Polish state companies win minor concession on coal rescue plan

By bne IntelliNews March 29, 2016

A growing list of state-controlled companies has agreed to join the effort to save the Polish coal industry, a government official said in comments published on March 29, while winning a minor concession on the timing of investment.

Poland has recently pushed power utilities Energa and PGE, alongside gas utility PGNiG, into investing in the country’s new state coal group PGG. The new entity will replace Kompania Weglowa (KW), the country’s largest coal miner, which has been struggling because of weak coal markets and poor efficiency.

Warsaw expects the listed companies to contribute PLN1.5bn (€350mn). The firms have now won a small concession, and will be able to make payments in two installments, Energy Minister Krzysztof Tchorzewski told the weekly Wprost.

Meanwhile, other companies are being pulled into the rescue of the mines. Power firm Enea, its coal unit Bogdanka, and coal exporter Weglokoks are set to help dig Katowicki Holding Weglowy (KHW) out of a hole, deputy Energy Minister Grzegorz Tobiszowski told PAP on March 24. KHW needs an estimated PLN400mn-500mn to improve efficiency.

The listed firms have been resisting the pressure to get involved - which has come from both the current government and its predecessor - for months. The government of Law and Justice (PiS) has overseen a wide scale change of management at the companies to push the scheme through.

Warsaw now needs to win the backing of the powerful unions. Workers have demanded no jobs should be lost in the process.

“I told the trade unions that investors will concede [to support PGG] on condition that the money would be paid in two installments," Tchorzewski said. "The first instalment would be made at the beginning, while the second by the end of Q1 2017, when it will be apparent that things are improving, that the cost restructuring program is realized," he said. The official reiterated that the creation of PGG will not result in any layoffs.

A successful rescue for the coal industry is key for the government, which promised in its successful election campaign in October that it would help the sector. Coal is Poland’s staple fuel and the sector employs 100,000.

 

 

 

 

 

 

 

 

 

 

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