Bulgarian National Railways (BDZ) have exited since 1866 and have been under government control since 1885. According to the CIA World Factbook, Bulgaria currently has over 4,000 km of railways all serviced by BDZ, which is also one of the most indebted public companies in the country. In the past few months, the future of BDZ has come into question due to the continuing inability for the company to pay its debts. Exacerbated by the ongoing ‘debt crisis’ in Europe, this is just one more problematic situation to take into account for the Bulgarian government.
In an continuous battle to save Bulgaria’s railway system from bankruptcy, the Ministry for Transport, Information Technology and Communications has been pursuing ways to save the BDZ. On October 3rd 2011, it was announced that the company would receive a 480 million leva (245 million Euro) loan from the World Bank under the condition that it could increase its income to the point where it can at least cover the interest on its earlier loans. These lines of credit amount to approximately 800 million leva (410 million Euro) and no installments have been made since 2008. This is due to the fact that the estimated loss of BDZ until September of this year is 25 million leva (13 million Euro).
In addition to these financial troubles, BDZ is not seen as a trustworthy company. A recent audit of its material capital reportedly showed that around 600 freight cars were “missing”. According to the BDZ Board of Directors this is due to a technical problem with the way the cars were listed in official records. However, it was due to this ‘technical problem’ that the audit was ordered, including the fact that the last inventory of the company was conducted in 2001. The outcome – for the last 10 years, the freight section of BDZ has been operating 600 freights cars that do not exist.
In the current situation, BDZ is facing a vicious circle. On October 11th, it was announced that the company would lose half of its newest passenger trains (one of its greatest assets) because it has not repaid the credit used to buy the machines. The bank which issued the credit has initiated a procedure for the sale of the trains in question, which would lead to a major disruption in the train schedules in Bulgaria. Indirectly, this would hit BDZ’s attempt to raise profits in order to repay its loans, and would also cause it to lose the newly negotiated credit from the World Bank.
From the perspective of the Bulgarian government, there is nothing that can be done. The budget does not have the possibility to bail-out the national railway company and the current European debt crisis is not helping. Possible privatization has been explored as an option and BDZ’s freight service is already being auctioned. However, whether Bulgaria’s citizens will be able to use trains in order to travel in the near future remains questionable. Many might simply decide not to take a risk and use the already booming private bus transportation system. If a further passenger decrease occurs, then BDZ’s losses would increase even more. It seems that Bulgaria’s National Railways is going to be derailed.