In a major step towards the modernization of Moldova’s railways, the EBRD is providing €52.5 million to the state-owned railway company “Calea Ferata din Moldova”. The lending agreement was signed by Moldova’s Prime Minister Iurie Leanca and EBRD Director for Transport Sue Barrett in Chisinau on November 14, IPN reports.
The loan will be used to co-finance the acquisition of around 10 new multi-purpose locomotives and the rehabilitation of rail infrastructure. The EBRD finance will also support a broader reform of the railway sector to improve safety and efficiency.
After the signing of the agreement, Iurie Leanca said Moldova’s railways are in need of fundamental restructuring and the modernization of rail infrastructure is a priority for the Government.
At the signing ceremony, Sue Barrett said that the EBRD is teaming up with the EIB, the EU and development partners to support this restructuring so that the Moldovan railway sector is financially viable, provides adequate railway services and is able to compete with other means of transport.
In addition to the EBRD’s €52.5 million loan, the European Investment Bank is expected to provide a parallel loan of a similar size to support this program. Further to the EU’s investment grant, further grant financing worth €1.75 million will be provided by the EBRD’s own funds, the Central European Initiative and the Czech government.
The European Union is co-financing the purchase of the locomotives with a €5 million investment grant through its Neighborhood Investment Facility (NIF), said the Head of the EU Delegation to Moldova Pirkka Tapiola, who attended the event.
The EBRD’s loan comes in two tranches, where the second tranche of €27.5 million will be subject to the achievement of key milestones financed by the first tranche including grant financing.
The EBRD is the largest institutional investor in Moldova. To date, the Bank has invested some €900 million in over 100 projects.
