Poland raises the pressure on privatised PKP Energetyka

By bne IntelliNews July 12, 2016

Polish power utility PKP Energetyka risks being forced to suspend operations due to safety concerns, local media reported on July 12. It is difficult not to connect the problems to the government's insistance that last year’s privatisation of the company is a potential threat to the country's energy security.

Law and Justice (PiS), which took office in November, has long claimed that the sale of Poland's fifth-largest power generator by the previous administration to CVC Capital Partners was a mistake. PKP Energetyka is the owner of the power grid supplying energy to the rail network, as well as the only energy distributor on that network. PiS has said it would like to reverse the privatisation.

Rail transport regulator UTK has launched a procedure that could lead to the withdrawal of  PKP Energetyka's safety certificate, Gazeta Prawna reports. The watchdog has carried out a number of safety inspections across the railway sector, based on figures that UTK claims show an increase in accidents, especially at companies dealing with railway infrastructure.

A number of companies, including PKP Energetyka, are now subject to procedures that may lead to withdrawal of their safety certificates. Without the key document, companies would be forced to suspend operations.

The issue will clearly provoke speculation that, in the case of PKP Energetyka at least, the government’s wish to exert pressure on the private equity fund that bought the company in 2015. A recent report by state audit body NIK reiterated PiS' concerns. The report concluded risks for PKP Energetyka include the possibility that CVC could sell the company on to an entity “undesirable from the point of view of Polish markets of rail freight or energy”. Neglect of investment in technology and know-how is another worry, NIK said.

PKP Energetyka said it is surprised by the action from UTK. “In 2013-2015, there were 12 accidents in the company on average, while in the first six months of 2016 there were only three. Between 2013 and 2016, none of the accidents was categorised as serious,” Krzysztof Krawczyk, CVC’s head for Poland, told Gazeta Prawna.


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