bne IntelliNews -
The government is threatening to push through management changes at state-controlled PGE in a bid to break the resistance of Poland's largest power producer to funding Warsaw's rescue of the coal industry, local media claimed on August 17.
The treasury is pushing for changes in PGE’s management as it has become irritated by the company’s apparent lack of enthusiasm to put its hand in its pocket to help bail out Kompania Weglowa, Rzeczpospolita reports, citing company documents.
PGE's supervisory board is set to meet on August 20, and personnel changes are on the agenda, according to the newspaper. The motivation for that is the serious disagreements between management and the treasury ministry over the company's role in the KW rescue, unnamed sources claim.
The state coal holding has said it needs PLN1.5bn in capital by the end of the month in order to avert filing for bankruptcy, before the government's planned restructuring can be carried out. However, alongside other listed state-controlled companies, PGE has been resisting the pressure to contribute, insisting that investing in KW - which has been battered by weak European coal markets and prevented from a deep restructuring by unions and the current political situation in the country - makes no economic sense.
Facing a tough fight to catch up with the populist Law and Justice party ahead of the October elections, the governing Civic Platform sees little choice but to push the rescue through. Sources say Warsaw is twisting arms at the companies earmarked to fund the scheme, which has done little for sentiment on their stocks.
PGE is reportedly on the hook for PLN400mn, with peer Energa being tapped up for PLN300mn. National gas utility PGNIG is being asked for PLN100mn. On top of that, state-owned investment fund TF Silesia has also been requested to provide PLN100mn. State investment fund FIPP would then add PLN600mn.
Treasury Minister Andrzej Czerwinski told the newspaper no personnel decisions have been taken yet. However, he added somewhat ominously "every president of companies that come under the control of the treasury can be evaluated".
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