OREANDA-NEWS. More than 80 million euro has been made available by the European Investment Bank (EIB) and the European Commission (EC) for the start of modernisation of 148 kilometres of railways in Kosovo, connecting it to the European network.

A 42 million euro loan agreement for the modernisation of the Kosovo part of the European Route 10 Rail network was signed today by the EIB Deputy Director General Romualdo Massa Bernucci and Kosovo Minister of Finance Avdullah Hoti, in the presence of Head of the EU Office in Kosovo/EU Special Representative Samuel ?bogar.

At the same time, the EU will initially support the project with a 40 million euro grant for project preparation and implementation. An additional 40 million euro in EU grant is potentially envisaged for later stages of the project.

"This is the first EIB loan ever to the public sector in Kosovo", said Mr Massa Bernucci. "The loan contributes to the Bank’s commitment to support “climate action” as a result of the expected overall reduction of greenhouse gases arising from the modal shift of freight and passengers due to the project."

"Through this project, Kosovo benefits from a significant investment grant from the EU, as a part of the EU's concrete delivery to the connectivity agenda for the Western Balkans and its commitment to the region's European perspective within the framework of the Berlin process", said Mr ?bogar.

"The rehabilitation of the railways network will bring direct benefit to the Kosovo people. The rail connection will result in passenger and cargo rail capacity and travel time significantly improved, with reduced CO2 emissions. The money granted by the European Union is expected to bring at least double that amount into the local economy in the long term."

The railway modernization project was included in the investment package approved at the Western Balkan summit in Vienna in August 2015, within European Union's wider agenda to promote connectivity in the region and with the EU.

The project will integrate the rail network in Kosovo into the Orient/East-Mediterranean Corridor, connecting the Western Balkans to Austria, Greece and Bulgaria, as part of the Core Network Corridors of the Trans-European Transport network (TEN-T).

The Rail route 10 is 250 km long, out of which 148 km are in Kosovo and the rest are in the former Yugoslav Republic of Macedonia and Serbia. The modernisation is expected to start in late 2016 and be finalized by the end of 2020.

At the moment, the project of modernization of railways in Kosovo has received total commitments of 122 million euro. Alongside with the 40 million euro from the EU grant and the 42 million euro from the EIB loan, the project benefits 40 million euro from the European Bank for Reconstruction and Development (EBRD) loan, agreed in September 2015. The Western Balkans Investment Framework (WBIF) has also contributed to the project.