Syndicates: Bulgarian Govt Could Avert Mass Railway Strike

Business | September 29, 2011, Thursday // 17:40| Views: | Comments: 0
Bulgaria: Syndicates: Bulgarian Govt Could Avert Mass Railway Strike KNSB head Dimitrov (middle) says the government could still avert a mass railway strike. Photo by BGNES

Bulgaria's syndicates have given the Borisov Cabinet one last chance to avoid a mass railway strike in October, which they announced earlier this month over trouble with Bulgarian State Railways BDZ.

The railway unions are set to meet with Prime Minister Boyko Borisov and Transport Minister Ivaylo Moskovski on Monday in order to seek out common ground to defuse the situation in the railway sector, announced Plamen Dimitrov, President of KNSB (Confederation of Independent Bulgarian Syndicates).

"We expect to hear at least three things at the upcoming meeting – how the financial memorandum signed on March 10 about the Bulgarian railway transport will be implemented; whether the amount of investments for railways over the next 5 years will be confirmed; and what the fate of the application for a loan from the World Bank will be," Dimitrov told reporters in Sofia Thursday.

The syndicates are firmly opposed to the government's intention to privatize BDZ Freight Services, the freight section of the troubled state-owned operator, which is usually a lot more solvent than the passenger services department.

KNSB believes that the Cabinet wants to sell BDZ Freight Services in order to pay off the BGN 480 M of debt that the state railway operator accrued in the past 15 years.

"We expect to learn how the railways will be restructured and what that will mean for its staff," the unionist explained.

He did say that the syndicates could agree to a compromise with the government based on the Cabinet's loan memorandum signed with the World Bank in December 2010. He stressed, however, that there could be no layoffs of railway workers without the signing of a new collective labor contract.

Dimitrov also hinted of serious tensions among other transport workers, especially the employees of Port Varna, the major Bulgarian Black Sea port, and Sofia International Airport.

Bulgaria's railway syndicates announced two weeks ago 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.

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.

Unionists say 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.

The railway unions' strike announcement came 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 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.

Earlier in September, 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", Petar Bunev, Plamen Dimitrov
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