Interview of Minister Georgi Gvozdeykov for BANKER, the conversation was conducted by Belcho Tsanev
Mr Gvozdeykov, you took over the management of the transport sector, which is clearly not in a good state, and immediately undertook meetings to resolve hot issues. Could you outline the main 3-4 areas on which you will focus your efforts as Minister?
We are focused on the preparation of the restructuring plan of Bulgarian Post, which we will present to the EC as soon as it is ready - the preliminary version - by the end of July and the final one - in the first week of September. Its approval by the EC is a mandatory condition for the temporary loan of BGN 50 million granted to the company by the government to be converted into capital. This plan will propose a new financial-management model that will allow for proper accounting of costs to the corresponding revenues, correct determination of compensation for services of general economic interest and state aid, and management of the profitability of the different services. A new product strategy is also to be made as well as upgrading the company’s software and hardware systems.
The Company is preparing to execute the Recovery and Resilience Plan projects so that they will be initiated at the time of receipt of authorization to use the designated funds. Budget and resource estimates are made to open a modern courier service in the shortest possible time. Additionally, the provision of a number of administrative services for the population, which are particularly important and necessary in more remote locations, is being prepared.
For the modernisation of the railways, our aim is to proceed quickly with the procedures and contracts for the delivery of rolling stock under the Recovery and Resilience Plan. By the time we have them, we are considering hiring a few train sets and running them on the main routes.
As far as air ambulance is concerned, this is an issue that I am personally involved in and on which we will also work actively.
One of the severe problems you inherited is the road hauliers’ revolt against the increase in tolls and the extension of the toll road network. Will you be lobbying the Ministry of Regional Development to adopt relief for carriers?
The first workshops I held were with the transport industry. They brought before us topical problems, which it became clear that to solve, more than one institution needs to work together. For example, there is the issue of the toll system. We are already working together with the Minister of Regional Development and Public Works to resolve the issue. We are convinced that with dialogue we can find a balance and a lasting solution to the problem.
Border crossings are traditional barriers to free trade and transit. And while there is a tiny improvement on the ones with Turkey, the ones with Romania are a higher and higher barrier for carriers. What measures will you take to unblock the main BCPs with Romania? What more could be done to improve crossing at all BCPs with Turkey?
Our main priority is the country’s accession to the Schengen area before the end of 2023.We are working hard to meet the requirements of European partners to strengthen border control by creating an effective infrastructure and organisation of work that will contribute to the common security of the European borders. In mid-July, during a working visit to Romania of the Prime Minister and a delegation, in which I also participated, the progress of joint transport projects was discussed, which is a prerequisite for intensifying the dialogue on important bilateral issues.
Our efforts are focused on the resumption of the Ruse - Giurgiu ferry line, which is expected to relieve 25% of the traffic on the bridge. You know that we have completed all the procedures and we are fully prepared, but at the moment the Romanian side does not give a clear answer when it will open the border crossing on its territory.
With Turkey we are working on the construction of a new border rail crossing in the region of Lesovo to relieve the traffic of Svilengrad - Kapakule. We plan to restore the railway line Yambol - Elhovo, which has not been operational since 2011, and to continue it to Lesovo and the Turkish border. The tender for the preparation of a pre-investment study to propose the best route options has now been opened. We will then seek funding from Cohesion Funds or the Green Deal.
You know that rail transport in our country is in a particularly difficult situation and you have already taken some important measures to change this. In your opinion, won’t the suspended procurement of unproven rolling stock, which BANKER has repeatedly written about, lead to a loss of funds under the RRP?
We are doing everything possible to ensure that no Recovery and Resilience Plan funds are lost. Public procurement has been terminated following the identification of breached procedures and committees have been immediately appointed to revise and streamline the procurement documents, with the aim of re-advertising the tenders in August and having contracts in place by the end of 2023.
What should the new passenger trains be?
I would not like to comment on the technical parameters of the rolling stock, because this is the work of the experts who have worked for months on the documentation. It is important to me that the new rolling stock meets the interoperability requirements of European standards and guarantees a high level of safety and comfort for passengers.
How will you proceed with the delayed repair and maintenance contracts for the Siemens Desiro locomotives with Alstom and 15 passenger cars at VZ - Intercom, Dryanovo? In general - what is your opinion about the renewal of some of the wagons in railway factories in our country?
