Interview of Minister Georgi Gvozdeykov for Mediapool.bg, the conversation was conducted by Lili Granitska
We aim to have the first new trains available in 2024.
Every transport minister comes with the ambition to put the state railways on its feet - the black hole where hundreds of millions sink every year. However, the few remaining passengers see no change. Trains are old, delays are sometimes hours and breakdowns are becoming more frequent. The track is crying out for repairs. In some places it is dangerous for locomotives to move at more than 30 km/h. All this is happening against the backdrop of billions of EU funds pouring in over the past 20 years. The state, on the other hand, finances the loss-making passenger transport, and this year the subsidy is over BGN 180 million. Transport Minister Georgi Gvozdeykov presents his vision for the development of BDZ and National Railway Infrastructure Company (NRIC), as well as for Bulgarian Post and the concession of Sofia Airport.
You have made changes in the management of BDZ. Your predecessor Nikolai Sabev had drawn up an action plan for reform in BDZ. How far has its implementation gone? Are you going to stick with it or do you have a new vision of what needs to happen?
Every manager wants quick results and that usually happens with a change of management. You need to put people in place who have a vision for change backed by expertise. For this reason, I appointed Yulia Varadinova as chairman of BDZ’s board of directors. She is Dean of the Transport Faculty at the Todor Kableshkov University of Transport in Sofia. She has a serious vision for the development of the state railways. It is obvious that passenger transport needs to change.
It is a fact that BDZ rolling stock is quite old. The technique is over 50 years old. We are urgently looking to modernise BDZ’s rolling stock between 2023 and 2026. Our first task is to deliver new trains quickly, as early as next year. Under the Recovery and Resilience Plan (RRP), new rolling stock is to be purchased, but it will provide only half of the trains needed.
The remaining half must be provided otherwise. That is why we have asked the major manufacturers and the major railway operators. One asks them if they have any trains ready for us to buy, the other asks if they can rent trains. It is about the purchase of about 30 railcars. If they cannot be bought they will be rented.
There is no problem with financing and the funds can be provided from various sources - the state budget, loans from international financial institutions or through leasing.
Our ambition is to improve the quality of the service in 2024 and Bulgarians to ride on new trains.
You have stopped the procurement of new rolling stock for BGN 2.8 billion, which were announced by the caretaker government. They are now to be announced again. What is different in the new procedures?
The financing of these contracts is entirely under the RRP, which requires strict compliance with procedures. The first contracts were announced without going through the approval of the National Fund of the Ministry of Finance. This is an important requirement that cannot be circumvented. The European Commission is currently examining two of the contracts. We expect them back by the end of the week and next week they will be published in the procurement register.
The other reason for the suspension was that there were requirements for activities to be funded from the state budget. For example - the construction of four repair bases by the state. This was done without a study of where the bases would be and how much it would cost. Our analysis showed that BGN 150-180 million would be needed for this. At the same time, the winner of the contract was required to pay rent and service the repair bases without being clear how much this would cost.
Now there are no repair bases in the new procurement. All technical requirements that were limiting competition have also been cleared.
According to the published schedule for the implementation of the RRP and according to the Finance Minister Asen Vassilev there is a huge delay in the implementation of these orders, what are you doing to speed up the process?
There is no delay. All deadlines have been met, there is no risk to train delivery. The delivery period for the rolling stock from the announcement of the orders in September until delivery is 33 months. The risks of appeals are also included in this timeframe. We have met all potential candidates and created the conditions for a good competition.
Are you satisfied with the work of the National Railway Infrastructure Company (NRIC)? None of the rail modernization projects could be completed in the past programming period 2014 - 2020 and remained to be completed in the current one - 2021 - 2027. Are there going to be changes in the management of the NRIC?
Bulgaria has been using EU funds to upgrade the railway for years, but there are places where trains still run at 30 km/h. Unfortunately, there is still no complete all-rail track on which trains can run at least 160 km/h. This shows that our country cannot manage large European projects.
Perhaps they are being mismanaged as well, since the European Public Prosecutor’s Office is entering, which is a precedent. The contractors of two projects are currently under investigation. (It is about the railway project for Septemvri - Kostenets and Orizovo - Mihailovo - ed.)
I suppose and expect that there will come a time when the European prosecutors will enter the Ministry of Transport, because the case is related to the NRIC. That means I have to have a solution, the least of which is to hold management accountable.
