Three Polish government-controlled power and gas utilities placed initial bids to buy stakes in a coal producer to be created from money-losing state-held mining assets.
PGE SA, PGNiG SA and Energa SA pledged investments of 500 million zloty ($129 million), 400 million zloty and 600 million zloty, respectively, in Polska Grupa Gornicza Sp. z o. o., they said in separate regulatory statements after market close on Tuesday. All three want assurances the mining company will be profitable, won’t ask them for more capital in the next 10 years and that the cash injection won’t be treated as state aid, which could run Poland foul of European Union rules on public assistance.
While Poland relies on coal for about 90 percent of its electricity generation, declining prices for the black fuel have pushed the industry into a 1.9 billion-zloty loss last year. The government won October’s general election after promising not to shut any mines and keep the country dependent on coal for decades to come.
While the previous administration failed to overhaul the heavily unionized industry that still employs about 100,000 people, the new cabinet’s plan is also counting on using state-controlled utilities’ money to rescue unprofitable mines.
Polska Grupa Gornicza, or PGG, needs 2.2 billion zloty of new capital, which can be provided by both utilities as well as financial companies, Deputy Energy Minister Grzegorz Tobiszowski told public television TVP Info on March 4. The nation’s leading insurer, state-controlled PZU SA, doesn’t plan to invest in mines, Chief Executive Office Michal Krupinski told Parkiet daily on Tuesday.
Reuters
