BDZ may go bankrupt within three months because of its reduced subsidy

“Without a State subsidy, the Bulgarian State Railways (BDZ) will go bankrupt within three months,” predicted for klassa.bg Petar Bunev, Chairman of the railways syndicate organisation with the Confederation of Independent Trade Unions in Bulgaria. According to him, there will be no opportunity for the repair of carriages, needed for the normal operation of the company.

After the meeting of the Council of Ministers on Wednesday, Transport Minister Ivaylo Moskovski admitted that the State subsidy for the national railroad carrier had been suspended as of July 1, 2012. By the end of the year, the company had to receive nearly BGN 80 mln. The reason for the suspension of the subsidy are overdue liabilities of BGN 55 mln to the World Bank for the repayment of a loan from 1995. An inquiry by klassa.bg showed that BGN 12.7 mln have to be repaid by the end of 2015. As of the end of last year, the default stood at BGN 5.9 mln.

According to Minister Moskovski, the trouble with the repayment of the loan is that it was borrowed by the Bulgarian State Railways National Company, which split into two separate companies in 2002: a railway operator and an infrastructure company. After the split, however, the railway operator continued to repay the loan, although the bulk of the credit is invested in the infrastructure company.

Meanwhile, experts predicted that in case the State subsidy is stopped for a long time, BDZ will have to resort to cancellation of trains, beginning in the coming weeks. According to them, the company will have to take steps to terminate the contract for public services and unprofitable railway lines will be suspended as a first step. As a second step, all discounts for various social groups, which were until now subsidised by the budget, may be eliminated. This will affect a large number of students and pensioners, who are currently travelling at 50% discount fares.

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