MIL-OSI Europe: Czech railway safety and capacity strengthened with EIB loan of CZK 13 billion

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Source: European Investment Bank

  • European Investment Bank signs CZK 13 billion (€ 527 million) loan agreement with Czech Ministry of Finance for major railway upgrade. 
  • The financing is part of an CZK 48.8 billion EIB operation (€ 2 billion), to increase the capacity of Czech railways for freight and passenger transport while making them safer and more comfortable.
  • Works to benefit lines across country and strengthen trans-European transport network (TEN-T) with three major corridors running through Czechia.

The European Investment Bank (EIB) and the Czech Ministry of Finance signed a CZK 13 billion loan accord to upgrade the country’s rail network, unlocking the second part of planned EIB support totalling CZK 48.8 billion. The funding will improve TEN-T railway lines in the Czech Republic and enable the deployment of the European Rail Traffic Management System (ERTMS). The project will be managed by Správa železnic, s.o., the national railway infrastructure administrator, under the authority of the Czech Ministry of Transport. The first part of the loan, CZK 24 billion, was signed in autumn 2023.

Správa železnic will use the latest round of financing to continue installing ERTMS, a rail traffic management system that not only is compulsory in the European Union but also greatly reduces the risks of human error and accidents. Other benefits of the system include higher capacity, potentially allowing for more travel options and lower operating and maintenance costs (from electricity savings in particular).

As regards safety, modern railroad crossings in the Czech Republic could avoid up to 180 incidents annually resulting in 30 to 40 deaths a year. Správa železnic plans to install barriers at level crossings or replace them with bridges or tunnels, so that cars, bikes and pedestrians can cross the railway lines without going on the tracks.

“Rail is among the most energy-efficient modes of transport for freight and passengers and we need more of it,” said EIB Vice-President Kyriacos Kakouris. “But if we want people and companies to choose rail over roads, we need to make our trains safer, greener and more reliable. Our financing for the Czech railway system has a dual benefit – it will render the transport options in the country more sustainable and it will support regional development in EU areas with lower economic activity.”

The project also includes works in railway stations and buildings to improve accessibility for people with reduced mobility and travellers with children. It consists of some 40 sub-projects scheduled to be finished by the end of 2028. Around a quarter of the upgrades will happen in the Prague region, but the vast majority are planned in areas that fall under EU cohesion policy. Once complete, the project will benefit approximately 90 million passengers annually and facilitate the transport of more than 8 million tonnes of freight.

“The EIB has played a crucial role in the financing of transport infrastructure in the Czech Republic. The first contract between the Bank and the Czech Government was signed back in 2001, and since then, the EIB has participated in numerous important projects. I highly appreciate this long-lasting cooperation, as we can finance some long-term investments of a strategic nature through a loan with a lower interest rate than we could receive on the market with standard bond issuance,” said Minister of Finance Zbyněk Stanjura.

“Modernising and increasing the capacity of our railway infrastructure ranks among the main priorities of our government. The need for investment, however, exceeds the possibilities of our national budget. The EIB loan will enable us to progress faster and on a much larger scale so that our railway network offers transport of passengers and goods of a higher quality. With regard to the planned construction of high-speed railways, we would like to cooperate with this institution over a longer period of time,” said Martin Kupka, Czech Minister of Transport.

The signed facility builds upon a 2022 Memorandum of Understanding to establish a partnership to modernise Czechia’s railway network. Under the memorandum, the EIB committed to providing financing of up to €7 billion and technical assistance to the Czech railway infrastructure administrator. Several of the current sub-projects were prepared with the support of JASPERS, a European Commission-EIB partnership to help project owners align with EU standards to improve their chances of securing EU funding.

Upgrading the railway lines will increase both maximum speeds and capacity on sections of the TEN-T network. The investment supports the transport policy of the Czech Republic for the period of 2021 to 2027. This framework envisages an energy-efficient and climate-resilient transport system with a neutral impact on the environment. Shifting passenger and freight transport from roads to rail would minimise noise, pollution and CO2 emissions.

Background information

The Czech rail network spans 9,463 route kilometres of mainline, around one-third of which is electrified. Excluding the COVID-affected period, the volume of train passengers has steadily increased. This can be explained by enhancements in rail infrastructure and rolling stock, resulting in reduced travel times across many routes. New international connections to Austria and Slovakia, as well as improved competition for rail services, have also contributed to the growing popularity of rail travel in the country.

About the EIB

The EIB is the long-term lending institution of the European Union. It finances sound investment contributing to EU policy goals and works closely with other EU institutions to advance shared policy priorities, like equitable growth and a just transition to climate neutrality. In 2023 alone, the EIB Group provided €1.88 billion for Czech projects.

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