EIB signs €1bn green funding for railway modernization in the Czech Republic

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The European Investment Bank (EIB) has signed its largest ever loan agreement in the Czech Republic, with a CZK 24 billion (€992 million) contract with the Ministry of Finance to support the upgrade of the country’s rail network.

Through Správa železnic, the national railway infrastructure administrator, which falls under the authority of the Transport Ministry, the loan will support the modernization and retrofit of trans-European networks (TEN-T) railway lines in the country and enable the deployment of the European Rail Traffic Management System (ERTMS).

“This will be the largest EIB loan ever signed in the Czech Republic and the funds will greatly benefit rail transport usage in the country,” said EIB vice-president Kris Peeters. “We expect the increased quality of rail services to promote a modal shift from road to rail, which will reduce the negative impacts of the transport sector on the local environment. Decreasing emissions means the project contributes to sustainable transport in line with EU objectives. In addition, better and more rail connections will facilitate access to EU Cohesion Priority Regions, thus supporting regional development.”

As part of the broad program that the EIB funding will finance, Správa železnic will improve the safety of level crossings on the network, retrofit maintenance vehicles with ERTMS equipment, and strengthen the company’s cyber-security. The investment also includes works in railway stations and railway buildings to improve their accessibility for people with reduced mobility and people travelling with children.

“The use of a loan from the European Investment Bank is the most economical and efficient solution to obtain funds for a strategic investment such as the digitalization and automation of railway transportation, given the current level of the general government budget deficit. We can therefore finance long-term investments of a strategic nature through a favorable loan from the EIB with a lower interest rate, while using funds from the general government budget for other, equally important, priorities,” added Czech Minister of Finance Zbyněk Stanjura.

The signed facility is the first concrete financing result of the Memorandum of Understanding that was signed In November 2022 with both Ministries to establish a partnership to finance the modernization of the Czech Republic’s railway network. Under the memorandum, the EIB may also provide technical assistance to the Czech railway infrastructure administrator, with support already being provided under its JASPERS mandate. The financing is expected to accelerate an increased use of rail transport, with clear environmental benefits over traditional road transport.

Modernizing the railway lines will increase both maximum speeds and capacity on sections of the TEN-T network, which is expected to improve connectivity between EU regions. The operation consists of around 40 sub-projects in different parts of the country, which are part of the Czech Republic’s “Unified Railway Framework” plan for 2023-2027.