Ukraine rail tunnel years in the making
It took years for financing and other details to be arranged for the new Ukraine rail tunnel. The EIB signed a EUR 55 million loan for the project in May 2014, even as fighting continued elsewhere in Ukraine. The European Bank for Reconstruction and Development also contributed USD 40 million.
“The association agreement made this tunnel supporting trade and mobility even more important for Ukraine and the EU,” says Lionel Rapaille, the EIB division head who oversees public sector deals in Ukraine, as well as elsewhere in Eastern Europe and the Caucasus. “Beskyd was the first deal we did in our major commitment to Ukraine.”
By the end of 2016, the EIB expects its lending to Ukraine since the EU association agreement to reach EUR 3 billion. The EIB has also increased its staff in Kyiv to work on the new projects, which include helping the country to rebuild after the recent conflict and to create infrastructure to cope with 1.7 million displaced people within Ukraine. Other EIB deals are aimed at supporting the modernization of municipal infrastructure, small and medium-sized businesses, agri-businesses, and energy security.
The tunnel meets other EU policy aims beyond closer ties with Ukraine. Much of the freight that will use the new tunnel would otherwise have travelled to nearby Hungary and Slovakia, and then on to Austria by road.
“The economic case for this is that is helps attract more container traffic onto the railway,” says Piers Vickers, the EIB’s deputy economic adviser on strategic railways. “It will promote a modal shift from road to rail. That’s good for the economy and the environment.”