EBRD assigns €150 million to modernize railways leading to Black Sea ports

Source : 112 Ukraine

The funds will be used to finance electrification, construction of a second track, modernization of signaling and communication systems
15:00, 3 January 2018


On 30 December 2017, the Ministry of Infrastructure of Ukraine signed an agreement with the European Bank for Reconstruction and Development that will provide a loan of €150 million, reported by the Center for Transport Strategies. The ministry expects to direct these funds towards electrification, construction of a second track and modernization of communication and signaling systems on the Dolinska-Mykolaiv-Kolosovka line.

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According to both Minister of Infrastructure Volodymyr Omelyan and Head of Ukrzaliznytsya Yevhen Kravtsov, the cumulative project costs are around €300 million. The project will be financed by the funds lent by the EBRD in exchange for state guarantees (€150 million), as well as from the funds assigned by the European Investment Bank (according to an agreement from December 2016). The modernization and expansion of the Dolinska-Mykolaiv-Kolosovka line is expected to increase the railway’s traffic capacity in the direction of Mykolaiv and Odesa seaports (both in southern Ukraine). In addition, it will increase the service speed of freight trains by 20-25%, which will cut freight delivery times and operational costs associated with scheduling of train traffic.

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The funds lent by the EBRD are expected to be divided into two tranches: up to €124.5 million will be spent on electrification, construction of an additional track and construction of a high voltage power line between Dolinska and Mykolaiv, whereas another €25.5 will finance the electrification of the Mykolaiv-Kolosovka section. Construction is expected to be completed by 2021.

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The project cost was initially estimated at €367.9 million. Ukrzaliznytsya expects to pay the remaining funds out of its budget, as well as by attracting grants. The section is 252 km long, which means the project will be one of the largest infrastructure developments in recent years. According to member of parliament Borys Kozyr, who is the deputy head of the transport committee, the project will allow higher traffic speed and improve the efficiency of freight delivery to the seaports in Mykolaiv region.

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“Over the long term it will ease the load of major railroad highways toward the seaports of Greater Odesa. Among other benefits to both Ukrzaliznytsya and freight shippers is the fact that the electrification will cut fuel costs and, thus, total shipping costs. For example, freight from Kryvy Rih to Mykolaiv could be shipped and delivered solely with electric motive power”, - Kozyr explained.

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“According to our calculations, as a result of the electrification, Ukrzaliznytsya’s transportation costs will decrease sevenfold compared to diesel operation! I am sincerely thankful to the President of Ukraine for his immediate reaction and instantaneous decree, which allowed the project to begin.” - Minister of Infrastructure Volodymyr Omelyan announced today after signing the agreement.

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