The Bulgarian government through its Privatization Agency has embarked Friday on a new campaign to privatize troubled Bulgarian State Railways BDZ's profit-making Freight Services unit to make up for losses from its passenger unit.

The announcement, posted on the Agency's site, informs that only strategic and financial investors will be allowed to bid.

Strategic investors must have experience in freight railways transport in the last five years, a license to carry out such services, a safety certificate, and minimum annual revenue of EUR 100 M in the last three years.

Financial investors must manage assets and have stakes in other companies for no less than EUR 400 M annually for the last three years. The deposit to participate in the procedure is set at EUR 20 M.

Consortiums, offshore companies, and individuals with debts to the State cannot apply.

The first round of the privatization bid in August failed due to the lack of serious investor interest. BDZ Freight Transport has a current debt of BGN 114 M.

German bank KfW is now willing to wait for the conclusion of the privatization and then continue talks for a possible deferral of debts owed to it.

This was revealed Friday by Bulgarian Minister of Transport Ivaylo Moskovski, cited by the Focus news agency.

According to estimates, BDZ currently owes KfW some EUR 41 M for Siemens Desiro electric trains it bought in 2005, a debt it does not manage to service as per the arranged schedule.

Until now BDZ was managing to pay just EUR 1 M a month, prompting KfW to threaten to seize part of the trains. Both the Transport Ministry and the Finance Ministry have been negotiatiting a possible deferral.

At the end of October, KfW said they will not hold any further talks with Bulgaria about the deferral.

Moskovski informs the money from the privatization would be used to pay off the debt and the rest, along with a loan in the amount of EUR 460 the World Bank is willing to grant, would be used for the modernization of the railways.

The Finance Ministry has advised to wait for the conclusion of the privatization to sign for the loan since its amount will depend on it.