Bulgaria Poised to Sell Multi-million Railway Freight Services Co

Bulgaria's Borisov Cabinet is to sell its BDZ Freight Services. Photo by Manager magazine

Bulgaria's Borisov Cabinet has firmly decided to go for the privatization of BDZ Freight Services - the one moderately profitable division of the vastly troubled Bulgarian State Railways BDZ.

"We are certainly going to sell BDZ Freight Services, and I am responsible for that. I am not worried in any way about the privatization topic," Bulgaria's Transport Minister Ivaylo Mosvkoski stated at a press briefing in Parliament, as cited by "Focus".

He refused to comment on the rumors that the asking price for BDZ Freight Services - the company controlling more than 80% of the Bulgarian railway freight market - will be BGN 200 M.

"I don't wish to comment. I don't know what price BDZ Freight Services will be privatized at. The price is determined by the demand and the market. We have set sufficient high privatization criteria," he stressed.

"We are carrying out an analysis, based on their nominal value the assets of BDZ Freight Services are worth BGN 300 - 320 M. I can't say whether the market will "approve" of that, and which way the price is going to shift," Moskovski elaborated.

According to the Transport Minister, the sale of BDZ Freight Services is the only way to make enough cash in order to guarantee the long-anticipated massive loan from the World Bank to the Bulgarian for the ailing Bulgarian State Railways BDZ.

"The sale of BDZ Freight Services has two dimensions. If we sign an agreement with the World Bank, which will provide for a BGN 460 M loan, this will be a loan from the World Bank to the Bulgarian state, not to BDZ. The state is to grant it in some way to BDZ with the sanction of the European Commission. For that to happen, BDZ will have to provide a minimum funding of its own equaling at least 50% of the loan. There is nowhere else to get this money expect the sale of Freight Services," Moskovski declared.

He further explained his rationale by saying that even if the World Bank does not grant the loan, the fresh inflow of cash that is to come from the sale of BDZ Freight Services is the only way for BDZ to start overcoming its dire situation.

Moskoski comments about the sale of BDZ Freight Services came on the 16th day of the general strike in the Bulgarian State Railways that was caused by the government plan to lay off 2 000 out of some 13 000 workers at the state company, and to terminate the operation of 150 trains.

Even though BDZ's debts were estimated to total BGN 771 M as of early October 2011, Bulgarian syndicates have been adamantly opposed to the sale of BDZ Freight Services because - even though it has been registering losses the past few years - the company is supposed to have the potential to be highly profitable, with Bulgarian governments usually milking its revenues to sustain BDZ Passenger Services, which has been registering major losses for the past 20 years.

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