Bulgarian Govt to Privatize Railway Freight Services

Bulgarian railway infrastructure allows for an average train speed of only 60 km/h. Photo by BGNES

Bulgaria's Cabinet is taking steps in order to privatize the freight services of the state railway company BDZ, according to Vladimir Vladimirov, chair of the Board of Directors of the BDZ Holding.

Speaking at a railway transport forum in Sofia Wednesday, Vladimirov said the privatization of the freight and cargo services is part of the plan to restructure the notoriously troubled state railways, and will allow for improvements by private investors that the state can hardly ever carry out.

The idea to privatize the railway freight services was put forth by the GERB party Cabinet in late 2009 but the economic crisis made the likely investors from Germany and Austria to give up bidding, at least temporarily. Some 10% of the railway freight market in Bulgaria is already in the hands of private firms but there are no private passenger services in the country because of their lack of profits.

Traditionally, Bulgaria's railway passenger services generate losses and they are subsidized by the state including by using funds generated through the state-provided railway freight services in the period before the economic crisis of 2008-2009.

Vladimirov stated that the current plan to restructure the two state railways firms – BDZ and National Company Railway Infrastructure (NKZI) – must be their last restructuring. The current railway reforms aimed at reducing the some BGN 1 B debt owed by BDZ and getting a BGN 600 M loan from the World Bank have come under fire from syndicates because of planned layoffs of workers.

The BDZ board head said that as a result of the optimization of the staff in 2010, the labor productivity increased by 12%.

He stressed the need to reform the NKZI – which is in charge of the railway infrastructure and collects fees from carriers including BDZ and a couple of private companies operating freight services - saying that because of the outdated infrastructure even the fastest trains set on Bulgarian tracks cannot afford to reach speed of more than 60 km/h.

BDZ executives have revealed that the prices of both passenger and freight services are likely to be increased by about 5% in the coming months because of the rising fuel prices.

At the end of the summer, BDZ is finally expected to launch the online purchase of tickets, which was supposed to be in place a long time ago, and to provide the promised wireless Internet access in two "business trains" traveling from Sofia to Varna and Burgas on weekends.

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