EBRD Bares Repurposing Of Funds To Ukraine Rail Company
The EBRD is repurposing a further €98.8 million of an existing loan to Ukraine’s state railway cargo and passenger transportation provider Ukrzaliznytsya (UZ), after agreeing in June to repurpose an initial €50 million of the loan.
Photo Insert: The EBRD's €98.8 million package Укрзалізниця - Ukrzaliznytsia will ensure vital railway transport services are available for people and businesses affected by Russia’s war on Ukraine.
The funds will allow UZ to address critical liquidity needs, ensuring vital railway passenger and cargo transport services are available for people and business affected by Russia’s war on Ukraine.
The original €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 €73.3 million of the existing undrawn commitment and €25.5 million in 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 transportation 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 €1 billion this year in supporting the Ukrainian economy, with risks shared with donors and partners. The €98.8 million repurposed now for Ukrzaliznytsya’s use is expected to be supported by up to 50 percent guarantee coverage from a G7 donor.
The earlier €50 million transaction was supported by the European Union’s European Fund for Sustainable Development (EFSD) as part of a common program with the EBRD that focuses on municipal, infrastructure, and industrial resilience in the EU’s eastern and southern neighbors.
To address the Ukrainian economy’s most pressing current needs, the EBRD is prioritizing five areas: trade finance, energy security, vital infrastructure, food security (covering the provision of liquidity to farmers via banks for the spring sowing campaign as well as agribusiness companies and food retailers) and providing liquidity to pharmaceutical companies. Investments in all areas will involve risk-sharing with partners.
The EBRD was swift to condemn the Russian invasion of Ukraine on 24 February and pledged to stand by Ukraine. In early April, the EBRD’s Board of Governors voted to suspend open-endedly the access of Russian Federation and Belarus to EBRD finance and expertise, and the Bank has closed its offices in Russia and Belarus.