Bulgaria's Cabinet could complete the privatization of the "Freight Services" unit of state railways operator BDZ Holding within six months, according to Transport Minister Ivaylo Moskovski.

Moskovski told BNR Sunday that the plan for reforms of the vastly troubled state railway company coordinated with the World Bank called for the splitting of BDZ "Passenger Services" from BDZ "Freight Services."

"The privatization of the freight railway services unit itself will be carried out by the Privatization Agency. The negotiations with the World Bank have been completed. All documents have been submitted to the WB headquarters," the Transport Minister explained.

"We need to wait for the board of directors of the World Bank to convene to get an overall approval for the loan. This could happen as early as September or in October but the loan will become a fact. I.e. the restructuring is continuing," he said.

He promised that there would be no direct layoffs in the state railways BDZ but certain activities that the management of the state company deems "untypical" would be outsourced.

Bulgaria's state-owned passenger railway operator BDZ has been traditionally in a horrendous financial condition in the past 20 years.

The government had been hoping to get a loan of BGN 460 M for BDZ, together with a loan of BGN 160 M for the National Company "Railway Infrastructure", from the World Bank for badly needed reforms since December 2010 when a preliminary loan agreement was signed.

However, the reform attempts have been countered by the trade unions as they threatened to lead to massive layoffs of the state-employed railway workers (estimated by the unions at as many as 7 000 people).

Thus, in March 2011, the Bulgarian government was forced by an imminent railway strike to back out of some of its reform plans. The following months saw the replacement of the Transport Minister and the BDZ CEO.

The freight services of the Bulgarian state railways have traditionally been its more profitable unit, and past governments have used freight revenues to cover mounting deficits in the passenger services.