Bulgarian Railways 'Technically Insolvent'

"BDZ is in a technical bankruptcy and we are now faced with a huge challenge to take actions that can help heal the company," the Transport Minister declared after a meeting with syndicate leaders chaired by Prime Minister Boyko Borisov and Finance Minister Simeon Djankov on Thursday.

Bulgaria's major trade unions continue to threaten an all-out railway strike as little compromise on their demands has been reached with the government.

Moskovski assuaged fears that the state company will run out of money to pay the salaries of its employees. He said the Transport Ministry is mulling the shutting down of some railway lines along routes where alternative transport means can be employed with the help of State Executive Agency "Automobile Administration", a subdivision of the ministry.

Vladimir Vladimirov, Chair of the Board of BDZ stated in turn that the government is making progress with a reform package, and that the major concern of the unions for a new collective labour contract is only one of the issues on the agenda.

"Our goal is to carry out the reforms and sign a collective labour contract so that in 2012 BDZ won't generate losses. If our talks continue, I think we will reach an agreement," he declared.

In addition to the looming general strike, the railway service faces an additional hurdle.  Earlier this week,  German bank KfW demanded that 50 diesel and electric Siemens trains bought by the Bulgarian government be returned because the BDZ management had reportedly violated the purchase contract and had not paid its instalments since 2010.

Last week, Finance Minister Simeon Djankov revealed the massive debts of the BDZ company total BGN 771 M.

Of those, BGN 531 M are debts to financial institutions.

This revelation came in the wake of an announcement in September 2011 that for the time being the World Bank has refused to grant the Bulgarian railways a much-needed loan of BGN 460 M, which was reportedly negotiated in December 2010.