Prague will be able to take a loan from the European Investment Bank for the construction of metro line D.

Prague – Prague will be able to take a loan from the European Investment Bank (EIB) for the construction of metro line D from Pankrác to Písnice, equivalent to approximately 22.76 billion crowns. The capital city will be able to defer repayments for eight years and pay back the principal over 40 years. The loan can be drawn in crowns or euros, and if euros are chosen, the interest will be set at less than two percent. The bank will provide the loan without the need for collateral. This is stated in a document approved by the Prague councillors today. The loan will cover approximately half of the total costs of the metro construction. The loan still needs to be discussed and approved by the representatives of the capital city.

Prague Public Transit Company (DPP) started construction of the section from Pankrác to Olbrachtova Street in the second half of April this year. The company is now looking for a construction firm for the section from Olbrachtova to Nové Dvory. The section from Nové Dvory to Písnice Depot will be built last. The total costs, accounting for inflation, are preliminarily estimated at 52.09 billion crowns. In the future, a section towards the north from Pankrác to náměstí Míru is planned to be built.

"The capital city has once again obtained a favorable loan from a bank, which aims to support significant development projects in the European Union after many years. The loan arrangement will allow costs to be spread over time and will not hinder other investment activities and maintenance of the city, as historically occurred, for example, with the construction of the Blanka tunnel," said Deputy Mayor Pavel Vyhnánek (Praha Sobě) to ČTK last week.

The city and DPP have been negotiating with the EIB for several months. According to the deputy, the metro project attracted the interest of EIB experts, among other things, because it is in accordance with the city's approved climate plan, which aims to gradually reduce carbon dioxide emissions to zero, and they positively assessed the impact of the construction on the city's development. The bank also took into account Prague's low debt level.

Although the city managed to secure a loan from the EIB, the city council will continue to negotiate financing for the construction with the state. Vyhnánek has stated several times in the past that in the West, similar construction projects are always supported by the state.

How, when, and exactly how much the city will borrow is still unclear. "We are not yet detailed on the specific drawing and repayment methods. We have currently approved the intention to accept a loan framework. Then, I expect, in September, we will proceed to the approval of the final documentation, which is advantageous, among other things, due to its great flexibility. So it will depend on the specific financial situation of the city, the speed of metro construction, and the city will be able to decide how quickly to draw the loan or how long to defer repayments," said Deputy Mayor Pavel Vyhnánek (Praha Sobě).

The most recent section of the Prague metro, the extension of line A from Dejvická to Motol, began construction after years of preparation in May 2010, and the tunneling commenced in the spring of 2011. The connection was opened to passengers in April 2015. The construction cost approximately 20 billion crowns. Prague also borrowed from the EIB for this project, and part of the costs was covered by European grants. Prior to that, the city constructed the extension of line C from Nádraží Holešovice station first to Ládví and later to Letňany in two phases. The first section was opened in June 2004 and cost nearly nine billion crowns. Of this, four billion crowns came from a loan from the EIB and over 660 million crowns from bonds. The second section was put into operation in May 2008 and cost 15.5 billion crowns. In this case, the city also utilized a loan from the EIB of over two billion crowns.