The ultimatum was hardly a surprising development given the increasingly-dire financial state of BDZ, whose debts now stand at almost Lev 1bn ($US 629m). Djankov's exasperation stemmed from BDZ's failure to service two World Bank loans dating back to the mid-1990s, the interest from which is now burdening his ministry. The government has been paying off the first of the loans, the smaller of the two, for some time, but says it is unable to pay the interest on the second, which amounts to some Lev 30m this year.

All this is a big problem for BDZ, not least because it wants a further loan from the World Bank, which is contingent on the railway raising sufficient income to at least pay the interest on its existing debts. The government saw a solution in the privatisation of BDZ's railfreight unit Tovarni Prevozi, which was launched in June with the objective of raising up to Lev 250m, enough to address the debt and unlock further financing.

However, the reaction from investors has been lukewarm and Bulgaria's Privatisation and Post-Privatisation Control Agency reported last month that only one candidate – a financial investor – has submitted an offer with qualified information. Prime minister Mr Boyko Borisov recently offered the company to Siemens and German Bank KfW to settle a Lev 230m debt it owes for 50 Desiro regional trains, which KfW threatened to seize earlier this year after BDZ missed repayments. However, the government is now planning to relaunch the process with revised conditions in an effort to make Tovarni Prevozi a more enticing prospect for investors.

According to Novonite, Djankov said this week that the government and BDZ "have agreed to implement as soon as possible all short term measures to reduce BDZ's expenditure in any way possible," and an emergency committee has been formed to look for savings. BDZ says new measures to tackle fare evasion and theft could save millions, while the government is pushing BDZ to sell off assets and divest itself of shares in companies that are not relevant to its core business.

There are other grounds for optimism. On August 7, BDZ CEO Mr Vladimir Vladimirov told Focus Radio that BDZ's passenger division posted a Lev 10m profit in the first half of this year. Overall, BDZ Holding's first-half losses fell from Lev 22.5m to Lev 9m.

But while the immediate focus is understandably channelling efforts into addressing the financial crisis, it is unclear how the government expects to BDZ to become a financially-sustainable concern in the longer-term. The continuing dependence on life-expired rolling stock, crumbling infrastructure, and outdated working practices do not auger well for rail's ability to halt its decline in market share, let alone reverse it, particularly as the road network continues to improve.

Underinvestment is complicit in the current chaotic state of Bulgaria's railway network and the crisis in BDZ. The government has at least publically acknowledged the need for greater investment, but it also needs to recognise the future viability of BDZ rests on modernisation and long-term reform, not just on its ability to meet its historic debt obligations. Without attending to these parallel issues, the pattern of crises that have dogged the railway over the last decade looks doomed to continue.