Polish official sees deal on Ukraine railway link in June

By Marek Strzelecki

WARSAW (Reuters) - Poland and Ukraine have agreed to bring railway gauges in western Ukraine into line with European standards to eliminate an infrastructure bottleneck to transport, the top Polish official in charge of economic cooperation with Ukraine said.

An accord between railway operators in Poland and Ukraine will be signed in June, enabling the extension of the European standard of tracks into western Ukraine and further on to Kyiv, Jadwiga Emilewicz told Reuters.

Wider rail gauge used in Ukraine has been a major logistical hindrance to the transit of its grain through neighbouring European Union countries after Russia blocked Black Sea ports following its invasion last year.

"The grain crisis has made it clear that Poland is a logistics hub, so the first large project should involve new border crossings and extending the European railway gauge into Ukraine (...) I think an agreement between Polish and Ukrainian companies will be signed this month," she said.Ukraine relies heavily on rail to transport goods and plans to change the gauge of its tracks to the European standard. The European Union last year launched a preliminary study on extending the European 1435 millimeter-gauge standard into Ukraine and Moldova.

Emilewicz also said Poland wants its export credit agency to provide insurance to Polish businesses investing and signing contracts in war-torn Ukraine and will create an investment fund to support the expansion of small Polish businesses in Ukraine.

Rebuilding Ukraine's economy is expected to cost $411 billion, a most recent study by the World Bank, United Nations, European Commission and Ukraine found. Given the scale of the challenge, public funding will have to be supplemented by the private sector and by international organisations, according to the European Commission.

"The EU could and should do more for reconstruction of Ukraine but this requires a political consent for a new budget, which means new member state contributions, or issuing debt," Emilewicz said.

With every 100 kilometers traveled away from the Ukrainian border, understanding for their situation among EU members is weaker, she said.

(Reporting by Marek Strzelecki; Editing by Sharon Singleton)