Ukraine launches a large-scale modernization of its railway infrastructure
A framework agreement was signed between “Ukrzaliznytsia” and the American corporation “General Electric” regarding a long-term strategic partnership for the modernization of Ukraine’s rolling stock for the period 2018-2034.
Kyiv, Ukraine, February 23, 2018 – A Framework Agreement was signed today between “Ukrzaliznytsya” and “General Electric”, an American corporation and a world technology leader. The accord provides for a 15 year, long-term cooperation agreement, with a total value of up to $1 billion USD. The agreement marks the beginning of a qualitatively new stage in the development of Ukraine’s transport system which will create new jobs, attract new technologies and develop Ukraine’s export potential.
“I am very pleased that our dynamic talks with GE lasted only five months and led to the signing of this unprecedented agreement. My government is always ready to support innovative investments that result in high value-added products and create new jobs in Ukraine. I am convinced that the signing of an agreement between “Ukrzaliznytsya” and “General Electric”, which was supported by the efforts of the government’s investment promotion office – UkraineInvest, will offer a significant boost to the development of Ukraine’s transport infrastructure and domestic manufacturing,” stated Prime Minister of Ukraine, Volodymyr Groysman.
The framework agreement anticipates the production of up to 225 new diesel locomotives and upgrades to 75 older models with a significant degree of (up to 40%) localization in Ukraine.
“These are win-win deals – Ukraine gets value-added investment in terms of jobs and the modernization of its manufacturing base, and the investor obtains access to a competitive highly skilled workforce and products that can be integrated into their global supply chain,” said Daniel Bilak, head of the government’s investment promotion agency, UkraineInvest. “We continue to target global brands for investment, in order to reach the Government’s goal of 5-7% economic growth per year by 2020”.
As part of the implementation of the first phase of the Framework Agreement, a sale-purchase contract was signed between General Electric and Ukreximbank regarding the delivery and production in Ukraine of 30 new GE Evolution series locomotives in 2018-2019, which will then be leased to Ukrzaliznytsya.
“After many years of lack of activity and stagnation, with this project we are now launching a large-scale program to upgrade Ukrzaliznytsia’s locomotive fleet. In addition to solving the problem of sufficient locomotives, the strategic partnership of Ukrzaliznytsia and General Electric will become a powerful impetus for the development of our manufacturing industry,” said Yevhen Kravtsov, acting Chairman of the Board of “Ukrzaliznytsia”.
The first deliveries of locomotives from the US are planned for the fall of 2018. The agreement provides for a significant localization of the production of locomotives and their maintenance, which will result in the creation of new jobs in Ukraine.
“The agreement, signed today, expands our global customer base and is a new stage in our strategic partnership with Ukrzaliznytsia.. Our cooperation can serve as a catalyst for attracting international investment and accelerating Ukraine’s economic growth,” said Raphael Santana, President and CEO of GE Transportation. “We highly value the trust and support of our Ukrainian partners, including the Ministry of Infrastructure, UkraineInvest, the National Investment Council and Ukreximbank. We are also proud to take part in the modernization of Ukraine’s railway infrastructure, thereby helping to move cargo faster and more efficiently.”
In the broader perspective, the successful implementation of this bilateral cooperation will have a positive effect on the modernization of Ukraine’s industrial infrastructure, the enhancement of the country’s energy security and export potential, – and will enable Ukraine to become a key logistics and transport hub in the region.