The End Of The Line For Bulgaria’s State Railways?


Red light for the Bulgarian State Railways

Red light for the Bulgarian State Railways (www.jb-photography.org)

Sofia, 15 Nov 2011: Because of unpaid debts a court in Sofia last week blocked all accounts of the Bulgarian State Railways BDZ. If the government does not step in quickly to save the ailing company, passengers trains might stop running before long.

(All Images Copyright: JB Photography)

The state-owned railway company BDZ, never a big asset in the Bulgarian government’s portfolio, managed to accumulate debts totalling 772 million Leva (€ 394.7 million) between 1995 and August 2011. Despite plans to reform the company structure, sell off assets like recreational facilities owned by BDZ and other measures, the company failed to cut its debts.

BDZ recently has tried to further reduce its work force from 13,000 by offering  a severance pay of six monthly wages to its employees but so far only about 300 people accept the proposal. With the Bulgarian economy in shambles and the unemployment rate raising that is  not exactly surprising.

Now the government plans to slash another 2,000 jobs and close 150 lines, resulting in another 1,000 layoffs.

Finally, last week the information surfaced that the accounts of the BDZ and its subsidiaries (including freight and passenger transport) were impounded by a court in Sofia after a complaint by one of the debtors. As a result, BDZ will be unable to keep up its operations because there is simply no money available to finance the daily business, unless the state steps in to avoid the collapse of Bulgaria’s biggest employer.

The measure also threatens the planned sale of the profitable freight transport subsidiary.

Rolling stock and infrastructure rotting away in Septemvri

Rolling stock and infrastructure rotting away in Septemvri, central Bulgaria (www.jb-photography.org)

But the problem goes beyond mere lack of profit in economically hard times. As everywhere in Bulgaria, the reasons to nominate somebody for a management position are not competence and experience, but the right connections. The recently appointed new CEO of BDZ, Yordan Nedev has no experience whatsoever in the field of transport, why transport minister Ivaylo Moskovsky put him on that position remains a mistery.

The new head of the state railways did not waste any time and jumped right in when he declared in July that he could not see any reason why the company should not be profitable by next year. He added, “I feel as if I am at war. We are fighting against something, and we don’t know what it is, there are new problems emerging all the time that we hadn’t known anything about.” True indeed…

Yesterday he said in an interview with Focus News Agency that he plans to lay off more than 4,000 employees instead of 3,000 . Asked if he thinks the closing of lines will be a problem for commuters on the route between Sofia and Pernik, his answer was, “As of now, I cannot say if this would prove to be a problem.” The line between Sofia and the industrial city of Pernik, some 30 kilometers southwest of the capital, is the busiest in the country and thousands of workers use it every day to get to their jobs.

Series 55 diesel shunting locomotive near Sofia Central Station

Series 55 diesel shunting locomotive near Sofia Central Station (www.jb-photography.org)

At the end of last year the European Commission (EC) temporarily approved public financing of the BDZ with 249 million Leva (about € 128 million) to avoid disruption of services. However, the money never reached BDZ because the parliament could not agree on it.

The EC also published a report on 9 November stating that, “The Commission has a number of doubts about the restructuring plan submitted in May.”  The report then raises the suspicion that the plan “lacks several crucial elements,” and might prove to be “too optimistic.” According to the EC report, there is no evidence that the sale of BDZ’s freight subsidiary is enough to compensate for the distortion of competition or is an adequate contribution at all.

Comment by Mr. Nedev: “The report has nothing to do with any actual measures.” — (by Johann Brandstatter)

(Sources: Middle East & Balkans News own research, Sofia Echo, Focus, Bulgarian Business NewspaperEuropean Commission; 16 Nov 2011)

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About Johann Brandstätter

Photojournalist and documentary photographer based in Bulgaria, working mainly in the Balkans and the Middle East. Conflicts & crises, social and environmental issues, defense & military, travel, transportation.
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