Upgrading vital road networks

Key routes into the Ukrainian capital Kiev will benefit from a rehabilitation and upgrade process, thanks to the EBRD’s €450 million sovereign loan facility to Ukravtodor, the State Road Administration of Ukraine.

A timely investment
The successful implementation of the project will stimulate economic growth by increasing regional integration through better transport links.  It will also provide a significant boost for the country’s preparations for hosting the EURO 2012 football European Championships tournament.

The new transaction is just the latest in the Bank’s ongoing work to improve transport infrastructure within Ukraine and beyond, building upon a series of earlier road-improvement loans worth €375 million. Among the routes that will be completed under the new investment are stretches of the M06 motorway, which is one of the key arterial roads in the country, forming part of Pan-European Corridors III and V, linking the Ukrainian capital with the EU.

The EBRD financing, which will be provided in two tranches, is expected to be matched by a similar-sized loan from the European Investment Bank.

Stimulating sector reform
In addition to capital investment, the project will facilitate the introduction of performance-based road maintenance contracts on a pilot basis, which would increase competition and efficiency in this area. The Bank will also continue to support Ukravtodor in reforming sector financing and road network management and administration.

“By signing this important project for Ukraine, the EBRD is supporting the development of key infrastructure crucial for the country and for the region”, says Sue Barratt, ERBD Director for Transport. “Our loan is also going to stimulate important sector reforms, which will determine its proper functioning and competitiveness in the future”.

Yevgen Prusenko, the Deputy Head of Ukravtodor, added: “Signing of this loan agreement with the EBRD is the evidence of trust of the International Financial Institutions (IFI) to our country and reforms initiated by the President and the Government. Loan proceeds, which we receive on beneficial terms, will be used to finance rehabilitation of 400 kilometres of roads in the approaches to Kiev. Ukravtodor’s long-term experience in cooperation with the IFIs gives us confidence in the success of this project, which is so important for our transport system”.

An ongoing committment to Ukraine
By supporting this project, the EBRD is closing a financing gap at a time when financing from commercial sources is limited. The Bank is planning to increase its presence in Ukraine’s transport infrastructure sector and act as a catalyst for necessary sector reforms in line with its operational strategy for the country.