OREANDA-NEWS. November 03, 2011. The EBRD has committed to a long-term loan of EUR 22.5 million to fund an investment in new freight wagons to boost by over 70 per cent the fleet of a CIS-wide freight carrier which has a special focus on cross-border rail traffic between Finland and Russia for the pulp and paper industry, reported the press-centre of EBRD.

The investment by the St Petersburg-registered Huolintakeskus LLC, which operates in the whole CIS and Baltic region, is being made to support expansion of the operations of this niche operator in the freight rail market. The 8-year EBRD loan will allow the company to buy over 700 new freight wagons. 

Independent consultants hired by the EBRD estimate that Russia will need to add between 45,000 and 60,000 new freight wagons every year over the next 10 years. Freight operators in Russia froze their fleet expansion plans due to the 2008 financial crisis and replacements are now overdue.

This is the EBRD’s second loan to Huolintakeskus and part of the Bank’s funding will be used to re-finance what remains outstanding from the earlier loan of 556 million roubles advanced in 2006. Discussions on possible additional financing of EUR 22.5 million for this second project are still ongoing. 

Huolintakeskus is a wholly owned subsidiary of Finland’s Nurminen Logistics, a publicly listed company founded in 1886 which is now one of the 10 biggest Finnish logistics firms operating in the Baltic region. Nurminen’s shares are listed on the Helsinki stock exchange.

Russia is Finland’s top trading partner, accounting for 16 per cent of Finland’s imports and 11 per cent of Finnish exports. Finland is also one of the few countries to share a common railway gauge with Russia and its use of a wider track explains the considerable rail traffic between the two countries across their common border.

“The EBRD has a longstanding commitment to support reform of the rail sector in Russia and is pleased to finance expansion of an independent operator in this market,” said Sue Barrett, Director of the EBRD’s Transport team.

The EBRD has to date committed over €1 billion to the rail freight sector in Russia.