EIB and JSC Ukrposhta sign €30m loan to modernise Ukraine’s postal services

The loan, signed during the 22nd EU-Ukraine Summit, will allow Ukrposhta to start modernising its logistics network with three new sorting hubs, 20 postal depots and IT infrastructure.

The European Investment Bank (EIB) and JSC Ukrposhta, Ukraine’s national postal service provider, have signed a €30 million loan to continue the modernisation and digitalisation of the country’s postal services. The loan, signed during the 22nd EU-Ukraine Summit, will allow Ukrposhta to start modernising its logistics network with three new sorting hubs, 20 postal depots and IT infrastructure.

EIB Vice-President Lilyana Pavlova said: “An efficient, affordable and modern postal service is crucial for faster, sustainable long-term economic development, as it unlocks new business opportunities, creates jobs and makes trade easier and more profitable. Together with our Ukrainian partners, the EIB will support the development of modern, digitalised postal infrastructure, benefiting the people and businesses of Ukraine alike. We are extremely proud of our continuing role in the economic and social development of Ukraine.”

Ambassador of the European Union to Ukraine Matti Maasikas commented: “At a time in which it is key to move to world-class standards as regards logistics and digitalisation, we are happy that the European Investment Bank is partnering with key public service providers such as Ukrposhta to ensure that they have the resources and capacity to offer reliable, modern and affordable services to all Ukrainians.”

With the loan from the EU bank, Ukrposhta will design and roll out a new, state-of-the-art parcel logistics network, reduce delivery times and improve the overall quality of the postal service for millions of Ukrainians.

General Director of JSC Ukrposhta Ihor Smilianskyi said: “The next few years will see the largest modernisation in the history of Ukrposhta. The EIB loan is a part of a major investment in postal infrastructure and a testament to the fact that Ukrposhta is a trusted and reliable partner. In total, as part of the strategy to upgrade the logistics network, we plan to attract about €100 million for the construction of eight sorting hubs and 62 regional depots. This will comprise loans from the EIB and the EBRD, as well as the company's own investments. The new logistics centres will be fully automated and moved out of the city, which will significantly speed up the shipping process and improve connections as well as the environment in cities. Capacity will increase to three to four times its current levels. We will also provide a separate storage space for online stores. Thus, orders made in the evening will go directly to the sorting line and will be at the postal offices of the recipients in the morning. Modernisation of the postal infrastructure will significantly change working conditions for the company's employees: manual sorting will become a thing of the past, and the digitalisation of processes will attract employees to jobs with competitive salaries. In total, we plan to create more than 5 000 new jobs.”

An improved and affordable postal service with reduced delivery times will also improve conditions for doing business in the country (especially for small and medium enterprises), create infrastructure vital for faster development of e-commerce and pharmaceutical deliveries, and increase the efficiency of domestic and international supply chains.

It will also strengthen nationwide infrastructure critical for major emergencies such as the COVID-19 pandemic.

Ukrainian Minister of Infrastructure Vladyslav Kryklii commented: “We continue to create qualitatively new infrastructure in Ukraine and cooperate in this area with our permanent international partners for the implementation of large-scale investment projects. The signing of this guarantee agreement with the European Investment Bank will provide us with the opportunity to qualitatively modernise the existing logistics network of Ukrposhta, namely to create new sorting centres and purchase the necessary modern equipment for faster and more convenient shipments. Despite the crisis and quarantine, Ukrposhta continues to grow steadily and proves that state-owned companies can be successful and modern. It became one of the first state companies to actively sell its non-core assets and channel the funds received for modernisation. We will continue doing our best and using all opportunities for the further development and improvement of the national postal service provider.”

The EIB has also provided a technical assistance package to Ukrposhta and assisted in the development of its investment programme, a crucial element for securing the ElB’s affordable financing. The technical assistance included a market analysis, the development of a business plan and the investment needs for the new logistic network.