EU bank loans ČD €300m one week after EU fines it… €300m

Published on 31-10-2024 at 10:20

ČD is getting 300 million euros from the EU's lending arm. ČD

You lose some, you win some. Last week, the EU fined Czechia’s state-backed rail company České dráhy (ČD) nearly thirty-two million euros for trying to shut out private operators. Luckily, Brussels has essentially given them the money back already: the European Investment Bank (EIB) is lending the Czech company three hundred million euros (two million short) to buy new train carriages and locomotives, as well as upgrade existing ones to ERTMS.

It was only last week that the EU’s executive fined ČD and Austria’s ÖBB forty-eight point seven million euros for colluding to prevent the privately owned new entrant, RegioJet, from accessing used wagons, thus making it harder for it to compete against the state-backed companies. ČD is bearing the brunt of the fine (after ÖBB decided to cooperate in full with the EU investigation), having been asked to pay thirty-two million euros back to the bloc.

It says it “fundamentally disagrees” with the “legally flawed” decision and denies “any alleged interference” with the trade of the used railway cars, stating that the Commission had “a clear desire to punish someone” for a historic offence. ČD added that despite its protestations, it was “prepared to face the financial impact of the fine” because it has “financial reserves” specifically created for the penalty in question. It now also has three hundred million euros from the lending arm of the EU.

New trains, new systems

The Czech company announced on Wednesday that the EIB had given the go-ahead for a loan to purchase one hundred and eighty passenger coaches and twenty electric locomotives, while retrofitting two hundred and nineteen existing coaches and locomotives with the European Rail Traffic Management System (ERTMS). The improvements are set to be completed by the end of 2028, it said.

“The funds from the European Investment Bank help us to invest in the modernisation of our rolling stock,” said Lukáš Svoboda, Member of the Board of Directors and Deputy Director General of ČD for Economics and Purchasing. “We are using the funds obtained in this way primarily for the improvement of the quality of long-distance trains, including the acquisition of the most modern ComfortJet trainsets, which will run on the lines interconnecting Prague with Germany, Austria, Slovakia, or Hungary, as well as for the equipment of other vehicles with the on-board part of the European Train Control System (ETCS).”

‘The competitive edge’

Thanks to these investments, he said, ČD would be able to offer its passengers “more comfortable, more convenient, and safer trains.” Svoboda added that the money would “further strengthen the competitive edge” of Czech rail. Just don’t mention RegioJet…

And for the EU’s bank, the fine—despite being contested—also appears to be water under the bridge. “This financing exemplifies our unwavering commitment to sustainable transport,” said EIB Vice-President Kyriacos Kakouris. “By modernising the rolling stock of České dráhy, we are not only enhancing the safety and efficiency of rail services but also advancing the EU’s climate-action goals.”

The loan builds on years of EIB-ČD cooperation to upgrade infrastructure and rolling stock in Czechia, with the bank committing as much as eight hundred and eighty million euros to Czech rail projects in 2023 alone.

ERTMS upgrade for ČD

As for the upgrade to ERTMS, Czechia has been one of Central Europe’s fastest adopters of the EU’s new signalling system. Its speed has been influenced partly by EU pressure due to its strategic location as a freight transporter. As of next January, around fifty thousand trains per month in Czechia, covering forty-two per cent of all its rail traffic, will be operating under ETCS supervision on its priority routes as it readies to launch exclusive ETCS Level 2 operations on its key lines in the New Year.

In fact, Alstom and Škoda Group signed a renewed deal earlier this month focused on the integration of ETCS Level 2 on Czechia’s RegioJet trains. Get the full report here.

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