Bulgarian Railways Set for Mass Strike as WB Loan Falls Through

Business | September 17, 2011, Saturday // 15:15
Bulgaria: Bulgarian Railways Set for Mass Strike as WB Loan Falls Through

Bulgaria's railway syndicates have announced they plan a strike in early October 2011 over a number of issues, including the news that a badly needed World Bank loan for state railway company BDZ has fallen through.

"We have no dialogue whatsoever with the management of BDZ and the Transport Ministry," Petar Bunev, head of the railway syndicate a the Confederation of Independent Bulgarian Syndicates (KNSB) told Darik Radio Saturday.

The major grievances of the railway unionists and laborers include the failed negotiations with the government for the signing of a new collective labor contract, the refusal of the World Bank to grant a massive loan for BDZ, and what is said to be measures on part of the government to implement massive layoffs from the railways in the near future.

Bunev made it clear that the syndicates have started to circulate a statement asking for signatures in order to check how many of the railway workers are ready to go on strike.

"The people will revolt in order to save their jobs and their bread," the unionist declared.

In his words, the entire railway system in Bulgaria is "in panic" as some 2000 people are to be laid off from BDZ Passenger Services and BDZ Freight Services.

"All of that is happening in a moment when a collective labor contract is missing, and the government doesn't want to make a new contract, and doesn't even wish to negotiate," he declared.

The railway unions' strike announcement comes a day after BDZ CEO Yordan Nedev announced that the World Bank has refused for the time being to a grant a life-and-death restructuring loan for the Bulgarian State Railways BDZ.

Nedev explained Friday that the ailing Bulgarian railways need to demonstrate much better management in order to hope they can get the long-discussed loan.

Bulgaria's state-owned passenger railway operator BDZ has been traditionally in a horrendous financial condition in the past 20 years.

Since December 2010, when a preliminary loan agreement in the form of a memorandum with the World Bank was signed, the Bulgarian government had been hoping to get a loan of BGN 460 M for BDZ, together with a loan of BGN 160 M for the National Company "Railway Infrastructure", from the World Bank for badly needed reforms.

However, the reform attempts have been countered by the trade unions as they threatened to lead to massive layoffs of the state-employed railway workers (estimated by the unions at as many as 7 000 people).

Thus, in March 2011, the Bulgarian government was forced by an imminent railway strike to back out of some of its reform plans. The following months saw the replacement of the Transport Minister and the BDZ CEO.

The Bulgarian government had planned to grant BDZ a loan of BGN 140 M, counting on receiving back the money from the expected World Bank loan. The rest of the WB credit was to be utilized for covering the railways' mounting debts as the company is said to be nearing bankruptcy even though it has reduced its losses over the past two years.

According to Nedev, the end of 2011 the state company can make about BGN 10-13 M by ridding itself of outdated assets such as railway cars, spare parts, etc.

As part of the company's restructuring efforts, 600 BDZ employees will be transferred into a cleaning firm that will receive a three-year contract for BGN 14 M. Another 250 employees will be transferred to work at security firms guarding BDZ properties.

BDZ has already sent 200 of its employees to work in a joint venture together with Tip-Top Courier, a shipping company.

Nedev has confirmed the intention of the Bulgarian Transport Ministry to go for the privatization of BDZ Freight Services, first announced in August 2011.

"The process for the privatization of BDZ Freight Services has not been organized yet," Nedev said, adding the only thing clear at present was that BDZ Freight Services' assets are valued at about BGN 320 M.

The freight services of the Bulgarian state railways have traditionally been its more profitable unit, and past governments have used freight revenues to cover mounting deficits in the passenger services.

Last week Bulgarian Transport Minister Ivaylo Moskovski said the privatization could take about 6-12 months.

Unlike BDZ, however, Bulgaria's National Company "Railway Infrastructure" is expected to get its BGN 140 M loan from the World Bank because it is not going to cover old debts with the money but will invest them in new railway network equipment.

Bulgaria's railway unions have been fiercely opposed to all moves of the present government, slamming BDZ CEO himself, after Nedev was appointed in the spring without prior experience in the railway sector. The syndicates have threated new protests over the possibility of massive layoffs, and have been vehemently against the loan deal with the World Bank which seems to have fallen through at least for the time being.

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Tags: Peter Bunev, KNSB, Bulgarian State Railways, BDZ, railways, Ivaylo Moskovski, Transport Minister, World Bank, loan, privatization, Privatization Agency, Privatization and post-Privatization Control Agency, freight, BDZ Freight Services, trade unions, syndicates, Yordan Nedev, National Company "Railway Infrastructure"
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