Railway rehabilitation measures adopted by the Government


On 18th January, the Council of Ministers discussed and validated the report of the Transport Minister, Petar Mutafchiev, on the necessary measures for financial and organisational improvement of BDZ EAD, NRIC and SE “TCR”, as well as for the overall financial rehabilitation of the railway sector.


The Government approved the structural reform in the railways, which officially began on 1st January 2007 (Editor’s note: you can read more about the new structure in “Railway transport”, issue 11 – 12/06). The reform aims at the enhancement of passenger and freight traffic safety, the improvement of railway transport competitiveness, the efficient utilisation of funding from European funds and the establishment of an environment appropriate for the development of PPP in the sector.


The liabilities of BDZ EAD and NRIC for 2006 amount to about BGN424 million, of which BGN125 million are the liabilities of the infrastructure manager and BGN298 million are those of the railway operator. Most of NRIC liabilities (70%) are to NEC from previous periods. The company cannot disburse them for lack of funding. Meanwhile, the liabilities of BDZ EAD to NRIC amount to over BGN100 million. More than 50% of the railway operator’s liabilities are to NRIC and NEC and about 30% are other outstanding debts. As a result of measures for debt reduction adopted by the two companies at the beginning of last year, the liabilities of NRIC in 2006 were reduced by 6.3% in comparison with the previous year, while BDZ cut its losses by BGN14 million.


Among the measures for business improvements and financial rehabilitation of the two companies is the sale of non-operational assets. Revenue from these sales will at least partially cover the liabilities. NRIC has prepared 27 immovable assets for sale at a total of BGN80 million and BDZ EAD can sell 11 immovable assets for BGN14.3 million.


Poor condition of coach fleet


Currently, BDZ EAD has in its fleet 1 311 passenger coaches, the majority of which do not comply with European requirements. Most of them (815) were built in the former German Democratic Republic and 496 were built in Dryanovo Coach Works. Of the sleeping cars, nearly 90% of the first-class and 57% of the second-class coaches are in poor condition. Only 50 passenger coaches, recycled under the rehabilitation programme funded by the EBRD, comply with modern requirements.


Only 669 passenger coaches from the fleet of BDZ EAD are in operation. The regular daily and peak-time passenger services require an extra fleet reserve of 20%, or 133 passenger coaches. In other words, the company operates with 91 coaches less than necessary for ensuring smooth implementation of the train timetable. Forecasts show that 200 coaches will be put out of operation in 2007.


The liabilities of SE “TCR” amount to BGN18.908 million and the enhancement of its financial situation necessitates the procurement of new construction machinery and tipper-lorries. Only thus will the enterprise be in a position to accomplish the tasks defined in its programme of construction works. In its turn, the increase of construction volumes will enable the enterprise to reduce its liabilities.

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