Poland working on new coal sector strategy

By bne IntelliNews July 7, 2016

Poland will draft a new “action plan” for the ailing coal mining industry by year’s end, the energy minister said on July 7.

The plan will follow major changes in the industry overseen by the government in recent months, during which state-controlled companies have been pushed to buy into the country's mines. Once the sector has the desired structure, a strategy will be rolled out that will focus on innovation, tapping into new deposits, improving efficiency, and human resources, Energy Minister Krzysztof Tchorzewski told MPs, according to PAP.

The official's comments suggest the government is keen to reduce headcount in the inefficient industry, which is sinking due to weak markets. However, that would spark tension with the powerful mining unions, which no government has managed to stand up to over the past two decades.

The minister added that schemes will be offered to miners leaving the profession, but that is unlikely to avert protest. The government would also like to shift non-production assets to SRK, the sector’s specialist restructuring company.

Coal is a key sector for Poland’s energy security, producing about 80% of electricity. The PiS government hopes to maintain the industry for years to come, having essentially bailed out the country’s largest miner Kompania Weglowa (KW) in late April. KW has become Polska Grupa Gornicza (PGG), with the government pushing state-controlled companies to invest PLN3.5bn (€800mn) in the new company.

On top of restructuring coal companies – a similar process is expected soon for coking-coal producer JSW – Warsaw is crafting legislation to try to help coal thrive. A recently passed law on renewable energy and a bill specifically on wind power are seen likely to weaken competition. Plans are under way to establish a power capacity market to enable large utilities to build new coal-fired generation.

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