Ukrzaliznytsia, GE Transportation strike $1 bln deal

State-run Ukrzaliznytsia has signed a deal with U.S.-based GE Transportation, a division of General Electric, on the joint manufacture of rolling stock worth $1 billion.

The agreement was signed by acting CEO of Ukrzaliznytsia Yevhen Kravtsov and CEO of GE Transportation Rafael Santana in the presence of Ukrainian President Petro Poroshenko, U.S. Ambassador to Ukraine Marie Yovanovitch and Ukreximbank Governor Oleksandr Hrytsenko.

Read alsoUkrainian Railways acting chief elaborates on company's debts"This is a very important day for the entire economy. I can reveal the secret of how it all began. During my visit to the United States in June, we talked with [U.S. President Donald] Trump that our countries' relations should go practical. For many years, Ukrzaliznytsia has been underfinanced. The company needs rolling stock, new locomotives. A contract worth $1 billion was signed very quickly. GE's reputation is very high. It comes to [work in] those countries where tolerance for corruption is very low. Therefore, [its] arrival in Ukraine is an indicator of trust," Poroshenko said.

The president noted that the role of Ukreximbank is to lend Ukrzaliznytsia on leasing terms at the first stage of the agreement with guarantees from U.S. Citibank.

The framework agreement provides for a 15-year partnership – the modernization of up to 74 locomotives, the delivery of up to 225 new GE Evolution-series locomotives until 2034 and their long-term maintenance.

The localization of the production process in Ukraine will reach 40%, due to which Ukrainian enterprises will be involved in cooperation with GE and will be able to become suppliers of goods and services for GE.

As part of the first stage of the agreement, a purchase and sale contract was signed between General Electric and Ukreximbank for the delivery of 30 GE TE33AC diesel locomotives late in 2018 and early in 2019 with a localization level of 10%.