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EBRD investment puts Bosnia and Herzegovina back on track
EBRD-backed rail rehabilitation project brings much needed investment to ailing sector
The European Bank for Reconstruction and Development today committed a €21 million sovereign loan to repair an important 395-km stretch of rail track that links Bosnia and Herzegovina (BiH) to Hungary and Croatia through largely inaccessible mountain terrain. The track forms part of Pan European Corridor Vc, which was an important route to international markets for businesses in BiH before it was damaged by war in the Balkans.
The project will finance improved signalling and the purchase of new track rehabilitation machines needed to keep rail tracks level. The project is being co-financed by the European Investment Bank, which will provide €40 million towards replacing old track. The EBRD mobilised an additional €4.4 million in grant financing from Canada, Japan, Sweden and the USA.
Johan Bastin, the EBRD's Business Group Director for Infrastructure, said that the upgrading would make the railways a reliable transport service for industry and traders who can make a strong contribution to the Bosnian economy.
Of more than 1,000 kilometres of working rail track in BiH, the most important route is Corridor Vc. It provides the main international rail link, and serves Banja Luka in Republic Srpska; the capital, Sarajevo; Mostar; and Ploce, which is a prominent regional port for southeast Europe.
The loan will be made to the State of Bosnia and Herzegovina. The finance will be distributed through the State's two entities, the Republic of Srpska and the Federation of Bosnia and Herzegovina, to the three operating rail companies: Railways of Bosnia and Herzegovina (ZBH); Railways of Herzeg-Bosnia (ZHB); and Republic of Srpska Railways (ZRS). The project -- part of the post-war reconstruction programme, the Stability Pact for Southeastern Europe -- will increase regional integration and support the recovery of the industrial sector. The grant money will support several initiatives to enhance the financial and operational performance of the rail sector.
To date, the EBRD has signed 15 projects totalling €143 million, mobilising altogether €582 million in investment in BiH. These include projects in both the private and public sectors.
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