AIIB Lends Russian Railways US$300 million

The Asian Infrastructure Investment Bank (AIIB ), of which Russia is a major shareholder, is extending financing to Russian Railways (RZD) to the Ruble equivalent of US$300 million. RZD owns and operates Russia’s integrated national passenger and freight railway network and is the largest commercial employer in Russia with around 900,000 employees. The AIIB loan will contribute to the company’s efforts to preserve jobs and the working conditions of employees and ensure continuous operations. RZD faces negative impacts from COVID-19. In particular, long-haul passenger rail operations in Russia have been severely affected; in some months, the decline in passenger turnover reached 70 percent.

Covering approximately 85,500 kilometers of track, Russia’s railway system is the world’s third longest railway network, second largest railway in terms of freight turnover and fourth largest railway in terms of passenger turnover. In addition to transporting passengers across large distances, its rail routes link to busy seaports that service Asia and Europe, serving as a “land bridge” between them, thus contributing to Russia’s domestic and foreign trade.

The RZD loan aligns with AIIB’s commitment to support infrastructure clients in responding to the COVID-19 crisis through the Bank’s COVID-19 Crisis Recovery Facility (CRF). With such support, clients can successfully overcome temporary liquidity constraints and maintain critical long-term investments. It is AIIB’s first approved non-sovereign CRF project in Russia.

Konstantin Limitovskiy,  AIIB Vice President, Investment Operations said “With this project, AIIB contributes to the support for railway transportation services, which remain a socially significant and the most affordable means of transport for millions of citizens, and an efficient way to transport large quantities of goods and freight. AIIB’s commitment to sustainability has to go beyond just the infrastructure itself. It must also account for the people, both those who provide and those who depend on its services.”

The CRF is providing US$13 billion of financing to both public and private-sector entities facing serious adverse impacts as a result of the pandemic. As of October 15th this year, AIIB’s Board of Directors has approved a total of 22 projects amounting to over US$6.645 billion to help 16 sovereign nation members of the bank navigate the challenges posed by maintaining civil operations during Covid-19.

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