The European Bank for Reconstruction and Development (EBRD) and the Ukrainian Railways public joint-stock company (Ukrzaliznytsia) have signed a long-term loan agreement, under which the bank will provide USD 150 million for purchase of new freight gondola cars, the CFTS portal reports, citing Ukrzaliznytsia’s acting Board Chairman Yevhen Kravtsov.
"A few hours ago, we signed a long-term loan agreement with the EBRD for purchase of new freight gondola cars... We get USD 150 million at a good interest rate. It is lower than the rate on the Ukrainian banking market and international capital markets. With this money, we will build freight gondolas, which are the most in-demand rolling stock," Kravtsov wrote on Facebook.
According to him, this loan was provided without government guarantee.
“After Fitch raised [Ukrzaliznytsia’s credit] rating, it sent the latest signal to the entire market: Ukrzaliznytsia is a reliable partner and a stable company,” Kravtsov wrote.
According to him, EBRD has already invited tenders for supply of the gondola cars and the first deliveries are expected before the end of 2018.
“We will transfer these railcars to a separate subsidiary company. This will allow the setting of realistic market rates for freight transportation. The railcars will be able to operate on the market as a private fleet,” Kravtsov wrote.
According to him, these are unprecedented working conditions for the company, which will allow it to plan the recoupment of the cost of the rolling stock for the first time.
According to the information published by the EBRD, the loan will be used to acquire up to 6,500 general-purpose open freight gondola-type wagons through an open international tender.
"The investment program will help to maintain Ukrzaliznytsia’s capacity, significantly improve its efficiency, and reduce greenhouse gas emissions produced by its operations. Carbon dioxide emissions are expected to fall by up to 80,000 tons a year, thanks to the new rolling stock," the EBRD said.
According to the EBRD, the bank will also assist Ukrzaliznytsia in certifying and improving its procurement processes and implementing an energy management information system, which will lead to better overall efficiency of Ukrzaliznytsia.
"This will be funded by the EBRD Shareholder Special Fund," the EBRD said.
According to the bank, Ukrzaliznytsia possesses a total track length of over 23,000 kilometers, making it the 14th largest in the world. Ukrzaliznytsia is also the world’s sixth largest rail passenger transporter and the world’s seventh largest freight transporter.
As reported earlier, Ukrzaliznytsia plans to create a separate railcar company, which will acquire 3,500 railcars with loan funds in 2018 and 2019.
The EBRD confirmed its interest in financing Ukrainian railway infrastructure projects in June 2018.
According to the EBRD, the bank is the largest international financial investor in Ukraine. To date, the bank has made a cumulative commitment of almost EUR 12.1 billion across some 400 projects since it started operating in the country in 1993.