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.