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August 30, 2011

Bulgaria railfreight division could be sold within six months

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BULGARIA's transport minister, Mr Ivaylo Moskovski, says that the freight division of BDZ, Bulgaria's national train operator, could be privatised within the next six months. This would pave the way for the World Bank to grant a Lev 460m ($US 338m) loan to BDZ and a further Lev 160m loan to the National Railway Infrastructure Company (NRIC).
 
"The privatisation of the freight railway services unit will be carried out by the Privatisation Agency," says Moskovski. "The negotiations with the World Bank have been completed and all documents have been submitted to them. We need to wait for the board of directors of the World Bank to convene to get an overall approval for the loan, but this could happen as early as September or in October. The loan will become a fact, as the restructuring [of BDZ] is continuing."

BDZ's freight business has traditionally been profitable, but its passenger division has made large losses. The World Bank refused to grant the loans until the two were separated and a serious attempt was made to restructure BDZ. However, strong opposition by the trade unions to job losses and a threatened strike in March forced the government to back down. But this led to the dismissal of the transport minister and the CEO of BDZ. The current minister has promised that there will not be any direct redundancies, but some activities may be outsourced.

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