Bulgarian State Railways to Choose between 3 Scenarios for Paying Off Debts

Business | June 17, 2013, Monday // 14:39|  views

Upon assuming the office of Transport Minister, Danail Papazov vowed to stop the privatization of BDZ Freight Services. Photo by BGNES

The management board of Holding Bulgarian State Railways, BDZ, has drafted three main scenarios for dealing with the company's debts, and all of them rely on state funding.

According to reports of Standard daily, BDZ Holding amassed debts of over BGN 709 M by end-April, 2013.

The first scenario involves the privatization of the cargo unit of BDZ, BDZ Freight Services, and the sale of other non-operating assets. The measures are expected to enable Holding BDZ to cover 50% of its debts on its own, after which the European Commission is to clear state aid for clearing the remaining 50%.

The second scenario, as cited by Standard daily, also envisages the sale assets and talks with creditors on deferring payments. The plan depends on the transfer of the unpaid state subsidy of BGN 306 M for the period 2002-2010 to BDZ.

The third scenario recommends studying the options for the state paying retroactively all debts of BDZ by the date of Bulgaria's EU accession. This is an opportunity which Bulgaria failed to use, despite the fact that it was entitled to it under EU regulations. By December 31, 2006, the debts of BDZ amounted to a total of BGN 516 M. According to reports of Standard daily, it remains unclear whether the EC would allow such a step, given the fact that so many years have passed since then.

Upon assuming the office of Transport Minister in end-May, Danail Papazov vowed to stop the privatization of BDZ Freight Services.

In an interview for Trud daily on the future of the heavily indebted BDZ Holding, Papazov suggested last week that there were two scenarios involving privatization and four scenarios which did not involve the sale of the state-owned company, adding that the choice would become clear within 10 days.

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Tags: BDZ, Bulgarian State Railways, Danail Papazov, BDZ Freight Services, privatization


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