Prime Minister Boyko Borissov and ministers to negotiate options for the saving of the Siemens Desiro trains

Government delegation, led by Prime Minister Boyko Borissov, went on a working visit in Berlin yesterday. The visit aims at negotiating options for the saving of the Siemens Desiro trains, for which the Bulgarian State Railways (BDZ) owe a total of €24 mln to the German KfW banking group.

"There are several options for the negotiations on the deal with the electric trains," said Minister of Transport Ivaylo Moskovski before the regular meeting of the Council of Ministers yesterday. “The first one is for the debt to be reimbursed with the proceeds of the future privatisation of the BDZ-Freight Services company", since the expected proceeds of the transaction are about BGN 100 mln. The second option is for the liability to be repaid with the expected World Bank loan. According to the minister, the debt-equity swaps provide a third option. This idea has already been negotiated with the German national railway company - Deutsche Bahn AG. The proposal is for Deutsche Bahn to become owner of the BDZ -Freight Services against the amount due.

"Until now, however, Deutsche Bahn has not shown interest in this offer," said Moskovski. He explained that such an agreement would be the most favourable option for BDZ. “The repayment of the liability with the proceeds from the privatisation would be the better solution from the remaining two options, because an agreement with the World Bank means a new loan”. BDZ may submit a new loan request with the approval of the Minister Finance Simeon Djankov alone, and he said he would agree only if urgent reforms were implemented in the state-owned company.

In December 2011, BDZ received a deferral of the contributions to the KfW under an agreement by the end of the year to pay €15 mln. In mid-January 2012, however, Moskovski announced that just € 1 mln had been repaid.

The Siemens Desiro trains are the only modern rolling stock of the state railways. They were bought in 2003 with a loan from the German KfW banking group, amounting to € 190 mln.

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