Bulgarian State Railways (known by its Bulgarian acronym BDZ) says that rail passenger ticket prices are to rise by about 10 per cent at the beginning of 2008.
On November 27, BDZ executive director Oleg Petkov said that ticket prices would increase by five to 10 per cent in 2008. The precise increases will be prepared by BDZ and announced in middle-December, when the new railway tariff table is expected to be ready.
The highest increase, about 30 per cent, will be for short-distance freight transportation, Bulgarian-language daily Pari reported on November 28.
BDZ is to be split into three enterprises.
BDZ-Passenger Transport will have a capital of about 9.9 million leva, BDZ-Freight Transport will have slightly above 23 million leva and BDZ-Traction Mobile Composition about 25 million leva. All three companies will remain fully owned by BDZ. The main purpose of the restructuring is to improve competitiveness and market share.
BDZ-Freight Transport manager Petko Popov said the reason for the price increase was that diesel locomotives use more fuel than electric engines. BDZ will introduce in 2008 a surcharge on the price for freight transported on non-electrified sections, amounting to 0.01 leva a ton/km. Popov said this would be a stimulus to the clients to choose routes along electrified sections. In addition, BDZ management expects by the end of 2007 to transport 34.5 million tons of freight, which is 1.5 million tons more than in 2006. Popov said that in 2008 trains’ speed would not change, remaining between 40 and 60 km/h.
The BDZ parent company will remain the owner of the locomotives and rolling stock, and it will rent them out to the three new companies. BDZ will also be in charge of the running and capital repairs of the equipment, and will remain responsible for all short- and long-term debts of the company that exist at the moment of the restructuring.
Furthermore, BDZ requested 56 million leva from the 2008 state budget, which is about 3.6 million leva more than in 2007. Petkov will, however, have to try modernising its company with minimal amounts from the budget surplus, as the Government will grant only 30 million leva to BDZ and 40 million leva from the budget surplus to National Company Road Infrastructure (NCRI). Experts in the field said that this is a very small amount in comparison to the money granted for improvement of the railroad infrastructure, which could make it difficult to implement reforms to both companies’ management.
At the same time, Petkov said BDZ-Passengers Transport and BDZ-Freight Transport are planning to establish in 2008 a joint consortium with NCRI. According to Petkov, it would create better opportunities for overall control of the railway process, while the companies will keep their independent juridical status. Private carriers can also enter the new consortium, according to Petkov. Licensed private railway transporters are Bulmarket and Bulgarian Railroad Company, which already have eight per cent market share.
In addition, BDZ will establish in 2008 a resort hotels management company. Petkov said the new company would be responsible for tourist facilities at Dobrinishte, Panichishte, Studenets, Primorsko, Zlatni Pyasutsi, Hissar and Kyustendil.
In 2005 BDZ put in pledge seven resort hotels in return for a loan from German company Siemens through German bank KFW. BDZ used the loan to buy 25 diesel trains. However, after the company released an obligation loan for 120 million euro, the guarantees can be exempted.
Meanwhile, on December 1 Transport Minister Petar Moutafchiev said in an interview with Darik Radio that railway transport should remain state-owned. He said that dividing up the company was a good opportunity for attracting private capital but the state should have the largest share of the entity, because experience had showed that in a crisis situation, state intervention was always necessary. Moutafchiev said that funding for road infrastructure was insufficient. “A joint survey of Railway Infrastructure and the European Union showed that to reach good levels, we need 250 million euro investments in railway infrastructure for six years, and current funding is between 120 and 150 million euro,” Moutafchiev said. He said that BDZ would look for opportunities to improve services on trains by purchasing buffet-carriages for express trains.
