Bulgarian Delegation to Discuss Troubled Loan for Siemens Trains in Germany

Transport Minister Ivaylo Moskovski has listed three options for settling the debt for the Siemens Desiro electric trains. Photo by BGNES

Bulgaria will offer German bank KfW three options for paying back the debt of state-owned railway company BDZ for the Siemens Desiro electric trains.

The scenarios will be discussed during a two-day visit in Berlin, Transport Minister Ivaylo Moskovski announced on Tuesday.

The Bulgarian delegation, which departed for Berlin Tuesday morning, includes Prime Minister Boyko Borisov, Interior Minister Tsvetan Tsvetanov , Agriculture Minister Miroslav Naydenov, Transport Minister Ivaylo Moskovski and Energy Minister Traicho Traikov.

The first two options for settling the debt are to use the proceeds from the upcoming privatization of BDZ's Freight Service department or to use the money BDZ will obtain under a loan agreement with the World Bank.

The third option is a debt/equity swap, which has so far failed to draw the interest of Deutcshe Bahn.

"Despite that, I will bring up the issue again because this is the most profitable scenario," Moskovski said on Tuesday.

He added that using the money from the privatization of BDZ's freight department would be the better option of the first two.

The Freight Service unit is the profit-making unit of the debt-ridden Bulgarian State Railways (BDZ) company, which has suffered severe financial problems as a whole.

BDZ's total debts amounted to BGN 771 M as of October 2011, which made Moskovski describe the firm as being "technically bankrupt."

In end-November, BDZ employees embarked on a strike which lasted 24 days, with no trains running between 8 a.m. and 4 p.m.

Railway workers were dissatisfied with the planned reform at the state-owned company envisaging 2000 layoffs and the reduction of number of trains in operation by 150 (later scaled down to 138) by January 2012.

A total of 1050 railway workers agreed to voluntarily quit their jobs and receive six gross monthly wages.

The collective bargaining agreements between the trade unions and the executives of the Passenger Services and the Freight Services units of the debt-ridden BDZ Holding were eventually signed in end-December.

BDZ risks losing the 25 Siemens Desiro electric trains, or half of the fleet of modern passenger trains, unless it moves to settle the EUR 24 M debt it owes to KfW for their purchase.

The loan, which was taken out in 2005 and has not been serviced since 2010, is partly guaranteed by the German government.

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