Greece’s inter-ministerial committee on public-private partnerships has approved a €400 million pilot project to upgrade the national rail network in the north of the country, a move that could dramatically reshape freight operations in Greece and boost the country’s efforts to become a transport and logistics hub to Southeast Europe.

The project, which would effectively hand over the construction and maintenance of the rail network to a private company, represents a major step in Greece’s ongoing efforts to modernize its neglected and outdated rail network. It would serve as a template for similar rail investments in the rest of the country.

A detailed outline is expected by April, but the government currently foresees upfront construction costs of €171.2 million, and €220 million in other investments stretching over a 20-year concession period. Some €80 million would be invested by the Greek government with funding coming from the national Recovery & Resilience Fund.

Despite Greece’s role as a shipping and logistics center, Greece’s rail network has been dogged by years of underfunding and mismanagement. While some steps have been taken to privatize parts of the rail system, data show that Greece’s railroad network accounts for less than 5% of all passenger and freight transport in the country.