The European Bank for Reconstruction and Development (EBRD) is reallocating part of an existing sovereign loan to the State Agency for the Restoration and Development of Infrastructure of Ukraine formerly known as the State Road Agency of Ukraine (Ukravtodor), to provide €182 million to upgrade a section of road between Lviv and Rava-Ruska on Ukraine’s border with Poland.
The EBRD had originally agreed to provide a €450 million sovereign loan to be on-lent to Ukravtodor in December 2020. The loan aimed to support the construction and rehabilitation of major highways in the country around Kyiv, Odesa and Lviv. Its three tranches have yet to be disbursed. The Bank has a long history of working with the agency, having financed five road rehabilitation projects for a total amount of €1.2 billion over the last 20 years.
Russia’s war on Ukraine has resulted in disruption to trade via its Black Sea ports, causing the redirection of traffic flows to land routes in western Ukraine that connect to the European Union (EU).
This has prompted the Ukrainian government to reassess its priorities and seek the reallocation of existing funds to the financing of repairs of the M-09 road section from Lviv to Rava-Ruska. This is the main route connecting Lviv to Warsaw and part of the Trans-European Transport Network (TEN-T), on which traffic intensity has increased significantly since the start of the war. There is now an urgent need to improve the condition of the road and make critical road safety improvements, including the installation of barriers to separate traffic and bicycle infrastructure connecting settlements along the road, as well as climate adaptation measures.
The road repairs will enhance existing transport links between Ukraine and its EU neighbours, as well as within Ukraine, and reduce the logistical costs of freight traffic. Upgrading the M-09 road supports the Ukrainian government and its partners’ priorities of developing alternative transport routes to facilitate the export and import of vital goods (including agricultural exports and critical imports), in line with the Solidarity Lanes initiative and in response to the war on Ukraine.
The reallocated loan to the State Agency for Restoration and Development of Infrastructure of Ukraine forms part of the EBRD’s five-pronged approach to supporting Ukraine’s real economy. The Bank’s support focuses on vital infrastructure, energy and food security, trade finance and support for the private sector.
