Favoured state buyer Enea reportedly files lowest bid for Engie’s Polish power plant

By bne IntelliNews October 25, 2016

Polish state-controlled utility Enea has filed the lowest bid out of three for a power plant being sold by French utility Engie, local media reported on October 24. The offer complicates the choice of buyer on Engie’s side, because of the government’s power of veto.

Enea has bid just over PLN1bn (€250mn) for the plant in Polaniec, Parkiet reports. A rival bids from Sunningwell International has been pitched at PLN1.3bn-1.5bn, while an obscure consortium of Chinese companies is tendering PLN1.8bn, the newspaper claims.

Engie, however, could be forced to sell to Enea. Recent legislation handed Warsaw the power to control deals involving assets deemed strategic for energy security. The government has made no secret of the fact that it wants to boost the state's role in the sector, which is a key element in its drive to resuscitate the coal industry.

“It’s a difficult transaction. It all depends what Engie knows from the energy ministry. If [Engie] can sell Polaniec but only to a Polish entity, they might consider Enea’s offer, which is the lowest but at least will be accepted,” an unnamed source told the newspaper. The French company is in talks with the energy ministry, looking to work out a compromise, Parkiet claims.

Enea's offer poses additional issues for Engie aside from the low price. The Polish utility is reportedly only ready to pay 15% of the offer immediately. It will seek to raise the reminder via bank debt and pay Engie in installments. The French utility is hunting ready cash from the asset.

Engie wants to get rid of Polaniec in order to limit exposure to coal-fired assets, which is a strategy underway at a number of other Western European power companies. Part of the Polaniec complex is also a large biomass-fired unit, which is also a risk under current conditions in Poland, with the price of renewable energy trending down because of Warsaw’s renewed focus on coal.

 

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