Ukrainian Railways, Alstom sign protocol on EUR 0.9 bln project

The top managers of Ukrainian Railways (RAILUA) and
Alstom (ALO FP) signed a protocol on cooperation in Kyiv, which may foresee the
supply of 130 electric locomotives for the Ukrainian rail operator, the company
reported on Feb. 8. The document was signed as part of the official visit of
president Emmanuel Macron to Kyiv. The protocol foresees a 14-year loan from
French banks for 85% of the deal, Ukrainian Railways reported. The renovation
of the Ukrainian locomotive is one of the government’s priorities as the
average age of the existing vehicles is about 40 years, the company reported.
President Zelensky told the media that the total value of the possible deal is
about EUR 900 mln. The deal also assumes a 35% localization of the locomotive
production in Ukraine.

Interestingly, the French machinery producer said
nothing on this deal on its website.

Recall, the framework deal on the supply of 130 French
locomotives was signed in May 2021. In July,
the Ukrainian parliament ratified the framework agreement, based on which the
French side will provide financing of up to EUR 750.1 mln to finance up to 85%
of purchase of goods from Alstom Transport SA. The borrower is Ukraine’s
Finance Ministry and the lenders are the French government (for up to EUR 350
mln) and a consortium of French or EU banks.

Alexander Paraschiy: If the deal
is realized Ukrainian Railways will receive modern locomotives at the expense
of the state budget, which will definitely benefit the company while possibly
bringing no addition to its financial leverage. Thus far, however, the
likelihood of the deal is hard to estimate. But Alstom’s silence on the signed
documents indicates the sides are very far from a concrete deal.