PGE seeks help on Polish nuclear plant

By bne IntelliNews April 18, 2013

bne -

Financially struggling under the weight of Warsaw's drive for greater energy independence, Poland's biggest utility PGE announced on April 17 it has opened talks with new potential partners about joining the long-drawn-out project to build the country's first nuclear plant.

The company said in a statement it has begun a new round of meetings to find partners to invest in the reactor, as well as providing technology and support services. PGE did not offer details on the potential partners, except to call them "suppliers and potential partners who have participated in previous briefings that took place in September 2011 and in September-October 2012."

The meetings, which are due to finish by the end of May, come in the wake of PGE's failure to meet a March deadline to sign a deal with three other state-controlled firms to share costs of the PLN50bn investment. It is also a matter of days since the utility announced the cancellation of a PLN11.6bn project to build 1.8 gigawatts (GW) of new coal-fired units at its Opole plant.

Poland's plan to launch a 3GW nuclear plant at one of four locations on the Baltic coast by 2023 - with a further ambition to double the capacity by 2030 - is a major plank in the government's drive to improve energy security. However, it's also putting stress on the balance sheets of state companies, especially since they have been pushed into investing in the shale gas hunt after international investors lost their enthusiasm last year.

The nuclear project has seen more than its own share of setbacks. PGE CEO Krzysztof Kilian raised doubts about the plan last year when he warned that high costs would force Poland to choose between investing in shale gas exploration or a nuclear programme. That prompted Prime Minister Donald Tusk to step in personally to try to put the project back on track. Following the failure of utilities Tauron and Enea, alongside copper miner KGHM, to seal their roles in the nuclear push last month, the PM appeared to directly contradict earlier statements from the treasury when he pledged on April 2 that the state would offer support, possibly including financing.

PGE is set to publish a new strategy in the coming days as it tries to juggle the demands upon its capital from Warsaw. The state wants it not only to commit to huge investment, but also to help the government's own finances. Pawel Tamborski, the deputy treasury minister, has already suggested Warsaw will seek to boost PGE's dividend payout for the year due to the cancellation of Opole. The government is pushing state companies hard to pay handsome sums to shareholders as it seeks revenue to support fiscal targets.

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