EBRD approves its biggest ever loan to Russia(4)

The European Bank for Reconstruction and Development is set to issue a loan of $500 million to Russian Railways, the state owned railway company, to enable it to restructure its balance sheet.

The European Bank for Reconstruction and Development (EBRD) has approved the largest single investment by the bank since its formation nearly 20 years ago.

EBRD is making a $500 million loan to Russian Railways, the state owned and managed railway company, to help restructure its balance sheet.

In an announcement posted this morning, the EBRD said the 10-year, unsecured loan would bring the amount it has invested in the country’s railways to almost $1.2 billion.

The investments made by the bank in Russia’s railways began in 2001 following the government’s decision to launch a structural reform of the system, the bank said. This reform included a restructuring of “freight operations and improving sector regulation”.

The EBRD said that the loan would enable Russian Railways, which employs approximately 1.3 million staff, to operate with a “more efficient match between the assets and its liabilities”. The bank said the loan was important in providing a stimulus to what is effectively the world’s second largest railway network behind that of the US.

Meanwhile, the EBRD is also to issue a 13-year loan of approximately €29 million for a communal heating scheme in the Khanty-Mansi Autonomous District in Siberia. The aim of the loan is to enable the area’s small municipalities to replace older and inefficient diesel and oil-fired generators with more energy-efficient alternatives including power plants which use biomass fuel.

The Khanty-Mansi Autonomous District accounts only for one percent of Russia’s population with 1.5 million people. However the region is responsible for producing 60 percent of the country’s oil.