EDF reportedly set to sell Polish assets

By bne IntelliNews January 13, 2016

EDF is reportedly looking to sell its power and heat generation assets in Poland, in line with its strategy to divest coal assets and move into renewables and nuclear, local media reported on January 13.

The French power firm's Polish assets could be worth up to PLN2bn (€460mn), Puls Biznesu reports. The company holds several combined heat and power (CHP) plants across in the country, as well as a power plant in the southern town of Rybnik. EDF needs cash to help power its nuclear plant project in the UK.

The move away from coal is being followed by several large Western European utilities, as they face EU pressure over the fuel's impact on environment and climate. However, Poland, it's Visegrad peers, and regional power companies, have shown themselves reluctant to embrace the change.

That suggests EDF’s Polish assets could attract serious interest. Coal currently supplies around 90% of the country's power. The new Law and Justice (PiS) government has repeatedly insisted coal will remain the country’s staple fuel for decades. The ruling party has pledged to the powerful unions that it will keep the struggling coal mining industry afloat, and is seeking to push state-controlled companies to invest billions in it.

The French company is reportedly ready to sell its Polish assets one by one if a portfolio deal proves impossible. Either way, it will signal a shake up of the country's power market; EDF controls 10% of the electricity market and 15% of the CHP segment.

Poland's state-controlled power giants may struggle to compete however, given the demands they are facing to help the coal industry and urgently build new capacity. That said, PGNiG Termika, the CHP arm of the state-controlled gas giant PGNiG, might interested, Puls Biznesu claims. Enea and PGE are also speculated to be possible buyers.

However, Czech-based, Slovak-owned Energeticky a Prumyslovy Holding (EPH) is the most likely suitor, the newspaper posits. Controlled by oligarchs connected to Slovak financial group J&T, EPH has been on a buying spree over the past few years, borrowing heavily to snap up assets to turn itself into a regional heavyweight.

The latest acquisitions saw the Czech based group buy Hungarian power producer Budapesti Eromu and part of Enel’s 66% stake in Slovak power utility Slovenske Elektrarne. In December, EPH bought a second power plant in the UK from RWE.

The holding is also bidding for the German lignite capacity and mines of Sweden's Vattenfall, which is being pushed by Stockholm to exit the highly polluting, but also profitable, assets. However, EPH may well have its head turned by the availability of a large Polish portfolio. The holding has made little headway in Visegrad's largest market.



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