Eurasian Development Bank signed a US $75 million loan agreement with RAIL1520 leasing company

The Eurasian Development Bank (EDB) will provide a ten-year US $75 million loan to RAIL1520 to finance a project to develop freight transportation. The loan agreement was signed today in Moscow.

In order to fill the market with modern freight cars, the borrower will purchase over 1,000 cars from freight car building plants and provide them in operating lease to freight-generating companies and carriers.

«This project is in line with the EDB’s mission and strategy. It will promote the advancement of Russia’s freight forwarding market and transport infrastructure. The demand for freight cars keeps growing and the car fleets of the Bank’s member states are very obsolete,» Gennady Zhuzhlev, Deputy Chairman of the EDB Executive Board, said. «The lease of this number of new, modern cars will contribute to the renewal of Russia’s rolling stock and increases in rail transportation volumes, which, in their turn, will improve the efficiency of the country’s infrastructure and transit potential.»

«We have ambitious plans to invest in Russia’s rolling stock. This loan will help us offer our customers modern freight cars on attractive terms,» Dmitry Bovykin, RAIL1520 Operation Director, said.

The project is expected to generate new orders for cars and components, which will give an additional impetus to the development of railway mechanical engineering and metallurgy. The subsequent lease of cars will have a positive effect on the sectors serviced by rail transport, including mining and metallurgy, coal production, and the power industry.

The EDB’s researchers estimate that, during the loan period, the project can generate an additional output of approximately US $301 million in the Russian economy. The annual gross output during the same period is expected to exceed US $30 million. The project financial model suggests that Russia’s tax revenue from the project will approximate US $70 million over the loan period.