No Russian, Turkish Interest in Buying Bulgaria's Railway Freight Co, Govt Says

Business | April 19, 2012, Thursday // 17:11| Views: | Comments: 0
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Bulgaria: No Russian, Turkish Interest in Buying Bulgaria's Railway Freight Co, Govt Says Bulgaria's government has moved to complete the sale of BDZ Freight Services - the only profitable division of state railways BDZ - in 2012. Photo by republika.bg

Neither Russian, nor Turkish companies have declared any interest in buying the state-owned BDZ Freight Services, the cargo company of the Bulgarian State Railways, according to Privatization Agency head Emil Karanikolov.

Karanikolov spoke Thusday on BNR after Wednesday's reports that Rossiyskie zheleznye dorogi (Russian Railways), Russia's state-owned national rail carrier, wants to acquire Bulgarian State Railways' Freight Transport.

The Russian Railways, one of the largest companies in the world, wants to buy the Balkan country's Freight Transport together with the Greek rail carrier, the Bulgarian Trud daily had reported, citing unnamed sources from the transport sector.

The Bulgarian freight company is of strategic importance for those willing to make use of the Thessaloniki port, a vital gateway for Chinese cargo traffic towards Europe, according to the newspaper.

Romanian Grup Feroviar Roman (GFR), French SNCF and the Turkish State Railways are also interested in buying Bulgaria's Freight Transport, according to the paper.

Unofficial reports also claim that Bulgaria's First Investment Bank, which funded the purchase of the bankrupt steel mill Kremikovtzi near Sofia by metal and scrap trader Nadin, and Corporate Commercial Bank owned by Bulgarian oligarch Tsvetan Vasilev are also interested in bidding for BDZ Freight Services. Vasilev's Corporate Commercial Bank could bid for the railway cargo company together with Russian state bank VTB, as the two banks are already bidding together to purchase the third largest Bulgarian mobile phone operator Vivacom.

The head of the Bulgarian Privatization Agency, however, has refuted these reports further by saying that only Austrian, Spanish, and Italian companies have made investment inquiries over the privatization of BDZ Freight Services.

There have also been unofficial inquiries by consultancies and law firms whose real clients are unknown to the Agency, Karanikolov said.

In his words, the privatization procedure for BDZ Freight Services can be started next week as on Monday the Supervisory Council of the Privatization and Post-Privatization Control Agency will approve the respective paperwork.

The privatization of Bulgarian State Railways (BDZ) freight services is expected to take place in 2012, Vladimir Vladimirov, chair of the Board of the troubled state company, announced in March.

Bulgaria's State Railways company BDZ has been experiencing chronic financial problems, with debts as of October 2011 amounting to some BGN 771 M.

Reforms were carried out in 2011 including cutting down on passenger trains and personnel, which provoked a massive railway workers' strike last November.

In contrast to the Passenger Transprot section of BDZ, Freight Transport has been steadily registering profits.

On Thursday, the Russian website InfraNews reported that RZD, the Russian state railway carrier, would have no benefit whatsoever from acquiring BDZ Freight Services.

InfraNews points out that Bulgaria has very little container freight traffic, and that the annual turnover of BDZ Freight Services could be smaller than the daily turnover of RZD, which could reach over USD 100 M.

"The road via Bulgaria leads nowhere – the country is small, which is why the administrative spending for the purchase will eat away all possible income for 10 years ahead," the Russian site says.

The assets of BDZ Freight Services are worth some BGN 320 M, as mentioned by Bulgarian Transport Minister Ivaylo Moskovski several months ago. BDZ hopes that its division can be sold for BGN 200 M but critics say BGN 100 M would be a more realistic price. The push to sell BDZ Freight Service has been highly questionable since it remains the only somewhat profitable division of BDZ.

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Tags: russian railways, Bulgaria, transport, Freight Transport, turkish state railways, grup feroviar roman, sncf, BDZ, Bulgarian State Railways, BDZ Freight Services, Emil Karanikolov, Privatization and post-Privatization Control Agency, Privatization Agency, privatization, Corporate Commercial Bank, VTB, Tsvetan Vasilev, First Investment Bank
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