Elektrim ups price for G-8 group

By : Joe Harper

   Conglomerate Elektrim last week upped its price for the northern group (G-8) of power distributors, looking to develop stronger links between the G-8 and Zespół Elektrowni PAK (PAK), the power generator in which Elektrim holds 38.46%, an Elektrim representative said last Friday.

   The previous day, the Treasury Ministry granted a consortium headed by Elektrim exclusive negotiating rights to buy 25% of the G-8 group.

   “Our offer is the best because of the synergies between Elektrim’s PAK and the G-8,” said Piotr Samojlik, an analyst at CA IB in Warsaw, Elektrim’s adviser in the sale. “We don’t foresee a merger of G-8 and PAK, but G-8 buys about as much as PAK can produce (15-16 terawatts a year), and we can cooperate much more closely and effectively than others.”

   Krzysztof Wiatrowski, director of PAK’s management board, agreed that the sale of G-8 to Elektrim would be a good fit for the power generator.

   “The choice of Elektrim would be the best solution for us,” he said. “We are located very close to the Kalisz G-8 distributor and we signed a zł. 6 million ($1.42 million) agreement on Oct. 3 with the G-8 group that we would like to increase in the future. The sale to Elektrim would be a natural and economical move.”

   Elektrim’s consortium partners include subsidiary trading unit Elektrim-Volt, fuel concern Polski Koncern Naftowy Orlen (PKN Orlen), and grid operator Polskie Sieci Elektroenergetyczne (PGNiG).

   The Treasury Ministry recently pulled the plug on exclusive negotiations with Spain’s Iberdrola for 25% of the G-8 group. Analysts said the main reason for the deal’s failure was the distributors’ inability to agree on social packages with trade unions. Samojlik said that he also recognizes the trades unions as a potential threat. “Social packages would have to be signed with each of the plants’ unions and the unions within each plant (OPZZ, Solidarity, Engineers and Permanent Staff),” he said.

   Samojlik also expressed concern about the new government’s plans for the G-8 group. “The statement the Treasury Ministry issued was very vague and much depends on the new government,” he said. “It is not too late for them to cancel the tender all together.”

   Samojlik said Elektrim’s bid was higher than Iberdola’s. “Theirs was a very good one in terms of price, although we have upped our price this time around,” he said. The price is believed to be about $490 million, a $90 million premium to Iberdola’s bid.

   The G-8 distributors themselves were largely uninformed last week about the Treasury Ministry’s agreement with Elektrim. “We are still waiting on the new Treasury Ministry’s decision on this,” said Marek Dymowski, PR officer at one of the G-8 plants, in Elblšg. “The Iberdrola deal broke down due to a failure to reach a social package with the trade unions on employment guarantees and we don’t know what the new government will do. All we know is that the treasury officially withdrew the obligation to buy one of four generators when buying into the G-8.”