OREANDA-NEWS. November 29, 2010. The European Bank for Reconstruction and Development is providing a EUR 450 million sovereign loan facility to Ukravtodor, the State Road Administration of Ukraine, to finance rehabilitation and upgrade of the road approaches to Kiev, which form part of key the European and national corridors in Ukraine. 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, reported the press-centre of EBRD.

This latest road infrastructure transaction marks a decade of a successful cooperation between the Bank and Ukravtodor, during which the EBRD has already provided EUR 375 million in three loans towards the rehabilitation of almost 700 kilometres of the M06 motorway. This is one of the key arterial roads in the country, which forms part of Pan-European Corridors III and V, linking Ukrainian capital with the EU, rehabilitation of which will be completed under the new project. 

The successful implementation of the project will stimulate economic growth by increasing regional integration through better transport link.  It will also provide a significant boost for the country’s preparations for hosting the EURO 2012 football championship finals.

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.

Sue Barrett, the EBRD’s Director for Transport said: “By signing this important project for Ukraine, the EBRD is supporting the development of key infrastructure crucial for the country and for the region. 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”.

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.

The European Bank for Reconstruction and Development is the largest financial investor in Ukraine. As of 1 November 2010, it had committed over €5.3 billion through 206 projects.