Bulgarian railways at the threshold of Europe


On 7th March, BDZ EAD and NRIC presented their four-year rehabilitation programmes. The discussion was attended by the Minister of transport, Petar Mutafchiev, the Deputy Minister, Georgi Petarneichev, experts and representative of the trade unions. NRIC are planning to establish a few new structures, covering the freight loading and unloading activities and traffic management. Most probably the energy unit will be given the licence for a power distribution company and will be permitted to sell electric power.

The two programmes outline a number of strategic priorities. The enhancement of competitiveness will enable BDZ re-establish its position as main provider of passenger and freight services. BDZ will improve service quality by a balanced tariff policy and pro-active market behaviour, with aggressive advertising to boost up company’s image. Larger investments are envisaged for the renovation of rolling stock if the relevant state guarantees are provided.

The NRIC programme includes track reconstruction and rehabilitation along Pan-European corridors with EU funds, which will result in an increase of design speeds and the enhancement of technological interoperability levels. The company will conduct a proactive investment policy to attract various funding sources apart from the state budget. Private investment will be aimed at with the establishment of joint ventures with state participation as regards infrastructure, transport and forwarding. A particular emphasis was laid upon the need for the construction and development of terminal infrastructure for combined transport. Minister Petar Mutafchiev will appeal for the cancellation of VAT on the infrastructure charge; thus BDZ will save BGN30 million. The public-private partnership is a major mechanism which will be pro-actively applied with a view to attracting investment capital from outside the state budget. The state budget itself will allocate BGN60 million for the financial rehabilitation of NRIC, 55 million of which will be invested in the Plovdiv-Svilengrad project. For the implementation of urgent infrastructure reconstruction and upgrading works the company needs BGN1.9 billion, while its 2005 revenue amounted to BGN147.6 million.

The Development Programme of the railway operator was formulated, taking into account the accumulated losses of BGN118 million in the period 2002-2005. Most of these losses are formed because the state failed to perform its obligation to cover losses from passenger services, amounting in this particular case to BGN101 million. For 2005, it is expected that the negative financial result of the railway company will amount to BGN37 million. Still, it is expected that losses can gradually be reduced, so that in 2007 the railway operator could become a profit-making company.

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