Bulgarian Railways About to Collapse as German Bank Demands Trains Back

Business | October 11, 2011, Tuesday // 15:18
Bulgaria: Bulgarian Railways About to Collapse as German Bank Demands Trains Back

Bulgaria's State Railway Company BDZ seems set to collapse as the German bank KfW has demanded back 50 diesel and electric trains that the Bulgarian government has bought after 2003.

Under its contract with KfW, the Bulgarian railway company 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 Tuesday by civil servants from the Transport Ministry and BDZ, the BNR reported. In the event that the German bank gets back the trains, Bulgaria's railway transport will end up in a disastrous situation, they have explained.

In the meantime, Bulgaria's government is said to be in shock, since the BDZ company, whose total debts amount to BGN 771 M, has no ways of raising the necessary cash.

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 claim that the problem with the trains now has 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 on Friday revealed that BDZ has 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.

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Tags: Bulgarian State Railways, trains, Siemens, BDZ, KfW, Germany, bank
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