The European Bank for Reconstruction and Development (EBRD) is stepping up its support for Serbia’s rail sector, this time with a loan to state-owned operator Serbia Cargo. The bank is lending the company 43 million euros to finance its freight fleet modernisation.

Serbia Cargo will use the funds to replace obsolete rolling stock, buy new locomotives and freight wagons, and overhaul existing wagons. It will also receive technical assistance to strengthen corporate governance, upskill its workforce and increase rail transport safety. In this way, the company will be able to improve the quality and volume of its freight services and encourage the greater use of rail transport over the currently dominant road, the EBRD argues.

In 2019, Serbia Cargo already bought 16 new Vectron locomotives from Siemens, which can run at a speed of 160 km/h, are equipped with ECTS and are allowed in several countries around Serbia. With this, it seems to anticipate a growing market.

Market growth

Indeed, goods transported by rail in the first half of 2022 saw an increase of 21.7 per cent compared to the same period last year. Volumes expressed in tonne/km noted an increase of 9.2 per cent relative to the same period in 2021.

Add to this the investments made in the development of the infrastructure, and you understand that the railways of Serbia can handle a lot more in the years to come. The Serbian government, with the support of Europe as well as China, is making great strides to upgrade its current infrastructure.

A key priority

The EBRD has already invested nearly 500 million euros in the sector up to date, acknowledging the importance of the Serbian railway. “The rail sector is a key priority for the EBRD in the Western Balkans as we support countries in the region in upgrading their level of infrastructure and services. This will help to unlock economic opportunities, strengthen regional integration and promote a more sustainable model of transport”, Matteo Colangeli, EBRD Director for the Western Balkans explained.

And just like the EBRD, the European Investment Bank (EIB) is supporting the country’s rail freight case. Earlier this month, it made available 1,1 billion euros for the modernisation of the Belgrade-Niš railway line, which is at the heart of corridor X. The EIB and EBRD investments add up to 1,6 billion euros, excluding the latest injection for Serbia Cargo.

Corridor X

Corridor X, which is actually shaped in the form of an X, explains well the interest of the European institutions. It connects Salzburg in Austria to Thessaloniki in Greece, and via a second branch Budapest in Hungary to Istanbul in Turkey. Thus, it connects the southeast of Europe with Central and Eastern Europe.

Once ready, the speed of the line will be upgraded to 120km/h (currently the maximum speed is 100 km /h, but in most parts it is not more than 30 or 50 km/h). Travel time will also be reduced significantly, and the annual freight volume of the line is estimated to increase by 30 per cent to reach 2.2 million tonnes a year.

Budpaest-Belgrade

In the meantime, China invests in the railway network north of Belgrade. A few months ago, the first section of the Belgrade-Budapest line was inaugurated and put into operation. Specifically, it was the Belgrade-Novi Sad section. Interestingly, China is the sole investor in the line’s construction, which is considered critical in the context of the Belt and Road Initiative and the Silk Road network.