Making Tracks

Economic News

22 Jul 2010
Text size +-

While Bulgaria moves as fast as it can to catch the European Union train, its transport ministry is planning to catch some less metaphorical methods of getting around, with the announcement last week that it will likely tender for some new railway rolling stock. Meanwhile, the country's first private railway company licence has now been issued, as transport infrastructure projects in other fields have also been rattling down the tracks.

Bulgaria has been mulling an update of its railway system for some time. Bulgarian State Railways (BDZ) operates a network of around 4200km, with none of it suitable for high-speed trains and much of it none-too good for slow ones either. The rolling stock is also outdated, and unlikely to be able to cope with the kind of future plans the EU, in particular, has for Bulgaria. The country's strategic position has placed it high up the list of EU transport chiefs' plans, with transportation corridors criss-crossing it from north to south (central Europe to Turkey and beyond) and east to west (Italy to the Black Sea coastal ports).

The government currently has a tender out for some 25 new diesel locomotives, yet this now looks set to be cancelled and a new tender for both normal diesels and high-speed trains issued.

This was certainly the message delivered by Minister of Transport and Communications Nikolay Vassilev on May 11, when he proposed a new tender as part of the overall upgrade. This would come after an abortive bullet-train tender last year, which saw no bidders turn up.

Vassilev, however, seems confident that this time things will be different. He has insisted that clear criteria, which are expected to be officially announced within a month, should be developed for the candidates.

At the same time, Vassilev told reporters that the government was looking to set up joint ventures between BDZ and the new train suppliers to cover repairs and operations, and thus cut maintenance costs.

Market watchers say that some eight foreign companies are interested in the tender for the bullet trains and normal diesel engines for BDZ, with Germany's Siemens, the Canadian-Swiss company Bombardier, Spain's Talgo, companies from Slovakia, Hungary, the Czech Republic, South Korea and Japan all thought to be in the running.

The new trains, if and when they arrive, will also have a local competitor, after a May 11 announcement from Vassilev that a licence had been issued for the country's first private railway company. The firm is the Russe-based Transkom Bulmarket, until now better known for its natural gas distribution business.

In 2001, BDZ was given a vertical division, separating into two parts - one of operators and the other of infrastructure. The move eased the way for the state railway service to lose its monopoly on services, with private operators in the industrial sector thought to be the most likely to take advantage, running non-passenger services between plants, ports and airports.

Under these circumstances, it is no great surprise that the first licence has gone to a company involved in sectors other than transport. The licence is for an indefinite period, can be renewed every five years, cost Lv10,000 and will see the firm running cargo trains between Russe and the towns of Pleven and Kaspichan in northern Bulgaria. BDZ will continue to operate its services along the same route. Transkom will also pay an annual fee to BDZ's infrastructure arm for the use of the track and its maintenance, the size of which remains undisclosed.

Bulgaria's northern regions have also seen some other transport infrastructure developments in recent weeks, with new deadlines in bidding for the strategically crucial Vidin-Calafat bridge over the Danube.

This 223m euro project aims to see this second bridge over the river constructed by the end of 2007. Some 2 km long, it will consist of a railway line and a two-lane highway and is being part funded by the European Investment Bank (EIB) and the EU's Instrument for Structural Policies for Pre-Accession (ISPA).

Deputy Minister of Transport and Communications Sophia Kassidova told reporters May 11 that the ministry would sign a contract with a large construction company for the project by February 2005 at the latest. This announcement came four days after the ministry had called the first of two tenders regarding the bridge - one for construction and the other for the selection of a supervisor. For the former, a deadline for submitting offers has been set for June 14 this year.

A committee will then shortlist eight companies from those who have made a bid - with these limited to those based in the EU, Bulgaria, Romania or Turkey. These will also have to gain EU Commission approval. A second tender will also be for the selection of a supervisor, though dates on this seem still unclear.

The EU's major role in the project is illustrative of its predominance in other transport projects too. While the transport ministry may be looking for bullet trains, for example, these will not be able to run on the existing track at any great speed. Upgrading the lines is a costly business - yet one the EU is prepared to sponsor, at least when it comes to main, transcontinental routes. Electrification of the Sofia-Plovdiv-Turkish border and Sofia-Burgas/Sofia-Varna lines are cases in point, as the EIB and ISPA have been strongly behind both.

Yet there is a worry too that while these main line services may see dramatic improvement in the years ahead, local services may lag far behind - particularly if the more profitable ones are licensed to private companies more interested in their non-passenger applications. How the Ministry of Transport and Communications deals with this issue may well be how many Bulgarians judge the success of its policies, as many local lines may indeed face closure.

Covid-19 Economic Impact Assessments

Stay updated on how some of the world’s most promising markets are being affected by the Covid-19 pandemic, and what actions governments and private businesses are taking to mitigate challenges and ensure their long-term growth story continues.

Register now and also receive a complimentary 2-month licence to the OBG Research Terminal.

Register Here×

Product successfully added to shopping cart

Read Next:

In Bulgaria

Counting Down

Approval of Bulgaria's handling of its economic reform programme this week by the International Monetary Fund (IMF) was welcome news for the country's leaders, as they square up for next month's...


Myanmar: Open for business

A new foreign investment law that offers investors broader access to Myanmar’s economy, as well as useful tax breaks, is expected to add new impetus to the country’s development and is a landmark...