Three months after Ukrzaliznytsia defaulted on $1 billion of private debt, Ukraine’s state railway just got €54 million ($63 million) in Western institutional funding. The money is meant to keep its trains running when Russia takes down the grid. The European Bank for Reconstruction and Development and the European Union signed two grant agreements with Ukrzaliznytsia on 28 April.
The grant buys infrastructure that keeps trains moving when the grid goes down.
It comes a day after six new sleeper cars rolled into Kyiv from the Kryukiv plant in Kremenchuk—the first delivery of a 100-car state-budget order.
What does a $1 billion default look like? In Ukraine, it looks like six new sleeper cars.
Russia struck the railway 1,200 times in 2025—more than 2023 and 2024 combined—killing 40 workers and averaging six attacks a day since March. The grant does not pay creditors. It buys infrastructure that keeps trains moving when the grid goes down.
€41 million to outlast the blackouts
The €41 million ($48 million) EU grant tranche funds 75 MW of gas-piston power plants. It unlocks an existing €180 million ($211 million) EBRD loan signed in December 2024, alongside a £20 million ($28 million) parallel UK grant via the Ukraine Energy Support Fund.
A separate €EBRD grant covers lifts and escalators at Kyiv Central Station and at Lviv station.
Combined, the €248 million ($290 million) project will install up to 200 MW of small-scale, gas-fired generation across the network—designed to run trains during blackouts without backup diesel locomotives.
A separate €10 million ($12 million) EBRD grant covers lifts and escalators at platforms two and seven of Kyiv Central Station and at Lviv station, while another €3 million ($3.5 million) launches UZ Academy, a training facility for 1,000 to 1,200 employees a year, including returning veterans.
Constant Russian drone attacks on the rail make the support all the more critical.
The 200 MW is around 13% of Ukraine’s national 2026 target of 1.5 GW of new distributed gas generation—a scale meant to make the grid impossible to knock out wholesale.
Ukrainian Railways chair Oleksandr Pertsovskyi described the project as enabling “energy independence that will allow us to operate even during blackouts.” EU Ambassador to Ukraine Katarína Mathernová added that constant Russian drone attacks on rail make the support all the more critical.
Russia’s campaign moves to rail
By the end of winter 2025–2026, all 15 thermal plants in Ukraine had been damaged or destroyed, with thermal generation collapsing from 23.5% of pre-war electricity supply to around 5%.
Having failed to break the power system, Russia shifted its targeting to the railways.
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The grid only held through emergency imports from Europe and round-the-clock repairs. Having failed to break the power system, Russia shifted its targeting to the railways.
Western funding while creditors wait
The EBRD signed despite Ukrzaliznytsia’s January default, when the company suspended coupon payments on Eurobonds maturing in 2026 and 2028. Fitch downgraded the railway to “Restricted Default” later that month.
Freight volume dropped roughly 17% in 2025.
In April, the bondholder group rejected Ukrzaliznytsia’s restructuring proposal—a 20% writedown and deferral until 2033—citing tariff structure rather than war pressure. Freight volume dropped roughly 17% in 2025.
The EBRD has deployed €9.7 billion ($11.3 billion) in Ukraine since February 2022, making it the country’s largest institutional investor.
