Monday, January 9, 2012

Privatisation of Rail Freight Services On Track

Bulgarian Cargo to be Split from Passenger Services
Shipping News Feature

BULGARIA – In an interview yesterday the head of the Government’s Privatisation Agency confirmed that plans are going ahead as planned to privatise freight services as national rail company BDZ fights to get approval for a loan of hundreds of millions of pounds to save it from collapse. Just last month a three week strike by the company’s workers against planned job cuts and reforms was ended. Freight services include the ‘piggy backing’ of cargo carrying road trucks via the pan European transport corridor which runs from Turkey in the South up into Central Europe.

Estimates of BDZ’s debts are all around £325 million and the estimates for the complete sale of the profitable freight arm stand at over £40 million with Privatisation boss Emil Karanikolov commenting that he was happy with the progress made so far. In September the World Bank refused to authorise a restructuring loan for BDZ and the following month German bank KfW insisted on the return of fifty Siemens locomotives, some up to eight years old, against outstanding debts.

That same month the EU Competition Commission opened an investigation into the state’s plans to restructure BDZ saying bluntly that members had doubts that the proposals would restore viability and didn’t show evidence that the company was contributing enough to restructure and permit competition.

The bank’s actions left the company with just Soviet era rolling stock and the efforts to cope with the equipment shortfall and simultaneously comply with EU requirements prompted drastic service cuts and a wave of redundancies which resulted in the subsequent strike which was finally settled a week before Christmas after talks when a new working contract was signed between management and unions.

Bulgaria is widely acknowledged to be the poorest partner in the twenty seven member EU alliance and desperately needs to upgrade its rail infrastructure to try to attract outside investment and promote new income streams.