France will provide a loan to Ukraine for the reconstruction of railway lines 03/08/23

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Author: Łukasz Kuś 2023/08/03


France will lend Ukraine EUR 37.6 million to finance the purchase of rails for the reconstruction of railway lines. The governments of both countries signed an agreement on this matter. This is another loan for Ukrainian Railways.

The loan will be granted to Ukraine on favorable terms. For the first 14 years of its use, it will be practically free of charge, and after 35 years the interest rate will be 0.016%, i.e. the cost of the loan will be approximately EUR 930. Thanks to these funds, Ukrainian Railways will be able to purchase rails from a European manufacturer. The government of Ukraine gave consent to take out the loan in a resolution of July 25 this year. The money for Ukrainian Railways (UZ) will be paid from a special fund under the budget program. In 2023, UZ will receive approximately PLN 20,000. tons of rails from the European manufacturer - Saarstahl Rail SAS.

— Thanks to the support of the French government, a significant part of Ukrainian Railways' critical demand for infrastructure reconstruction materials will be met in 2023-2024. This is the first successful experience in obtaining a long-term preferential loan, which, on the one hand, will allow us to plan a rhythmic and convenient repayment schedule for Ukrainian Railways, and on the other hand, will radically reduce the quoted net price of the railway - significantly below the market level. Similar loan programs can become one of the foundations for the revival and development of the Ukrainian railway industry, said Yevgeny Lyashchenko, chairman of the management board of UZ.

The new Marshall Plan

In order to rebuild the destroyed infrastructure, Ukrainian Railways will have to use various financing models. Not all projects will be able to be implemented thanks to subsidies, and the costs of commercial loans may prove to be too high for UZ. The loan granted by France is another form of this type of support for Ukraine. In June, the European Bank for Reconstruction and Development granted UZ a loan of EUR 200 million.

Read also:The EBRD will lend EUR 200 million to Ukrainian Railways

Ukrainian Railways will be one of the largest beneficiaries of the so-called the "new Marshall Plan", i.e. various forms of financial assistance for the reconstruction of the country ruined by the war. The World Bank estimates that war damage in Ukraine caused losses of around $350 billion. As part of the reconstruction of infrastructure, Ukrainians plan to change the gauge of main railway lines leading to European Union countries from 1,520 to 1,435 mm.