Poland forces state-controlled companies to pay into mining bailout fund

By bne IntelliNews July 22, 2015

bne IntelliNews -

 

Poland has pushed at least three large state-controlled companies into contributing to the fund that will be used to bail out the struggling coalmining industry, according to reports on July 22. 

Under pressure from Warsaw, copper and silver miner KGHM, power utility PGE, and chemicals company Azoty will all put capital into new state investment fund FIPP, unnamed sources claimed to Reuters. While the government claims the fund will be used for an array of purposes in the future, its raison d'etre is to plough PLN1.5bn into a rescue of state coal mine holding Kompania Weglowa (KW) by August.

The news will alarm minority shareholders in Poland's state-controlled companies. All three of the companies said to have signed up are listed. Having previously been earmarked to lead the effort, PGE and its fellow utilities have been fighting to avoid being roped into the rescue, which comes as Poland's inefficient mines sink in the midst of weak European markets and cheap imports.

Following what a source described as "arm-twisting" from the government, the companies will put capital into FIPP to move the fund’s capitalisation closer to the planned amount of PLN6bn (€1.45bn). State development bank BGK and state investment vehicle PIR have committed PLN1.6bn already. FIPP will become a major sharholder in KW. 

Poland's other powerful state-controlled firms are also in the government's cross hairs. PZU’s CEO went on record on July 22 to say the company will not get involved in coalmining in any form. However, utilities Enea and Tauron are like on top of the list of candidates in Warsaw. Reuters reports that oil refiner PKN Orlen is also being pushed.

The high profile fuss is unlikely to do much for Poland's investment climate. State-controlled companies, and the utilities in particular, have long fought government pressure to take part in politically-led programmes such as raising the country's energy security, which they say are not in their economic interests. 

However, with the ruling Civic Platform (PO) facing a tough looking fight ahead of elections in the autumn, it can't afford to allow the mining industry - which employs 100,000 - to buckle.

 
 

Related Articles

UK demands for EU reform provoke fury in Visegrad

bne IntelliNews - The Visegrad states raised a chorus of objection on November 10 as the UK prime minister demanded his country's welfare system be allowed to discriminate between EU citizens. The ... more

Poland's Law and Justice nominates hardline cabinet

Wojciech Kość in Warsaw -   Poland’s Law and Justice (PiS) party, which won an outright majority in the parliamentary elections on October 25, has announced a hardline ... more

Kaczynski expected to appoint hardline cabinet

Wojciech Kość in Warsaw -   The Law and Justice (PiS) party, which won an outright ... more

Register here to continue reading this article and 2 more for free or purchase 12 months full website access including the bne Magazine for just $119/year.

Already a subscriber or registered - click here to recover access.

If you a IntelliNews Pro user - click here to login.

Thank you. Please complete your registration by confirming your email address.
A confirmation email has been sent to the email address you provided.

To continue viewing our content you need to complete the registration process.

Please look for an email that was sent to with the subject line "Confirmation bne IntelliNews access". This email will have instructions on how to complete registration process. Please check in your "Junk" folder in case this communication was misdirected in your email system.

Already a subscriber or registered - click here to recover access.

If you a IntelliNews Pro user - click here to login.

If you have any questions please contact us at sales@intellinews.com

Subscribe to bne IntelliNews website and magazine

Subscribe to bne IntelliNews website and monthly magazine, the leading source of business, economic and financial news and commentary in emerging markets.

Your subscription includes:
  • Full access to the bne content daily news and features on the website
  • Newsletters direct to your mailbox
  • Print and digital subscription to the monthly bne magazine
  • Digital subscription to the weekly bne newspaper

Already a subscriber or registered - click here to recover access.

If you a IntelliNews Pro user - click here to login.

bne IntelliNews
$119 per year

All prices are in US dollars net of applicable taxes.

If you have any questions please contact us at sales@intellinews.com

Register for free to read bne IntelliNews Magazine. You'll receive a free digital subscription.

Already a subscriber or registered - click here to recover access.

If you a IntelliNews Pro user - click here to login.

Thank you. Please complete your registration by confirming your email address.
A confirmation email has been sent to the email address you provided.

IntelliNews Pro offers daily news updates delivered to your inbox and in-depth data reports.
Get the emerging markets newswire that financial professionals trust.

"No day starts for my team without IntelliNews Pro" — UBS

Thank-you for requesting an IntelliNews Pro trial. Our team will be in contact with you shortly.

Dismiss