German Creditor Gets Tough on Bulgarian Railways - Min

German bank KfW will not hold any further talks with the Bulgarian Ministry of Transport regarding a possible deferal of debts by the troubled Bulgarian State Railways company.

This was revealed Tuesday by Bulgarian Minister of Transport Ivaylo Moskovski.

"KfW now want to talk to Bulgaria's Ministry of Finance regarding the matter," said Moskovski.

This bodes ill for the Bulgarian State Railways (BDZ), since Bulgarian Minister of Finance Simeon Djankov has recently been highly ambivalent to subsidizing the company.

According to estimates, BDZ currently owes KfW some EUR 41 M, a debt it does not manage to service as per the arranged schedule.

However, Moskovski was optimistic in saying that the Ministry of Finance together with the Ministry of Transport have "almost drafted" a new payment plan that is "going to satisfy" the German creditors.

The Bulgarian government has embarked on a campaign to privatize BDZ's profit-making Freight Services unit to make up for losses from its passenger unit.

However, as the first round of the privatization bid in August failed, the state had to lower the price tag of BDZ Freight Services.

Also in August, BDZ's CEO Yordan Nedev resigned due to a perceived lack of commitment on the part of the government and FinMin Djankov in particular.

On a positive note, the Railways' managing board chair Vladimir Vladimirov announced that the company has registered decreased losses for the first 7 months of 2012.