The transport market in Bulgaria has changed dramatically in the past 20 years, but the railway companies have not adjusted their business and structures to current market needs.
Bulgarian State Railways (BDZ EAD) and National Railway Infrastructure Company (NRIC) have become one of the least productive railways in the European Union, they are overstaffed, they have obsolete rolling stock, railway infrastructure is generally in poor condition, and the significant subsidies that are given to both companies are not always efficiently used.
Freight transport by rail in Bulgaria also dropped dramatically due to the global financial crisis (by about 40 percent), and its impact on BDZ EAD and NRIC was even deeper due to the existing poor status and condition of BDZ EAD and NRIC.
The state-owned railway passenger operator also faces financial and restructuring difficulties. Traffic has declined by about 70 % since the mid-1990s, and annual subsidies amount to 0.5 % of GDP. Plans to privatise the freight unit of the railway operator were scrapped in 2013, even though the procedure was already under way no interest has been shown towards BDZ Cargo even in 2016. The state owned railway operator defaulted in 2010. Creditors and suppliers of the company have taken action to recover sums due and negotiations are still ongoing on the restructuring of loans.
The infrastructure of Bulgaria has 4159 km, of which 971 are double tracks, with a high electrification percentage, 2827 km, representing 67%.
Competition in the freight sector has opened up and its proportion of overall land transport is above the EU average. Passenger rail services need to be better aligned with demand and infrastructure charges should be set and paid on a nondiscriminatory basis. Reforms based on recommendations by the World Bank and privatisation work relating to the rail freight company are currently, as mentioned above, on hold.
Passenger transport is operated only by BDZ, which in 2014 transported 110 million passengers, respectively 2,864 passengers/km according to the information published by the Bulgarian Institute of Statistics. The number is lower by 0.9 % compared to 2013.
The decrease was due to the national carriages that fell by 1.8%, while the transport performance of the international carriages has increased by 5.5%.
The Government of Bulgaria developed a Railway Reform Program to rescue the railway sector and to put railways in Bulgaria on a solid foundation to support Bulgaria’s economic development in the years ahead. Plans for the reform also envisage full and efficient use of EU Cohesion funds available to railways under the Operational Program for Transport.
The Government in Sofia thinks it should meet the strict requirements of the EU’s regulations regarding the granting of state aid to enterprises in financial difficulties, in this case BDZ EAD. The Government of Bulgaria requested World Bank technical support to implement the Railway Reform Program.
The development strategy of the transport sector is defined in more detail in the Sectoral Operational Programme on Transport 2014-2020 (SOPT), as part of the National Strategic Reference Framework. 80% of the strategy concentrates on the development of road and railway infrastructure along the major national and Trans-European transport axes. The third priority is the improvement of intermodality for passengers and freight and the fourth priority is the improvement of maritime and inland-waterway navigation.
Concerning the Core Network rail Corridors in Bulgaria, the main strategy to follow envisages to remove bottlenecks and building missing links, streamline of cross-border operations and promoting modal integration and interoperability.
Bulgaria is crossed by no less than five Pan-European corridors: Corridor 4 (Dresda – Budapest- Arad – Craiova – Sofia – Thessaloniki / Plovdiv – Istanbul), Corridor 9 (Helsinki – Kiev – Chişinau – Bucuresti- Dimitrovgrad – Alexandroupolis), Corridor 8 (Durrës – Tirana – Skopje – Sofia – Plovdiv – Burgas – Varna), Corridor 10 – branch C (Niș – Sofia – Plovdiv – Dimitrovgrad – Istanbul) and Corridor 7 (the Danube).
EUR1.6 billion funds for better connections
Bulgaria’s priorities in terms of transport are synthesized in the document of the Sectoral Operational Programme for Transport, approved by the European Commission, and which envisages the distribution of structural and cohesion funds. The Bulgarian SOP-T has five priority axes, the first one refers to the development of the railway infrastructure along the TEN-T axes and the third one to the development of the intermodality for freight and passengers.
For the 36 proposed and approved projects, 34 contracts have already been signed. Among the beneficiaries of the projects we find National Railway Infrastructure Company (NRIC) and Metropoliten (to extend the subway in Sofia and a line to the airport).
