Competition first

The 'Program for Electro-energy' recently prepared by the Polish government, does not meet the expectations of private companies and potential investors. Instead, it enhances ineffective state structures and hampers privatization, say entrepreneurs from the Polish Confederation of Private Employers (PKPP) Lewiatan.

It is the program's goal of consolidating the state-owned energy companies that raises most objections. "The program is not coherent. It assumes that consolidation will be followed by competitiveness, which in turn will result in the decrease of the energy prices. However, consolidation means that there are going to be fewer entities, and thus, competitiveness will be limited and prices will not be lower," said the president of Electrabel Polska, Grzegorz Górski.

According to the energy entrepreneurs, only efficient privatization and deregulation can secure the state's interests and the sector's development. "The state has a conflict of interest. On the one hand it is the companies' owner and runs operational activity, and on the other, it is the market regulator," stresses the deputy president of STOEN, Matthias Preusser.

The government program assumes that power stations will be merged with distribution groups, and as a result, four main companies would be created, dealing with the energy production, distribution and sale. BOT Górnictwo i Energetyka will play the role of the national leader. "We would prefer if there were more - up to seven - entities that are formed on the basis of the market and not administratively regulated," said the deputy president of Lewiatan, Przemysław Chojnowski. He also highlights the necessity of modernizing Polish transmission infrastructure, which could only be carried out as a result of privatization. "Eighty percent of Poland's transmission infrastructure was assembled in the 1970s. In the energy sector any device that is more than 30 years old has to be replaced. In this case I would say that a blackout is quite a real risk," says Chojnowski.

Last week the Minister of Economy, Piotr Woźniak said the program might be presented in government session this Tuesday.

"In 2005 the value of merger transactions in Poland was a mere $1.4 (zł.4.5) billion, compared to $196 (zł.626) billion worldwide," said the deputy director of the energy-fuel sector team at PricewaterhouseCoopers, Katarzyna Rozenfeld. "The efficiency of an owner in the form of the state is limited. Let's launch four balanced companies that could compete with each other," she said.