Polish mogul offers to return listed power group ZE PAK to state control

By bne IntelliNews June 29, 2016

The Polish treasury confirmed on June 29 that it is studying an offer from businessman Zygmunt Solorz-Zak to return Warsaw-listed power group ZE PAK to state-control.

The comments followed a report the same day by Parkiet, which quoted unnamed sources, that Solorz-Zak is ready to give up control of the power and brown coal group. In return for his 51.6% stake, he is reportedly seeking a slice of state-controlled utility Enea.

Poland’s treasury minister said Warsaw “has taken note” of Solorz-Zak’s interest in exchanging the stakes, and suggested the proposal might make sense for the state. “This is not just a business issue, but also a matter of energy security of the state. What ZE PAK offers is 7-8% of annual domestic power production, that's not to be played down,” Dawid Jackiewicz told PAP. However, he also noted that the deal would have to be looked at by the energy ministry.

The reported deal suggests the businessman has decided not to challenge the Polish government’s drive to regain control over companies it deems strategic, especially those in the energy sector. The ruling party Law and Justice has been clear in insisting several privatisations should not have happened.

The sale of ZE PAK is one such transaction, PiS has said. Poland's second richest man bought 40% of Poland's fifth-largest utility in 1999, and took control during an IPO in 2012.

A deal to hand control back to the state would presumably help end the controversy surrounding other privatisation deals in which ZE PAK has been involved. Earlier this month, the government said it was ready to request prosecutors investigate the 2012 sale of a lignite coal mine to the company, at a price officials claim was vastly below value.

Since PiS took office in November, economic policy has sought to increase the role of the state. That includes stopping privatisation and – if possible – attempting to bring companies deemed strategic back into the state’s hands. The PiS government has specifically singled out the privatisations of power companies ZE PAK and PKP Energetyka, as well as chemicals firm Ciech, as mistakes.

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