Bulgaria's Transport Minister Ivaylo Moskovski is in Germany Wednesday for talks with the KfW bank over the failure of the troubled Bulgarian State Railways company BDZ to pay its dues for 50 brand-new Siemens trains.

In October, reports emerged that since BDZ had failed to pay its installments since 2010, KfW has the right to demand them back.

The 50 electric and diesel trains in question have been purchased after 2003, and are the only new transport equipment of the outdated Bulgarian State Railways.

Bulgaria will offer KfW two payment plans for the money it owes the German bank for the purchase of the Siemens trains, Moskovski explained in Brussels late Tuesday.

He will talking to KfW on a "political level" in order to get the bank not to demand back the assets in question, and to grant BDZ several months for coming to grips with its crisis situation.

"We believe that by February we will be able to offer the creditors at least two options for the payment of the dues. The first option: we will await the result of the privatization of BDZ Freight Services. The second option: we expect to sign the loan agreement with the World Bank," Moskovski said, as quoted by BNR.

He referred to the planned privatization of the only partially profitable devision of the Bulgarian State Railways – BDZ Freight Services, whose assets are estimated unofficially at BGN 320 M; however, the Bulgarian Privatization Agency has not come up with an asking price yet.

Since December 2010, Bulgaria's government has been hoping to get a loan of some BGN 600 M from the World Bank to cover the most urgent debts of BDZ, whose total indebtedness was estimated at BGN 771 in early October.

"I would like to reassure the creditors, and to provide them with guarantees that these unpopular painful measures that we are carrying out right now are designed to fix the railway company, and the bring it to a condition in which it is capable of paying its debts," he explained.

In October 2011, Bulgaria's State Railway Company BDZ, whose employees have now been on strike for seven days, seemed set to collapse as the German bank KfW demanded back the 50 diesel and electric trains that the Bulgarian government has bought after 2003.

Under its contract with KfW, the Bulgarian railway company is supposed to pay installments for the trains by 2017.

The 50 Siemens diesel and electric trains in question are the only modern trains of BDZ, and if it becomes devoid of them, the state company, which is vastly mismanaged and ridden with massive debts anyway, will be reduced to using solely Soviet-made trains from the 1970s.

The news that KfW has asked for the trains back was a rumor until it was confirmed by civil servants from the Transport Ministry and BDZ

The decision of the German bank to ask for the Siemens trains back comes after the management of BDZ terminated its contract with insurance company Allianz Bulgaria and started to work with Bulstrad instead.

This move was in violation of the contract for the purchase of the diesel and electric trains from Siemens, and was made without any consultations with KfW, reports say.

The contract in question, however, stipulates that until their purchase is 100% paid for, the Siemens trains are owned by the German bank, and not by BDZ, and KfW has the right to demand them back.

Reports further said that the problem with the trains had to be decided on the inter-government level between the authorities of Bulgaria and Germany.

In addition to being the only modern vehicles of the Bulgarian State Railways, the Siemens trains are very important because they serve a number of commuter routes around several major cities, including Sofia.

A Parliamentary hearing session revealed in October that BDZ had not maid any payments for the Siemens trains to KfW since 2010, and that the trains are supposed to be fully paid for by 2017.