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EIB to finance new sustainable transport project in Kraków

The EU’s European Investment Bank (EIB) and PPP Solutions Polska have signed a new financing agreement, worth 180 million złotych (38.2 million euros) for a new tram line in the southern Polish city of Kraków, the EIB announced on Wednesday (17 January).

The financing agreement will help fund the construction of a new tram line connecting the city centre with the Mistrzejowice terminus. Sustainable development of environmentally friendly public transport is of “strategic importance” for Krakow, and part of the funding will come from the European Fund for Strategic Investments, according to a press release by the EIB.

“The EIB is proud to strengthen its cooperation with Krakow — we believe this will result in the further dynamic development of the city,” Vice-President of the European Investment Bank, Teresa Czerwińska said. “We are pleased that this PPP transaction will open up new financing opportunities for other local governments. Investments in the sustainable development of public transport are of key importance: They facilitate moving around the city, improve the quality of life for residents, and have a positive impact on the climate. As the EU climate bank, the EIB is ready to continue supporting the green transformation of Polish cities and regions.”

As stated in EIB’s press release, the EU bank and the City of Krakow are expanding their “long-term cooperation, this time with a public-private partnership (PPP)”. This is the first investment in Poland’s urban transport sector implemented as a PPP, which opens up new financing opportunities for local Polish governments, according to the press release. The PPP agreement was signed between the City of Krakow (a public entity) and a consortium of PPP Solutions Polska and Gülermak Ağir Sanayi Inşaat Ve Taahhüt. It encompasses obligations to secure financing, design and build a tram line, and assume responsibility for its maintenance for 20 years.

“I strongly believe that the Krakow Tramway is a landmark project that will pave the way for a new wave of PPP projects in Poland,” Chairman of Gülermak, Kemal Güleryüz said. “With this project, we’ve established a benchmark for bankable documentation that is also aligned with procurement laws in Poland. This project is of the utmost importance for the City of Krakow. Not only will it bridge two existing tram lines, but it will also increase the usage of the tramway, which is a great step towards a greener transportation system. We’re proud to work with the EIB on this project, and thank them very much for the immense value they have added at this difficult time of global financial volatility and regional instability.”

The new tram line will connect residential districts in the northern part of Krakow with the city centre. The total project route is 4.45 kilometres and includes nine new tram stops (two of which are underground) and the reconstruction of the existing Mistrzejowice terminus. It is “perfectly aligned” with the City of Krakow’s development strategy, which set out plans for a gradual reduction of car traffic in the city centre in favour of alternative transport options, according to the press release.

“KST IV is the largest project in Poland implemented as a public-private partnership,” added the Mayor of Kraków, Jacek Majchrowski. “Using a PPP structure will not only allow a 4.5 km stretch of the new tram line to be built, but it will also optimise the costs of this investment. The development of public transport has undeniably been one of the most important elements of Krakow’s policy for years. The city is constantly looking for new solutions that will allow us to carry out more and more investments. One such solution that we found effective and beneficial for Krakow is the PPP model. With the support of the government, we have prepared KST IV — a project to construct a tram line to Mistrzejowice that, based on the PPP scheme, gives us both financial and qualitative benefits.”

Over the last EU long-term budget period of 2014–2020, the EIB Group supported investments worth around 630 billion euros in cohesion regions (equivalent to around 16 per cent of the European Union’s gross domestic product). In 2021, Poland was the largest beneficiary of cohesion region financing by the EIB Group, receiving a total of 4.5 billion euros.

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