The World Bank is providing a 314.5 million euro ($350 million) loan to Turkey for improving its rail connectivity and logistics, the bank said in a statement late Tuesday.

The Turkey Rail Logistics Improvement Project aims to reduce transport costs in selected rail freight corridors and to strengthen institutional capacity at the Transport and Infrastructure Ministry to deliver rail freight connectivity and manage rail-enabled logistics centers, said the statement.

The financing will help revitalize the transport and logistics sector and contribute to the sustainability of cargo owners operating supply chains in the project's target corridors in the aftermath of the COVID-19 pandemic, it added.

Auguste Kouame, World Bank country director for Turkey, stressed that rail accounts for 4% of Turkey's transported tonnage despite having economically advantageous geography and commodity specialization characteristics.

"This leaves significant economic value on the table in terms of avoidable logistics costs and environmental externalities," said Kouame.

Kouame underlined that the investments will help fully realize rail freight's potential in the country.

"The project is expected to reduce transport costs, reduce emissions of greenhouse gases and local pollutants and increase the share of rail in the freight transport task of the corridors targeted by the project," said Murad Gurmeric and Luis Blancas, the project's task team leaders.

The Ministry of Transportation and Infrastructure will be implementing the Railway Logistics Improvement Project which has three components.

The first component includes the construction of railroad junction lines and multimodal connections at priority rail network node points, including Filyos Port in northern Turkey’s Zonguldak province in the western Black Sea region, Çukurova Industrial Zones and Iskenderun Bay Ports in southern Turkey. Additional priority locations will be selected during the implementation of the project.

The second component includes the preparation of feasibility studies, detailed engineering projects, environmental and social documents for the connection infrastructure at additional freight transport node points and the provision of controlling services.

The third component envisages project implementation support, institutional strengthening, capacity building and as a second stage, COVID-19 response support. The third component of the project will also include technical assistance to ensure uniformity in the railway technical standards, providing support for the preparation of a strategy document aimed at improving the performance of the rail freight sector and through an operation and management plan for railway linked logistics centers, supporting the Turkish State Railways (TCDD).