Bulgarian Prime Minister Boyko Borisov has declared his idea to trade BDZ Freight Services, the cargo unit of the Bulgarian State Railways BDZ, to Siemens in exchange for BDZ's debt to the German company for a recent train purchase.

Borisov announced his idea Thursday after a meeting with Hans Heinrich Driftmann, the President of the Association of German Chambers of Industry and Commerce.

This is not a brand-new idea since it was discussed back in January 2012 when the Bulgarian transport authorities mentioned it as an option for covering the debt of BDZ Holding to German bank KfW for the purchase of 50 electric and diesel Desiro trains since 2003.

Back then KfW threatened to seize all Desiro trains – which are the only new trains bought by the Bulgarian State Railways after 1989 – over a delayed payment of EUR 24 M by BDZ.

Back in 2005, KfW granted BDZ a loan of EUR 190 M for the purchase of the 50 Desiro trains. At present, BDZ still owes KfW BGN 235 M, or about EUR 115 M, according to Vladimir Vladimirov, head of the BDZ Holding Board, as cited by Mediapool Thursday.

The assets of BDZ Freight Services are worth some BGN 320 M, as mentioned by Bulgarian Transport Minister Ivaylo Moskovski at the end of 2011.

During its first privatization attempt, BDZ has hoped that its freight 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.

At the same time, Borisov's statement about swapping BDZ Freight Services for BDZ's KfW Siemens train debt comes just days after the first attempt of the Borisov Cabinet to privatize BDZ Freight Services failed since it attracted only a single bidder with mysterious ownership.

"Bulgaria owes almost BGN 300 M to Germany under this deal, and this deal weighs heavily on us. This deal is uniquely stupid," the Bulgarian PM told reporters after his meeting with Hans Heinrich Driftmann, the President of the Association of German Chambers of Industry and Commerce.

"BDZ Freight Services is up for privatization, and I have asked for talks with Siemens if they would agree to take over the company in exchange for this debt. That is why we are inviting them to the privatization tender," Borisov stated.

Meanwhile, the German bank KfW has warned BDZ that it has violated its loan contract with the transformation in 2010 when BDZ was turned into BDZ Holding, transferring all of its assets to its subsidiaries – BDZ Freight Services and BDZ Passenger Services.

It is still unclear whether Siemens and KfW have been approached with the idea; if Siemens accepts the offer, they will acquire BDZ Freight Services, which has a 75% market share in Bulgaria, and was valued at BGN 200 M during its first privatization attempt.

Bulgarian state-owned railway co BDZ is a state of dire crisis, as in early July Finance Minister Simeon Djankov terminated the state subsidy for the company – about BGN 13 M per month for its failure to serve a World Bank loan of USD 80 M dating back to 1995.

"Ever since the state subsidy of BGN 13 M monthly has been blocked, we are unable to figure out what the Finance Ministry wants from us in order to restore it," BDZ CEO Yordan Nedev is quoted as saying.

Nedev has not denied the possibility of a gradual shutdown of BDZ because of the total lack of funds.