NRIC envisages the implementation of the following major projects:
- the modernisation of the Vidin-Sofia line (total cost EUR 320 million) – Corridor IV
- electrification and reconstruction of the line from Svilengrad to the border with Turkey (EUR 35 mil) Corridor IV, IX and X
- the modernisation of the line Sofia-Plovdiv (EUR 125 mil) Corridor IV and X
- the modernisation of the line Sofia – Pernik – Radomir (EUR 100 mil) Corridor X
- rehabilitation of the line Plovdiv – Burgas (EUR 187 mil) – Corridor VIII
- the construction of the intermodal terminal in Sofia (EUR 25.90 mil)
Other two alternative projects envisage the modernisation of the lines Mezdra-Gorna Oryahovtsa and Sofia-Dragoman.
Works are being carried on the sectors in Bulgaria that benefited from ISPA and EIB financing, the sector Plovdiv – Svilengrad and the bridge in Vidin, bridge that will be a new road and railway connection with Romania over the Danube. Also, works are being done for the doubling and the electrification of the line between Karnobat – Syndel, on Corridor 8, between Burgas and Varna, financed from the state budget.
According to the plan for recovery and development of the Bulgarian State Railways (BDZ) for 2015 – 2020, the company has in plan to purchase at least 30 EMUs.
BDZ envisaged a minimal investment programme of BGN 210 million ( EUR 107 million) for the next 7 years.
The management of the Bulgarian State Railways (BDZ) held a round table discussion themed “Recovery and development plan of the Group of the Holding BDZ for 2015-2020”, following the official presentation of the plan for recovery and reform.
“With the plan for the recovery of the Bulgarian State Railways (BDZ) we have tried to cover all fields in the company,” Holding BDZ executive director Vladimir Vladimirov said. In the first place, we will start with the investments, since the companies – BDZ and the National Railway Infrastructure Company, need investments,” he further commented.
“The second major priority is the introduction of information technologies in the company. We are seriously lagged behind in this field compared with the other railway companies,” Vladimir Vladimirov explained.
Moreover, three Bulgarian projects aimed at improving transport infrastructure have so far been granted funding by the European Commission under the new the Connecting Europe Facility (CEF).
Bulgaria will also benefit from EUR1.6 billion of EU funds for developing better transport connections. The Programme aims at developing the Trans European Network for Transport for railway (190 km of new and modernised railway line) and at making transport safer and more sustainable in Bulgaria. Thus, large parts of the Sofia – Septemvri and the Plovdiv – Burgas railway line will be reconstructed or modernised.
New approved projects
In March 2016, the Bulgarian government approved the allocation of up to BGN 208 million (EUR 106 million) for the completion of 10 vital railway projects. The funds will be transferred from the central budget to that of the Transport ministry. The funds will be allocated to projects which are being implemented under the Transport Operational Programme for the 2007-2013 programme period. Among them are projects concerning the three main railway routes- Septemvri-Plovdiv, Plovdiv-Burgas and Parvomay-Svilengrad.
The funds will be provided as temporary interest-free financial aid, which is subject to reimbursement to the National Railway Infrastructure Company in its capacity as beneficiary under the operational programme.
The European Commission signed the agreements on gratuitous financing of the projects approved in the frames of the first invitation for submitting project proposals under the Connecting Europe Facility in the sector of transport, the press centre of the Ministry of Transport, Information Technologies and Communications in Bulgaria announced.
The approved projects are for the modernisation of the railway sections of Sofia-Voluyak and Sofia-Elin Pelin. They will be implemented by the National Railway Infrastructure Company (NRIC).
Bulgaria will receive almost EUR 76.5 million, which is 73% of the total project costs, for the Sofia-Voluyak railway section.
EUR 61.4 million were received for the Sofia-Elin Pelin railway section, which is 85% of the total costs of planned activities. Bulgaria’s Transport Ministry announced that it had launched the works for this project which includes the construction of a 23 km double-track railway section connecting Sofia with the town of Elin Pelin to the east of the capital. The project must be completed in four years, including one year for planning and three years for the construction of the railway section.
by Elena Ilie
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