State railway monopoly Ukrzaliznytsya receives record loan of more than $550 million from Barclays Capital Bank
Ukrzaliznytsya, Ukraine’s state railway monopoly, has received a record loan of more than $550 million from Barclays Capital Bank, Ukrzaliznytsya reported this week.
The loan is the biggest provided to Ukraine by Barclays, one of the largest banks in the world, and represents the biggest loan landed by Ukrzaliznytsya for badly needed upgrades and infrastructure development for the country’s aging Soviet-built railways.
The loan was obtained on favorable terms, at an interest rate of LIBOR +2.5%. The funds will be used to finish construction of a bridge across the Dnipro River in Kyiv, modernizing railways and purchasing new rolling stock.
The Ukrainian railway system’s dilapidated railroad tracks and cars have been blamed for a series of accidents and headaches for businesses reliant on Ukraine’s transport infrastructure to move imports and exports.
In July, a freight train carrying 15 tankers full of yellow phosphorus derailed, sparking a fire that, in turn, spread a poisonous cloud of smoke in western Ukraine. Investigators have not yet determined the exact cause of the accident, but the poor state of the railways has been suspected as a possible cause for this and other accidents.
During the last three months alone, seven railway accidents occurred in Ukraine. After the accident in western Ukraine, some government officials, as well as President Viktor Yushchenko, called for the resignation of Transportation and Communications Minister Mykola Rudkovsky.
Finally, with this loan, Ukrzaliznytsya will eventually be able to start updating its infrastructure, though a bigger part of the money will be spent on finishing the construction of the bridge over the Dnipro River.
Experts have estimated that Ukrzaliznytsya would need to tap into billions of dollars in financing to overhaul its infrastructure and bring it in line with Western standards.
