EU And EBRD Provide Additional Financial Support To Strengthen Ukrainian Railways And Energy Security

The European Bank for Reconstruction and Development (EBRD) and the European Union (EU) are providing additional financial support to Ukrainian Railways (Ukrzaliznytsia or UZ), Ukraine’s largest state-owned transport company. The aim of this support is to strengthen Ukraine’s energy security, improve the resilience of critical infrastructure, and ensure that essential services continue to function despite ongoing wartime challenges. The EU is contributing a €44 million investment grant under its Ukraine Investment Framework. This grant is designed to support and expand an existing €180 million loan provided by the EBRD, which was signed in December 2024 with Ukrainian Railways.

The additional funding increases the overall scale of the project and enhances its impact on Ukraine’s energy and transport systems. In addition to the EU support, the project also received a parallel contribution of around €24 million (£20 million) from the Government of the United Kingdom.

This funding was directed to the Ukraine Energy Support Fund and is managed through the Energy Community Secretariat. Together, these contributions form part of a larger coordinated international effort to stabilize Ukraine’s energy infrastructure. The total project cost amounts to approximately €248 million.

It will finance the installation and operation of up to 200 megawatts of decentralised, small-scale gas-fired power generation units at selected Ukrainian Railways facilities across the country. These units are intended to provide a reliable and continuous electricity supply, helping to address power shortages and ensuring that both households and businesses receive stable energy access.

A key feature of this project is its focus on decentralised energy generation. Due to repeated attacks on Ukraine’s energy infrastructure during the ongoing war, large centralized power plants have become vulnerable targets. Since the beginning of the full-scale invasion, Ukraine has lost more than 10 gigawatts of electricity generation capacity. In response, the government and its international partners are prioritizing smaller, modular energy systems that are distributed across different locations.

These systems are less exposed to large-scale disruptions and can maintain essential operations even during emergency situations. The small gas-fired engines included in this project are expected to improve energy security, support grid stability, and reduce the risk of complete power outages affecting critical services. Beyond energy production, part of the EU grant, amounting to €3 million, will be used to establish a new internal training facility called the UZ Academy.

This academy will focus on workforce development and the reintegration of veterans into civilian employment. Each year, it is expected to train between 1,000 and 1,200 Ukrainian Railways employees. The goal is to equip staff with modern, market-relevant skills and qualifications, which is particularly important given the labour shortages and workforce disruptions caused by the war.

According to Arvid Tuerkner, Managing Director of the EBRD for Ukraine and Moldova, Ukrainian Railways has played a vital role since the start of the war by keeping the country connected and supporting both economic activity and civilian mobility. He emphasized that the joint investment with the EU not only strengthens immediate operational capacity through decentralized energy generation but also supports Ukraine’s long-term recovery through skills development and institutional resilience.

The EBRD remains committed to supporting Ukraine’s infrastructure and energy security in cooperation with international partners. Katarína Mathernová, the European Union Ambassador to Ukraine, noted that Ukrainian Railways has been essential in maintaining national connectivity during extremely difficult conditions.

It has transported people, essential goods, and services while operating under constant threat from drone and missile attacks. She explained that the EU’s financial support is aimed at ensuring that trains continue running, energy systems remain stable, and Ukraine’s economy continues to function despite the ongoing conflict.

Oleksandr Pertsovskyi, Chairman of the Board of Ukrainian Railways, stated that the company is actively preparing for winter and prioritizing energy independence. He explained that the development of in-house gas-based power generation will allow Ukrainian Railways to continue operating even during blackouts. This will ensure the uninterrupted transportation of passengers and freight, while also contributing to stabilizing the national energy system. He also expressed gratitude to the EU, UK, EBRD, and the Energy Community Secretariat for their continued support.

The EBRD, as one of the leading providers of climate and development finance in Ukraine, is also working on longer-term solutions for the country’s energy transition. While the current focus is on ensuring stability and resilience during wartime conditions, the small modular gas-fired systems being installed under this and similar projects are designed in a way that allows them to be integrated into future renewable energy systems. As Ukraine expands its use of solar and wind power, these flexible systems can help balance fluctuations in supply.

In a separate initiative, the EBRD is also providing a €10 million accessibility grant for urgent upgrades at major railway stations in Kyiv and Lviv. These improvements include step-free access, energy-efficient lighting, and safety enhancements across station environments. The upgrades are intended to improve accessibility for people with disabilities, elderly passengers, families with young children, and others with reduced mobility. Improved lighting will also enhance safety in public spaces around stations, particularly for women and other vulnerable groups.

Ukrainian Railways is a vertically integrated, state-owned monopoly responsible for rail transport across Ukraine. It operates a network of approximately 20,000 kilometres and plays a crucial role in the country’s economy, contributing around 2.34 percent of Ukraine’s pre-war GDP. Since the start of the war, its importance has increased significantly as it has become a key lifeline for transporting people, goods, and essential supplies across the country under extremely challenging conditions.

The EBRD is currently Ukraine’s largest institutional investor and has significantly increased its engagement since the start of Russia’s full-scale invasion in 2022. It has deployed billions of euros to support critical infrastructure, energy security, and private sector resilience, with the broader goal of strengthening Ukraine’s economy and supporting long-term recovery.