The condition of BDZ’s rolling stock is such that the implementation of these two contracts is a pressing need. In the event of termination of the contracts, the end user will ultimately be the main victim. It is therefore important to study the situation thoroughly before making a final decision.
So far we have seen that the delay in performance on both contracts has been documented by the submission of force majeure certificates. On this occasion, the terms of the contracts have been extended and the BDZ management is in constant communication with the contractors. We are also holding meetings at ministry level to find the best option in this situation.
The contract for the upgrade of 15 passenger coaches was signed at the end of April 2021 and is being executed with considerable delay. Testing of only the first wagon in Romania has already been completed, and then its certification is due. We have been assured by the contractor that he will submit the documents for certification by the Railway Administration Executive Agency by the end of next week. He has also stated that he may complete a total of 5 wagons by the end of the year. Of course, if the delay in implementation continues - we have no choice but to terminate the contract.
Under the other contract for maintenance of diesel and electric multiple units, only 12 multiple units have been overhauled so far. Scheduled maintenance is currently being carried out on the multiple unit trains, but planned repairs are being delayed considerably. BDZ management is in constant contact with the contractor to renegotiate performance schedules to compensate for delays. If this cannot be done - and here we enter into the same hypothesis with the termination of the contract.
Isn’t it right to invest more money in the renovation of the dilapidated railway network in our country instead of supplying new trains? And in general, in your opinion - shouldn’t the delivery of trains be the job of the railway company, which will enter into a long-term contract with the state for the carriage of passengers by rail in about a year’s time, and not the MoTC?
There is a need to invest in both the renewal of the rail network and the delivery of new trains and new rolling stock. The two aspects are interlinked and investing predominantly in infrastructure at the expense of investment in rolling stock creates an imbalance across the rail system and does not imply a significant improvement in service.
I think the state has waited too long and should have invested more in trains a long time ago because we have gotten to a situation where over 75% of the trains are over 35 years old and another 15% are over 40 years old.
What is your opinion on the liberalisation of passenger rail transport in Bulgaria? A new tender is to be launched for the selection of a railway operator to carry out the public passenger service by rail. Do you think it should be just one rail carrier again as it has been? Isn’t the time ripe for the concessioning of some mainline and tourist railways?
The new public service contract for rail transport will be awarded through an open, non-discriminatory and competitive procedure. Its scope will be determined on the basis of a market assessment, part of which will be - an assessment of demand; an assessment of what services could be provided by open access/commercial operators to meet that identified demand; an assessment of whether a less distortive measure than the award of a public service contract for rail transport could be used to achieve public transport policy objectives.
MoTC has launched a public procurement procedure with the subject: ‘Market assessment for the rail sector defining the scope of the public service obligation under the new public service contract for rail transport’. The tenders received are currently being evaluated. The award of the new contract will take into account the results of the market evaluation and the contract will be concluded in accordance with the legislation currently in force.
What is your vision regarding the development of intermodal transport in Bulgaria and the implementation of the measures in the National Plan for the Development of Combined Transport until 2030? What exactly will the huge funds proposed by the MoTS consultant - DZZD BIM EUROPRO2002 - be spent on to support intermodal operators in the country until 2027 (under a contract between the MoTS and the company dated 10 February 2023)? According to my information, the consultant offers colossal sums for some intermodal terminals, while others are not included in the support scheme at all. Are you aware of this contract and in general - the possible effectiveness of the money spent on it?
There is no doubt that the development of intermodal transport should be encouraged because it contributes significantly to improving the environmental friendliness and efficiency of the transport system. With regard to the adopted National Plan for the Development of Combined Transport in the Republic of Bulgaria until 2030, work is currently underway on the implementation of some of the measures contained therein. A Consultative Council for the Development of Combined Transport has been established under the Minister of Transport and Communications, with representatives of all stakeholders. With regard to the project ‘Provision of consultancy services for the preparation of a support scheme for intermodal operators’, awarded for implementation to the DZZD BIM-EUROPRO 2022 , the implementation of the first activity ‘Collection of the necessary baseline information and feasibility analysis of the support scheme for intermodal operators’ has been completed so far. The consultant is now working on the actual part of the contract, which is the preparation of a Scheme to assist intermodal operators. According to the requirements of the technical specification, the consultant should consider and analyse at least 3 options for financial support - depending on the scope (infrastructure, transhipment equipment, warehousing space, logistics centres), the envisaged financial resources, the possible financing modalities (grants, financial instruments, private financing or a combination thereof), the implementation timeframe (with regard to the eligible timeframes), etc. The contractor should evaluate and recommend the most appropriate of the three options, taking into account the above circumstances. The deadline for submission of the development under Activity 2 is the end of September 2023. The scheme is subject to extensive stakeholder consultation and will be presented to the 2021-2027 PTC Monitoring Committee. The indicative value of the funds foreseen to support intermodal operators amounts to EUR 17.6 million.
