Bulgarian Govt: No 'All Costs' Railways Privatization

Business | March 30, 2013, Saturday // 13:09|  views

Caretaker Transport Minister, Kristian Krastev, wants to be remembered as a man who had done a great job, and not only as the "playboy of the interim Cabinet." Photo by BGNES

If there are no serious bids for the privatization of the troubled Bulgarian State Railways company, BDZ Holding, the Privatization Agency could cancel it.

The statement was made Saturday by caretaker Transport Minister, Kristian Krastev, speaking for bTV.

He said the privatization was just one of the options for rescuing the company.

The Minister reported he had "resurrected" the dialogue with creditors and BDZ workers in setting on the path to salvage and stabilize the railways. He stressed he would back the privatization of the cargo unit only if it could be sold at a reasonable price to eliminate part of the debt, but was against "privatization at all costs."

Krastev informed the government was also working on a scenario that would involve a loan from the World Bank.

The deadline for companies to submit their bids for the privatization of BDZ Holding, expired on Friday, March 29.

At the beginning of February, the Sofia City Court ordered a freeze of 100% of the assets of the cargo unit of the company.

The freeze happened on the request of the Dublin-based German-Irish bank Depfa Bank, which owns bonds from the first bond loan for BDZ. BDZ owes to Depfa about BGN 6.3 M.

The news came on the heels of reports that five banks have filed a claim with the London Arbitration Court to declare BDZ Holding, bankrupt.

Experts comment that both – the freeze and the claim – would hurdle the privatization of the cargo unit. The freeze actually and effectively stops the procedure. Those who deal with frozen assets face prosecution under the law.

In mid-November 2012, Bulgaria's Privatization Agency launched a second privatization procedure for BDZ's Freight Services, after the first one fell through.

The second attempt to sell the cargo unit of BDZ only included strategic and financial investors.

The privatization of BDZ's profit making unit, Freight Services, is to secure money to cover huge debts of the company and help revive its other unit, Passenger Services.

However, experts from the railway sector have already said the State should not count on receiving much as the revenues of the cargo unit dropped by 30% in 2012, while the debt keeps climbing up.

In the TV interview Saturday, Krastev stated the overall goal of the caretaker Cabinet was stability and smooth transition to the next one to be elected on May 12, in the snap vote that was imposed by the resignation of Prime Minister, Boyko Borisov and the government of his Citizens for European Development of Bulgaria party, GERB.

Krastev is also said to have the best looks among senior officials in the country. When asked by the host if these good looks helped him in the job, he replied he did not want to be remembered only as the "playboy of the caretaker Cabinet," but as a man who had done a great job.

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Tags: caretaker, loan, World Bank, Transport Minister, Kristian Krastev, protests, rallies, privatization, Depfa bank, freeze, Holding, assets, cargo unit, bond, Bulgarian State Railways, BDZ, Freight Services, Passenger Services, Agency


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