Re-negotiation of the Air Express project

Investing in Ukraine: Air Express project

This article discusses the current situation over implementation of the #Air Express project, which deals with linking of the #Boryspil airport with the #underground station in #Kiev.

Visit our website if you are interested in #doing business in UkraineĀ or looking for new #investment opportunities.

The Air Express project was developed in 2011 and envisaged construction of high-speed passenger rail service between Kiev and Boryspil International Airport. Two Chinese state owned companies, namely China Machinery Engineering Corporation and China National Complete Engineering Corporation were hired as contractors, while the project itself was financed under the loan issued by the Export-Import Bank of China. The total amount of this loan for financing the Air Express project was USD 372 million with the first tranche of USD 52 million disbursed in 2013. While construction works officially began in 2011, no substantial progress has been made so far. Furthermore, the recent inspection of the Air Express project revealed a number of financial violations and embezzlement.

The Minister of Infrastructure of Ukraine announced that there is no possibility that the Air Express project is implemented under the current state of affairs. Therefore, there is a need to re-negotiate the scope of the project. Ukraine offered an alternative implementation project model (with allocation of some funds to other transportation projects near Boryspil International Airport), which was delivered to and discussed by the management of China Machinery Engineering Corporation and China National Complete Engineering Corporation and the Ambassador of the People’s Republic of China to Ukraine. Following the respective negotiations the parties agreed to consider new project model. However, the ultimate decision as to the future of the Air Express will be made by the Government of the People’s Republic of China. If the Government of the People’s Republic of China is reluctant to amend the initial project model and continue provide financing for the project, Ukraine will be required to return all funds obtned to this date.

Be the first to comment

Leave a Reply

Your email address will not be published.


*