The challenges which the Bulgarian railways have to face can be divided into the following groups:- High-level projects of European significance related to the process of railway integration into the railway network of Central and West European countries (South-West transport technological system from Kulata and Svilengrad - Sofia - the Danube Bridge II).- Projects of regional significance related to the process of railway integration into that of the countries in the Black sea region, the TRASECA corridor, the combined sea-railways-river transport and return (North-East transport technological system). Sofia-Ruse (Varna, Burgas).- Local projects which secure the projects from the two groups above and which concern domestic freight transport, operational organisation and transport technology, restructuring of the railway system and its capacity in accordance with its market position, as well as the solutions to the problems of efficiency, the technical condition of the rolling stock and the requirements to the staff under the conditions of the new challenges.If we have to briefly formulate the goals of the new challenges faced by the Bulgarian railways as a result of the First Package expansion, they should be directed towards the achievement of operational conformability with the trans-European railway system. Regretfully, the activities described in the Strategy which has been proposed are within the period up to 2015, which will place the Bulgarian railways in considerable difficulties and, certainly, in a vague future. Railway policies should not be based exclusively on infrastructure projects, which are being fulfilled today and then put into action not before 2007-2008, such as the modernization of the Plovdiv-Svilengrad line, or the construction of Danube Bridge II. Should we demand a better future for the Bulgarian railways and that they actually become part of the European railway network, the priorities should be realised sooner? The key steps should be undertaken during the next 3-5 years, i.e. before 2009.However, in order that a total high efficiency and investment turnover be achieved, it is necessary that, as part and parcel of it, a terminal for combined transport technology be built in the region of Sofia, in the directions of Turkey, Greece, Central and West Europe. Such a project will transform the whole transport scheme ‘The Danube Bridge II-Vidin-Sofia-Kulata-Svilengrad’ into a high-technology and competitive one; it will attract a transit flow through the territory of Bulgaria, including the Bulgarian ports. This high-tech transport scheme, under certain circumstances, can be included in the programme as one of the 60 most important infrastructure projects up to 2010. For this reason, a professional and nationally responsible attitude will need to be clearly stated. It is exactly this statement that will guarantee that our country will play a key part in the integration between the European and the Asian railway systems and the TRASECA countries. Defining the projects of the second group, we should point out that they have to include the rest of the railway network, which will have to find a solution to the problems of the domestic transport through the Bulgarian ports of the structure-defining railway clients on the one hand, and, on the other, the problems of the technological connection for combined transport along the Danube (Corridor VII) and the interaction with the ferry system on the Black sea (railway and Ro-Ro transport). This project will also successfully solve the problems of passenger transport between big cities where, due to the low quality of its service and the high cost, the railways are currently losing in the competition with road transport.The major drawback to all these projects is financing. The role of the state along these lines is restricted. For this reason, other forms of investment should be applied, so that the financial deficiency could be overcome to a certain extent. The separation of the infrastructure from operations in the particular railways aimed at better defining the relationship between the operator and the state in terms of subsidies, especially for passenger transport, and the role of the state as far as financing the railway infrastructure was concerned. The second, however very significant, aim was to set the rules for access and utilisation of the infrastructure by several operators, that is to say to increase the competition between the operators in terms of the quality of the railway services. The results of this institutional separation are debatable, yet not from the point of view of the philosophy behind the first railway project, introduced on 1st January 2002, but rather because of the application of the legal and financial norms. In the heart of these relations lies the infrastructure access and utilisation charge. Regretfully, this is not employed as a main regulation principle in financial relations. Furthermore, there is no actual regulator (represented by the Ministry of Transport and Communications) for these aspects. It is well-known that the infrastructure access charge is the main revenue component of the infrastructure and it has to invariably cover the marginal costs of infrastructure maintenance and operational management. As it is, they currently cover 85% of the costs. Unless the infrastructure access charge becomes a priority for the operator-infrastructure relations, the problems in the process of modernising the railway, the contact network and the devices for operation management will undoubtedly become more serious. With annual infrastructure operational cost of 180-200 million BGN, at present only the sum of 120-130 million BGN is covered.In the 15 EU member-countries till now (before the EU enlargement in 2004), the efficiency of the traction rolling stock is 20 million passenger/km and tonne/km. It is generally estimated that, with reference to these indicators, the Bulgarian railways deviate considerably from the results in the above-mentioned 15 countries. This comprises the main problem which has to be solved over the next three to five years. Eighty per cent of the locomotives used in Bulgaria are over 25-30 years old, 60% of the passenger coaches are over 30-35 years old and 40% of the freight wagons are over 25-30 years old.There is a future for the railways, but for the Bulgarian railways we need to focus our efforts in many directions. The main point is that there should be a transport policy as a whole, including railway transport, with the market share of freight transport reaching 30% and that of passenger transport 20%.