Bulgaria's Experience in Liberalizing the Rail Passenger Transport Sector

2026-03-29

In exchange for the EU subsidizing 25 passenger trains, Bulgaria has allowed a private company to operate its railway network. The appearance of a private passenger company on the Bulgarian railway network is considered a revolutionary step. This action is due to both the EU recommendation and the improvement of passenger transport services.

In practice, Bulgaria has decided to transition from a monopoly to a liberal model in the sector in exchange for the EU subsidized passenger rolling stock.

By analogy with Bulgaria, the Georgian Railways passenger transportation sector is characterized by a shortage of passenger rolling stock and a low level of service, where the costs of loss-making railway passenger transportation exceed revenues by 60%.

Over the past three years, a trend of permanent reduction in passenger transportation has been observed on Georgian Railways. In 2025 alone, compared to 2024, passenger transportation by rail has decreased by 17%.

Due to the deficit of financial resources, Georgian Railways has decided to make a radical decision to renew the fleet of passenger transportation rolling stock, not to purchase new units, but to overhaul five Chinese four-car electric trains purchased for $30 million in 2010-2013.

In such a situation, when instead of purchasing new rolling stock, the emphasis is shifted to the repair of depreciated electric sections purchased 15 years ago, it is clear that the state has no strategy to get passenger transportation out of the “deadlock”.

Currently, Georgian Railways is an uncompetitive company in the field of passenger transportation, which proposes to request millions of GEL from the budget annually in the form of subsidies from the state, not to increase the efficiency of the passenger direction, to compensate for the losses in passenger transportation.

In this regard, it is interesting to share the experience of liberalizing the railway passenger transportation sector of one of the poorest countries in the European Union, Bulgaria.

In Bulgaria, it is assumed that the direction of passenger transportation clearly needs changes and increased funding. The state hopes that this problem can be partially solved by allowing private passenger companies to use the railway infrastructure.

At this stage, the systematic renewal of the passenger rolling stock, which is so necessary for Georgian Railways, using a similar model of EU funding, is unlikely, therefore Georgia will have to renew its passenger rolling stock with its own budget or funds generated by the railway, which is a difficult and unattainable task in the short term.

In December 2025, the winner of the tender in Bulgaria was announced as Ivkoni Express, a well-known bus transportation company in the country.

The public tender envisaged the provision of passenger rail transportation services on existing railway routes in the northern and southern regions, the winner was given the right to carry 25% of the country's rail passenger traffic.

The Bulgarian Parliament, in parallel with the liberalization of the passenger transport market, took an important step and made amendments to the Law on Railway Transport. The legislation abolished the right of the national monopolist to collect infrastructure fees, develop train schedules, manage railway traffic, and exclusively implement applications for railway capacity.

Naturally, in the event that Georgia adopts a decision on the liberalization of the railway passenger transport market, the country's legislative body will have to make similar amendments to the Georgian Railway Code.

The Bulgarian Ministry of Transport announced a tender for the selection of railway passenger transport operators in August 2025. The contracts for both the northern and southern lots will be for a period of 12 years, with the state providing both operators (state and private) with a subsidy of €1.4 billion in exchange for unprofitable operations.

The main question is whether the state will allocate EU-subsidized passenger trains to the private operator.

The state will be involved in the allocation of new rolling stock. In particular, the private operator will lease new Škoda regional trains, which the Czech manufacturer will supply to the Bulgarian Ministry of Transport. These trains (25 units) were purchased with European subsidies.

The new trains will be allocated in proportion to the volume of traffic on the transport service. After the expiration of the contract, the passenger trains will be returned to the state in good condition. Obviously, at the first stage, the private carrier will simply use the trains leased from the state and will not purchase new ones.

The private company will have to fulfill social obligations. In particular, the state will employ 800 employees from BDZ Passenger Transportation, if they wish, at Ivkoni Express, maintaining their existing working conditions.

According to the Bulgarian Ministry of Transport, it is planned to increase the subsidy per train-kilometer by 50%, from the current 6 euros to 9 euros, by 2027. This amount will cover not only operating costs, but also investments in modernization, safety and improved maintenance.

In conclusion, an analysis of the liberalization model of the railway passenger transport sector in Bulgaria, one of the poorest countries in the European Union, clearly demonstrates the need for changes in the action strategy and legislative level in the sector. The systematic renewal of Georgia's passenger transport will put the country in a position to share a similar process.

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