Croatia Railways Fleet Renewal Project

cancelled

Translated version of this PSD: Croatian The EBRD is considering providing financing to Croatian Railways Group (HZ) to fund part of the Group’s rolling stock renewal programme and contribute to the envisaged labour restructuring programme as part of the on-going process of the sector reform and commercialisation. When approved by the EBRD’s Board, the loan proceeds will be directed toward the traction and passenger services subsidiaries of HZ Group. The transition impact will derive from the support the Project will provide towards further institutional strengthening of both the traction and passenger company in terms of cost transparency and operational efficiency leading to improvements in traction charges methodology and public service obligation contract payments. HŽ Hrvatske Željeznice Holding d.o.o. – a national railway holding company. Up to €150 million senior loan. Up to €180 million. This project has been categorised B under the EBRD’s Environmental and Social Policy. HZ is an existing EBRD’s client and has been providing information on its environmental and safety performance for several years. Environmental and social due diligence for this new investment is ongoing and includes a review of Environmental, Health and Safety (EHS) policies, system and performance data, meetings with HZ’s environment, safety and human resource managers, and visits to operational sites, including stations, maintenance depots and vehicle overhaul facilities. The benefits of this project will include improved energy efficiency and reduced greenhouse gas emissions, and increased reliability, comfort and safety for HZ’s customers. The company appears to be operating broadly in compliance with the EBRD Policy and Performance Requirements. Where deficiencies are identified, the EBRD and HZ will agree actions to address them. All required permits and licenses are in place. The vehicles to be purchased under this investment will meet EU standards for safety and noise. Environmental management at HZ is good, and includes systems for waste separation and recycling and measures to prevent pollution and control hazardous substances. Safety measures are generally appropriate and include controls for electrical safety, fire safety, and work on tracks. The EBRD is reviewing HZ's HR policies and plans for reductions in headcount. HZ management has a good working relationship with the trade unions and Collective Agreements are in place covering pay and conditions, worker rights and grievance mechanisms. Once due diligence is complete, the EBRD will agree any additional actions with HZ that may be necessary to bring the redundancy programme in line with the Bank’s Performance Requirements. Envisaged technical cooperation to be sought includes assistance to HZ Traction and HZ Passenger in institutional strengthening and financial transparency and cost effectiveness.