EC approves public support for Bulgarian railway company BDZ

The European Commission has concluded that Bulgarian support measures in favour of the publicly-owned railway incumbent BDZ are in line with EU state aid rules. The measures will allow the company to address its debt level without unduly distorting competition in the Single Market.
Bulgaria notified in 2011 a restructuring plan for BDZ to the Commission for assessment under EU state aid rules. The initial plan included several measures that could give an economic advantage to BDZ and therefore could involve state aid within the meaning of the EU rules.
In November 2011, the Commission opened an in-depth investigation as it had doubts concerning BDZ’s long-term viability and whether the restructuring plan contained sufficient measures to ensure the company’s own contribution to the restructuring costs and to off-set distortions of competition.
During the investigation, the Commission focused on the cancellation by the Bulgarian state of certain debts incurred by BDZ. The investigation found that the planned cancellation of these debts, amounting to BGN 224 million (EUR 114 million), is in line with the Commission’s 2008 Guidelines on state aid for railways.
As BDZ is the only provider of railway passenger transport in Bulgaria, it is of crucial importance to the country’s connectivity and economy. The Commission concluded that the debt cancellation is necessary and proportionate to support BDZ’s operation and in line with EU state aid rules.
BDZ has been in financial difficulties for several years. In 2011 Bulgaria notified to the Commission a capital increase for BDZ, to be provided over the period 2011-2016 and submitted a restructuring plan for BDZ. Bulgaria withdrew its plans to recapitalise BDZ during the investigation.

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