Ukraine rail logistics to be bolstered by EBRD electrification incentive

Ukraine’s railways are to receive a loan of up to Eur150 million for the electrification of a key 250 kilometres of railway linking the major ports of Odesa and Mykolaiv with Dolynska, in the heartland of Ukraine’s corn and sunflower belt.

The move is the latest investment from the European Bank for Reconstruction and Development (EBRD) in Ukraine and its infrastructure and comes as the country continues to grapple with major logistical bottleneck issues.

The 15-year sovereign-guaranteed loan will cover electrification of a key route, and is also intended to upgrade sections of single rail track to double, alleviating some of the delays experienced along key routes.

The European Investment Bank is also set to contribute a similar-sized loan, according to a statement from the EBRD, and a grant of Eur6.8 million provided by the EU’s Neighbourhood Investment Facility.

The news comes just weeks after the EBRD announced it would be providing a loan to cover investment in up to 3,400 new railcars, with other investment taking the total number of railcars that could be purchased to over 8,000.

"This is one of the key investment projects in 2018, which we presented at a meeting of the Cabinet of Ministers of Ukraine,” chairman of Ukrzaliznytsya, the company that operates Ukraine’s railways, Yevgeny Kravtsov said at the signing of the agreement on December 30.

The news comes as greater focus is brought to the logistics of the Black Sea, with Russia experiencing a massive wheat harvest, while sources in Ukraine have said the country is capable of producing 100 million mt of grains by 2020.

Of that 100 million mt, some 70 million mt could be exported, according to the Ukrainian Grains Association’s forecast.

However, such is the state of the country’s current rail logistics that Ukraine’s grain exports are expected to fall 6.4% versus the previous year, with the Deputy Minister of Agriculture Maxim Martynyuk citing bottlenecks and shortages of railcars as a major problem.

Agricensus approached the EBRD for comment, but no one was available.