In their election campaigns, PP/DB repeatedly emphasized the problems related to the concession of Sofia Airport? What action will you take as Minister to protect the public interest in relation to the Sofia Airport concession? Given that the traffic at the capital’s airport has almost recovered compared to 2019 - is it not right to terminate the decision of the concessionaire SOF Connect not to pay annual concession fees for 10 years?!
One of the first tasks I set my team is to review in detail the progress of the investment plan of the concessionaire of Sofia Airport. Our main goal is in two directions. Accelerating investment in the development of the capital’s airport and analysing passenger flow to see if traffic levels have recovered from 2019. A week ago, I held a meeting with the CEO of Sofia Airport, Jesus Caballero, and we discussed the investment plan, which includes the renovation of Terminal 2, the construction of Terminal 3, upcoming ongoing repairs, as well as the issue of airport security, which is very important in view of our accession to Schengen.
The traffic issue is important for us as a country because the reason for the postponement of the payment of the concession fees was precisely the reduced number of passengers due to the Covid pandemic. The terms of this deferral state that upon recovery to pre-pandemic levels, the Council of Ministers must reverse its decision to defer concession payments and the concessionaire must begin to pay the contractually stipulated funds to the state. This is an extremely important issue that we will be following closely. At the moment the data shows that traffic has not yet recovered 100%, but we still have to wait until the end of the year to draw conclusions. My opinion is that next year we will be able to take a new decision of the Council of Ministers to end the suspension of the concession fees and to start their regular payment to the Bulgarian state.
You travel and see the state of Sofia Airport. Will you ask for an independent assessment of the funds invested by the concessionaire - in what condition are the objects in which they are invested?
I have serious remarks, there is a backlog that needs to be caught up as a matter of urgency. The conditions at Bulgaria’s largest airport are not what people expect and the stated modernization should be accelerated. On the part of the ministry, I have ordered the strengthening of control over the implementation of the concession. According to the concession contract, a joint committee of the Ministry and representatives of the concessionaire must meet every month to regularly monitor the implementation of the contract. Since the beginning of the year, the committee has met only twice - instead of seven times - which to me shows a lack of control.
What is the future of Plovdiv Airport?
The state is interested in building a cargo hub on the territory of Plovdiv airport, which will be a kind of link for cargo between Europe and Asia. Two companies operating at the airport are also interested in building maintenance facilities. This will inevitably lead to the creation of new jobs and an increase in people’s living standards.
The state should use the opportunities given by the law on concessions and seek solutions for a reasonable and efficient management, which will enable the airport to acquire a modern European look and expand its market share with the help of private investment. The airport has huge potential and it needs to be developed by first focusing efforts on cleaning up the current problems and then planning its development.
What steps will you take to speed up the introduction of regulations for the safe use of drones in our airspace, as their number, and with it the risk of accidents, is increasing? A first step in this direction has already been taken, but it is extremely insufficient. Is it normal, in your opinion, for drones to fly and survey private sites - homes, gardens, businesses - with impunity for unknown purposes, perhaps theft, terrorism, etc.? How will the interests of the public be protected against surveillance carried out by drones, not by state services, but by private individuals?
The rules and procedures for the operation of drones are defined by European legislation. There is already an adopted Regulation on the conditions and procedures for the operation of unmanned aerial systems and the supervision of their operators, which introduces the administrative procedures related to the implementation of European regulations. In order to ensure the necessary safety and security, all those who use drones should carefully familiarise themselves with the procedures and rules and strictly follow them. In case of violations with this type of aircraft, the DG Civil Aviation Administration has the power to issue acts to the offenders. The Ministry is in talks with experts from the Ministry of Interior to find more effective mechanisms for cooperation in controlling and curbing the illegal use of drones.
Work is also underway on the implementation of a U-space airspace in Bulgaria in which the provision of a set of services will ensure the management of drone traffic and further help to regulate them.