Currently, there is a risk of the suspension of funding for both projects as they are under investigation by the European Public Prosecutor’s Office. At the same time, construction work is continuing, with about 40 per cent completion on both projects.
So there will be changes in the NRIC. They will be made not only because of the entry of the European Public Prosecutor’s Office there, but also because of the lack of results.
Our plans are that in 2026 Bulgaria will have a renewed railway infrastructure, on which trains can run at a speed of 160 km/h, the lines will be secured with the necessary security equipment and there will be new rolling stock. It is about the railway lines Sofia - Plovdiv - Burgas, Plovdiv - Svilengrad - Turkish border, Ruse - Kaspichan.
Until then, the rail passenger market should be liberalised and private carriers should enter. How will this happen?
The European Regulation entitles BDZ to be directly the operator for the provision of this service. There is no obstacle to entrusting BDZ to be the passenger transport operator. Bulgaria receives BGN 2 billion funding from Europe for the purchase of rolling stock and to look for an option to then give it to a private operator is a bit strange.
You had a meeting with the management of the concessionaire of Sofia Airport - SOF Connect. When will the concessionaire start implementing its investment programme and paying the concession fee to the Bulgarian state?
During the meeting I gave a clear message that the concession contract must be strictly adhered to and the control will be on a different level compared to my predecessors. The state must protect its interest. I gave instructions to have monthly meetings with the concessionaire to report on the progress of the concession.
Air traffic is very close to reaching 2019 levels - the last year before the corona virus pandemic. Currently the difference is less than 1% and it is a matter of time before the concession fee is reimbursed. It has not been cancelled, but only postponed in time.
I asked for a plan of what happens with the promised investments from now on, which was presented to me. As an excuse, the concessionaire claimed that the state was not cooperating. They had problems with building permits, fire safety, etc. Everything they asked for has already been provided as assistance. Meetings have been held with relevant institutions. The processes are now running smoothly and at an accelerated pace.
By 30 May 2023, the concessionaire reported that it had made investments in Sofia Airport for EUR 3.9 million.
For this year they promised investments totalling EUR 18 million. They are for the following types of activities Aerodrome - EUR 2.1 million excluding VAT ,Terminal 2 - EUR 2.9 million excluding VAT , Baggage system replacement - EUR 5.2 million excluding VAT , Security X-rays - EUR 2.1 million , Terminal 1 - EUR 900 thousand , Electric and special vehicles - EUR 660 thousand, Open and covered car parks - EUR 1.8 million , Information and telecommunication technology - EUR 1.6 million
At the meeting with the concessionaire we also talked about the construction of the new Terminal 3 at the airport.
You have had a meeting with the airline, Wise Air, about the delays and cancellations. Have they presented an action plan to deal with the situation yet?
The airline presented the plan. It is committed to have a back-up aircraft with crew based in Sofia in case of an unforeseen situation.
The reason for the frequent delays and cancellations was poor planning. The other problem was related to the fact that out of about 500 signals from Bulgarian citizens about delayed and cancelled flights only 200 were processed.
Importantly, for the first time, the supervisory authority, the Directorate General of Civil Aviation Administration, is acting decisively against an air carrier. Four administrative offence notices have been served on Wise Air and sanctions have been imposed.
Bulgarian Post is going the way of BDZ and is getting more and more bogged down. What changes do you foresee there?
For the second month, we are trying to understand why the leakage of funds continues, leading the company to a huge loss and into a pre-failure state. Last year, the loss amounted to about BGN 90 million. For this reason, all risky public procurement has been suspended by my order.
An analysis is being prepared for action from now on. The rescue plan for Bulgarian Post has been submitted to the European Commission for consideration.
As a rescue measure for Bulgarian Post we will undertake a change in the legislation, which will give the company the right to serve the entire state administration. This will enable Bulgarian Post to increase its revenues. Our plans are for the legislative changes to be tabled in Parliament in September. They do not distort competition in the industry. The changes are in line with European requirements.
In addition, in connection with the implementation of the projects under the Recovery and Resilience Plan, two decrees of the Council of Ministers related to the activities of Bulgarian Post are being prepared. One is for the provision of telemedicine services in small settlements. The other is for the delivery of identity documents and driving licenses in the villages and their servicing by Bulgarian Post.
My team and I give our best to make things happen. We work around the clock to show people that things can be different. It is extremely difficult, but we will manage.