Poland officially halts privatisation

Poland officially halts privatisation
Polish Prime Minister Beata Szydło visits the construction site of new Jaworzno power plant last week. Tauron Energy Co., the utility operating the plant, was privatised by Poland's previous government.
By bne IntelliNews February 28, 2016

Poland's government will "wind down" privatisation, increase its oversight of state-controlled companies, and plans mergers, the treasury minister said on February 26.

The Law and Justice (PiS) party, which took office in November has a statist view on the economy. It has long criticised previous sell-offs of state-controlled companies, many of which dominate their sectors and are listed in Warsaw. The administration announced early in its reign a plan to liquidate the treasury, which was tasked with further privatisation under the previous, market-friendly, Civic Platform (PO) government.

Treasury Minister Dawid Jackiewicz told a news conference that the previous policy was wrong and will be discontinued. Privatisation deals will now only take place for companies that are in trouble and “without importance for the national economy,” the official stressed.

"We have taken a different approach than the previous government to the state's assets management. We are winding down privatizations, we will privatize only those companies that are redundant," Jackiewicz told a news conference, according to Reuters.

The statement comes in the wake of legislation approved by the Polish parliament on February 11 that should end the treasury ministry’s supervision of state-controlled energy companies by the summer, to place them under the energy ministry. Companies outside energy, such as PKO BP - the country's largest bank - and insurance giant PZU, will likely be moved at some point under the management of a new state-owned company or agency.

Meanwhile, the treasury ministry has identified 19 business areas for potential consolidation, Jackiewicz said. By mid 2017 Warsaw plans to launch a capital group that would feature the likes of copper miner KGHM, chemicals group Azoty, PKO BP and PZU, with an aim of "increasing their value".

PiS has also said it plans to to scrutinise previous privatisation deals. The government is currently probing the privatisation of PKP Energetyka, which PiS had said before the October election it would like to block.

Another deal that raises doubt is the sell-off of a 10% stake in copper and silver miner KGHM in 2010, according to Jackiewicz. “If I had financial means, I would definitely seek to strengthen the state’s control of key companies,” Jackiewicz said, claiming that privatisation has often increased the vulnerability of state companies to hostile takeovers.

Given PiS' clear stance and repeated comments, the official halt of privatisation is unsurprising. Some now speculate that - like in Hungary, which is a source of inspiration for the new Polish government - Warsaw may now seek to renationalise some companies. Energy would appear the most likely target.

 

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