A Eu10mn EBRD loan to publicly-owned Kauno autobusai (Kaunas Bus Company) is set to significantly improve public service in Lithuania’s second-largest city, Kaunas. The loan will finance the purchase of 50 new buses, spare parts and maintenance equipment.
It will be the EBRD’s first public transport loan without a municipal guarantee, employing a new model of finance for urban transport projects that is expected to attract strong interest from other cities and towns. Instead of a municipal guarantee, the loan will be backed by a series of agreements between the city, the company and the bank covering everything from the quantity and quality of bus services to fares and performance-related fees.
This new model will take advantage of the EBRD’s experience in financing companies backed by municipal support agreements, providing an example that other financially sound transport companies and cities in the Baltic region could follow, says Thomas Maier, EBRD director, municipal and environmental infrastructure.
In Kaunas itself the financing should improve the efficiency and overall quality of local transport, adds Salvatore Candido, EBRD director for the Baltic States.
Swedish funding has already helped the bus company prepare a 10-year business plan. Additional assistance will enable the city to undertake a programme to improve its regulations of services. Thus the project will support improvements in the performance of Kaunas Bus Company and the public transport system in Kaunas.
Mindaugas Grigelis, general director of UAB Kauno autobusai, underlines that the project creates new operating conditions which will require a new quality of public transport services. He notices that the agreement has already attracted strong interest from other cities in Lithuania.