EC approved state aid for BDZ

The European Commission (EC) approved the Bulgarian support measures in favor of BDZ. Brussels found that the measures are in line with the European Union (EU) state aid rules. It has become clear today by the received official notification from the Commission.

The measures will allow the company to address its debt level without unduly distorting competition in the Single Market. Minister Ivaylo Moskovski stated that it was an excellent news for the Bulgarian Railways. „One of the key priorities to me and my team was the rehabilitation of Holding BDZ EAD. I appreciate that we have obtained the expected approval in order to support the company with funding from the State budget”, said Moskovski, who participated in the closing session of the Digital Assembly which is taking place in La Valetta, Malta.

The EC reminds in its notification that in 2011 Bulgaria notified a Restructuring Plan for BDZ, in which were also included several measures that could provide economic advantage to BDZ, and therefore could involve state aid within the meaning of the EU rules.

During the investigation, the EC 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 is in line with the Commission's 2008 Guidelines on state aid for railways, because the debts incurred prior to the Bulgaria's EU accession.

The EC points that the debts are directly linked to the BDZ's transport operations and are hindering the company's sound financial management. The amount of the debts to be cancelled is proportionate, and the state aid does not prevent the effective competition on the market.

Moreover, the Commission emphasizes that 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 the BDZ's operation and in line with the EU state aid rules. The Commission found no concerns under EU state aid rules for the reimbursement of certain amounts of VAT unduly paid by BDZ on the compensation received by the company for fulfilling its public service obligations.

According to Brussels as the company was not liable to pay the VAT in the first place, the repayment gives no competitive advantage to the State Railways on the market.

With reference to the repayment of BDZ's debts towards the National Railway Infrastructure Company (NRIC) the investigation of the EC showed that this raises no competition concerns, because the extension of and terms for repayment were in line with the market conditions.

Dear colleagues,

Official live comment of the Minister of Transport, Information Technology and Communications Ivaylo Moskovski is expected at 17 p.m. in his Facebook profile: