Serbia Railway Sector Modernization Phase 2

active

Railways are a major asset for Serbia's regional connectivity. As the largest economy in the Western Balkans, Serbia serves as a regional hub and springboard for companies to access the larger regional market. It is strategically located at the crossroads of Western Europe, Eastern Europe, Turkiye, and the Middle East. Serbia embraced an ambitious investment program to invest $5 billion from 2017-2027 to improve railway infrastructure. Funding sources include multilateral and bilateral sources, as well as domestic resources. The focus will be on the Alpine Western Balkan rail freight corridor, upgrading existing lines, constructing a new high-speed line, and rehabilitating suburban and regional lines. The goal is to modernize 40% of Serbia's railway network by 2030. To maintain the desired design speeds and safety performance standards, proper and regular maintenance is required for newly built or upgraded infrastructure assets. However, the maintenance capacity of the railway infrastructure manager (IZS) needs to be rebuilt and developed; this is what this second phase of the Serbia Railways Sector Modernization Program aims at doing. The Serbia Railway Sector Modernization Program, co-financed by the World Bank and French Development Agency (AFD) was approved in March 2021 with an overall aim of consolidating the sustainability of the railway sector, both through investment and institutional development. The program was designed to have three phases over a period of 10 years. The Program Development Objectives are to: (i) Increase the railway network utilization efficiency; (ii) increase the safety of railways operations; and (iii) improve the sustainability of transport in Serbia by increasing the role (modal share) that railways play both in cargo and passenger markets. The first phase of the Program, currently under implementation, focuses more particularly on setting the basis for enhanced sector sustainability. Phase 1 of the Program focuses on upgrading existing rail infrastructure and establishing the enabling environment for further corporatization of the railway companies and operationalization of sector reforms. Phase 1 was organized into three components: (1) Infrastructure Investments and Asset Management, (2) Institutional Strengthening and Project Management, and (3) Railway Modernization Enablers.The second phase of the Program builds upon the strong fundamentals established in the first phase of the Program and prepares the third phase of the Program. It focuses on railways asset maintenance and is organized along the same three components as in the first phase. Component 1 - Infrastructure and Asset Management. This component supports (i) the acquisition of heavy-duty machinery; (ii) the repair and refurbishment of out-of-order heavy-duty machinery already belonging to IZS; (iii) the modernization of existing IZS’s maintenance facilities; (iv) services contract to carry out the railway routine maintenance of a subset of Serbia’s railway network; (v) downstream activities to the implementation of the Railway Infrastructure Management Systems financed from the first phase of the Program; and (vi) the preparation of the technical documentation required for the rehabilitation and upgrade of the selected existing railway lines in Serbia.Component 2 - Institutional Strengthening and Project Management. This component supports: (i) developing Information Technology strategies and solutions for IZS, Serbia Voz, and Serbia Cargo; (ii) the continuation of Phase 1 activity to develop the human capital in the railways sector in Serbia – including human resources procedures, capacity building, and developing academic curricula to create pipelines of professional able to supply the railway sector. Human capital development includes specific actions to support further female participation in the railways sector. And (iii) Project management and citizen engagement activities.Component 3 - Railway Modernization Enablers. This component supports: (i) for freight transport: analytical work to develop an intermodal strategy, promoting rail/road and rail/waterways services as well as last mile connectivity opportunities; (ii) for passenger transport: execution of Integrated Territorial Development pilot projects, as a follow-up activity of Phase 1, as well as a business plan for railways stations in Serbia.The Program, including this second phase, aligns with Objective 1.2 of the current Serbia Country Partnership Framework (CPF), “Greener investments and (just) transition to a low-carbon and resilient economy.” Improved management of maintenance cycles supports longer life spans of assets and more efficient use of resources. Improved infrastructure maintenance directly contributes to better infrastructure – train, and services – resilience towards climate events. This second phase of the Program also aligns with Objective 1.3 of the CPF, “Improved business environment and regional integration.”