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Bulgarian railway restructuring to gain from EBRD loan
Bulgarian railways are to benefit from a US$ 45 million (ECU 35.2 million) loan from the European Bank for Reconstruction and Development (EBRD) signed today in London. The loan, to the Bulgarian State Railways (BDZ), will support and extend the country’s ongoing railway restructuring programme.
At the signing, Jacques de Larosière, President of the EBRD, said: “This is the EBRD’s first investment in the railway sector in Bulgaria. The project builds on the Bank’s broad objectives for transport in the region and is designed to promote the restructuring of the Bulgarian rail system. The loan will finance the much-needed rehabilitation of the railway’s infrastructure and facilities.”
His Excellency Stefan L. Tafrov, Bulgarian Ambassador to the UK and the Republic of Ireland, said: “The EBRD’s loan comes at a very opportune time. It will help create a railway organised along commercial lines which will be better adapted to the new economic situation in the country. We believe this first EBRD rail project in Bulgaria will help limit the need for public financing and set the stage for future private sector participation.”
The project will finance investments in high priority track repairs and track rehabilitation; equipment for track and overhead wire maintenance; rehabilitation of passenger rolling stock; investment in signalling and telecommunications; equipment for traction and rolling stock depots; creation of a management information system; and training and technical cooperation.
BDZ is a state-owned company which operates a railway system of about 4,300 route km, of which 960 km, or 22 per cent, is double track and 2,640 km, or 61 per cent, is electrified. Speed restrictions affect much of the core network and remedial work is required.
The overall objectives of the EBRD investment are to create a financially viable, independent, market-oriented railway, which includes the introduction of improved cost accounting procedures and a package of cost-reduction measures. The project promoted the establishment of a railway law to clarify the relationship between the state and BDZ, and this was ratified by Parliament in June 1995. The loan will provide funds for rehabilitation activities and essential investments, leading to the improvement of safety and operational efficiency.
The total cost of the project is ECU 231.2 million. It is co-financed by the World Bank, export credit agencies and the European Union’s Phare programme.
This is the first loan under the EBRD Export Credit Loan Arrangements programme (ECLAT). Under the programme, a portion of the EBRD loan is reserved for cofinancing certain items of the BDZ investment programme with export credit agencies. The ECLAT programme is designed to mobilise additional funding and facilitate financing for the countries of central and eastern Europe from export credit agencies.
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