninterrupted operation and technological communication with adjacent operators of the distribution system,” Oleksandr Kubrakov, the Deputy Prime Minister for Restoration of Ukraine said at the reception. Through the USAID, the US government provided Ukraine more than 3,300 generators since Russia’s war against Ukraine. Generators ensure the power supply for more than 100,000 consumers and facilitate uninterrupted freight and passenger services.

Better integration for freight services and infrastructure

In 2022, Lithuania’s LTG Cargo has started a pilot train from Kaunas Intermodal Terminal to Ukraine via Poland, bypassing Belarus. LTG Cargo ensured the cargo transport along the route in Lithuania, while its subsidiary LTG Cargo Polska delivered transport services from Ukraine to Poland border.

In May 2023, Ukrzaliznytsia and VTG GmbH signed cooperation agreement aiming at the development of intermodal connections between Ukraine and European countries, providing rhythmicity, predicted time and cost of transport services. At the beginning of 2023, Ukrzaliznytsia introduced an intermodal service for containers, combining semi-trailers, container and combined transport trains using the rolling stock from the Liski Transport Service Centre branch. The company announced that is exploring similar services to Poland, Austria, Romania and Turkey.

Under the company’s plans, an agreement was signed with ÖBB Rail Cargo Group (RCG) in May to organize intermodal services on Vienna–Kyiv route through RCG’s TransFER. The new service will stop in Budapest and Lviv delivering better connected and fast services.

During transport logistic 2023 trade fair held in Munich, Ukrzaliznytsia and Tria discussed on the possibility of the introduction of technological solutions especially the variable gauge system allowing smooth transition from 1520mm tracks to European-gauge lines. An expert group is expected to be established to assess the prospects of introducing this technology. In addition, talks have been held between Ukrzaliznytsia and PKP Cargo, EP Logistics and Slovenian Railways on facilitating rail transport services. Lithuanian Railways and Laude Smart Intermodal signed agreements with Ukrzaliznytsia to jointly implement the “FREE Rail Operating Model” project which is designed to increase transport capacity and offer a better interoperability between the European and Ukrainian railway infrastructure.

The parties will create a single independent system of railway operation on the 1520 mm network from the point of view of technical standards, IT systems, regulations or any type of certification. It is also planned to develop alternative transport corridors between the ports of the Baltic Sea and Ukraine, bypassing Russia and Belarus.

Under the agreement with Polish Laude Smart Intermodal company, the parties will identify methods and ways to develop intermodal solutions, bulk cargo services and rolling stock management and maintenance. This will improve rail logistics services and strength the exchange of know-how and practical experience.

Regarding a better integration with the EU’s rail system, in October 2022, the European Investment Bank (EIB) and the European Commission announced that a pre-feasibility study will be developed to connect the rail networks of Ukraine and Moldova and integrate them into the TEN-T. In addition, the EC made an amendment on the revision of the TEN-T Regulation to extend the European corridors (ETCs) to the two non-EU countries including Mariupol and Odesa ports which will improve rail connectivity and integration.


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