Bold plans to revamp Ukraine’s aging Soviet railways, eventually launching a high-speed passenger train network appear to have gotten back on track.
Transportation Minister Mykola Rudkovsky announced on Dec. 18 that the state railway company, Ukrzaliznytsya, was close to inking a deal on the purchase of about 20 brand new high-speed passenger trains from France’s Alstom, a leading producer of high speed trains and other technologies.
The new trains, each of which will cost about $70 million, are expected to begin service in 2010. Ukrzaliznytsya, which currently subsidized passenger transportation by charging higher tariffs for cargo, is seeking various financial instruments to fund the massive overhaul.
Rudkovsky said Ukraine hoped to bankroll the project through long-term financing from the French government and international banking institutions.
Implementation of the project will require significant modernization of Ukraine’s tracks, as Alstom’s trains can reach a speed of up to 250 kilometers per hour, he added. The average speed of Ukraine’s current passenger and cargo trains is 50 kilometer per hour.
Ukraine has in recent years gradually modernized its dilapidated railway infrastructure. Efforts are expected to shift into higher gear thanks to fresh capital raised through foreign borrowings.
Late last year, parliament approved a much anticipated $120 million loan earmarked for railway infrastructure. Ukraine’s government signed the loan deal with the European Bank for Reconstruction and Development in August 2004, but it took a new parliament, in November 2006, to ratify it, with President Viktor Yushchenko giving final approval last month.
The EBRD loan is for 15 years with an interest rate of LIBOR + 1 percent.
Ukrzaliznytsya will use the loan to purchase new carriages, modernize existing track and build a tunnel, according to the Transportation Ministry.
Ukrzaliznytsya Volodymyr Kozak said implementation of the project could start as early as the second quarter of this year. During the first stage of the project, Ukrzaliznytsya will spend $47 million on the purchase of new passenger carriages, $29 million on track machinery and $40 million to build a tunnel in the country’s Zakarpattya Region.
Officials at Ukrzaliznytsya are happy to finally receive the loan but insist that billions of dollars worth of upgrades are needed before genuine high-speed train service can be introduced.Zal Shakhbaz, vice president at Alstom in charge of business development, told Ukraine’s business daily Ekonomicheskie Izvestiya that his company was ready to supply carriages that would work within Ukraine’s current railway infrastructure.
