World Bank Grant Supports Reconstruction of Ukraine's Railway
Strategic Research Institute
Published on :
5 Jun, 2023, 6:06 am
Ukrainian Railways, the state-owned operator of Ukraine's extensive railway network, has received a substantial $25 million grant from the World Bank. This grant aims to support the crucial reconstruction of railway infrastructure, ultimately facilitating the transportation of steel products out of the country. Additionally, the funds will be utilized to expand the capacity for container cargo by procuring additional fitting platforms specifically designed for long or bulky loads. This significant financial assistance from the World Bank marks a milestone in Ukrainian Railways' collaboration with international institutions.
Recognizing the exceptional importance of railway connections for Ukraine's economy, particularly in the context of post-war reconstruction, the United Nations Office for Project Services (Unops) expressed its commitment to providing assistance to the national railway carrier. Unops emphasized the importance of facilitating access to necessary goods for the population and creating new opportunities for enterprises.
In addition to the grant from the World Bank, Ukrainian Railways has received pledges of support from other entities. The United Kingdom has pledged £10 million ($12.4 million) worth of railway material and repair equipment, while the European Bank for Reconstruction and Development has committed to providing a loan of up to €200 million ($214.4 million).
The ongoing war in Ukraine has significantly disrupted the railway operations, with the railway network suffering over 12,000 strikes necessitating extensive repair work. The conflict severed Ukraine's access to Black Sea ports and led to a halt in civil aviation, putting immense pressure on the railway's capacity. In addition to its regular operations, the railway had to transport internally displaced civilians, refugees, politicians, and even pets, with priority given to grain shipments.
The disruptions and capacity constraints caused by the war have had a detrimental impact on Ukrainian steelmaker Metinvest, leading to reduced production due to export logistics constraints. The planned improvements to Ukrainian Railways enabled by the World Bank grant are expected to alleviate these challenges and potentially increase shipments and overall output. However, the full recovery of Ukraine's metallurgical industry is dependent on the unblocking of ports, according to Metinvest's commercial director.
Metinvest welcomed the World Bank grant, stressing the importance of restoring critical infrastructure and manufacturing facilities, including rail production, for the long-term rebuilding of Ukraine. The absence of domestic rail production negatively affects the domestic market, resulting in higher costs for imported rail products.