Elstar Oils plays Robin Hood?
EU Directive 2008/30/EC requires the implementation of legislation providing a framework for the introduction of gradually increasing bio-components to transport fuels (gasoline and diesel). But successive attempts, since December 2002, to introduce legislation have been foiled, revealing the many national and international issues at stake. And as a fourth version of the bill is now awaited, the battle seems by no means over.
The first version of the bill was rejected by President Kwaśniewski in January 2003, following protests by oil giant PKN Orlen, among others, on the grounds that the bill was being pushed through hastily and denied consumer choice. Furthermore, by requiring that all bio-components added to fuel be made from plants grown within Poland, it violated rights to the free movement of goods enshrined in the European Treaty. Then, in a scandal which erupted just before the bio-fuel legislation's second airing last summer, Jan Rokita of the Civic Platform (PO) accused Aleksander Gudzowaty, owner of several bio-component refineries, of 'buying' the bill for zł.10 million.
The third version of the bill was killed by the issues of exactly how much bio-fuel should be introduced and how the mixing of bio-fuel is to be regulated, which prompted Andrzej Zoll, the Citizens Rights' spokesperson, to take the matter to the Constitutional Tribunal, which brought about the most recent failure of the legislation last month.
Whatever its wording, the now keenly awaited new version of the bill looks to make good business for all those who have been able to make the necessary capital investment in refineries. Of which, following all the struggles, there now seem to be notably few.
Some firms originally interested are pulling out of market on the grounds that the competition is too great, while other players, such as Zakłady Azotowe Kędzierznyn and Estry Metylowe, report difficulties in obtaining bank finance. Those in a position to go into production as soon as the legislation is introduced are therefore confined to Alexander Gudzowaty, PKN Orlen and the now publicly-listed Elstar Oils. Moreover, since Alexander Gudzowaty has - conveniently - opted to produce bio-elements only for gasoline, it looks as if Elstar Oils will have to share the local market for diesel bio-components with practically no-one but Orlen. And since Elstar Oils plan to produce only ten percent of the expected market needs, as Rosnowksi confimed, there's not that much rivalry either.
Meanwhile, smaller would-be bio-fuel processors may have to wait still longer to get funding to invest in refineries, as, intra-EU tensions and election politics could now combine to rock the bill. The protectionist clause rejected in 2002 was revived last month by the Senate, which proposed a clause that all bio-components be produced exclusively from domestic raw materials for a 'transition period' to last until 2013.
Since, in the opinion of lawyers, such a clause would certainly be in violation of the European Treaty, its inclusion would logically embroil this country in litigation with the EU. "The EU could sue Poland for large amounts of money," says Tomasz Tatomir, an attorney at law firm Baker and McKensie.
Nevertheless, Stanislaw Rosnowski expresses his wholehearted support for the clause. "To those who say that the inclusion of such a clause is illegal, I reply the same as Marek Belka did to German Chancellor Schroeder," Rosnowski declares, referring to Schroeder's proposals last week that tax levels be harmonized within the EU, to which Prime Minister Marek Belka replied that it would be easier to harmonize taxes once this country had reached a similar level.
Even if the EU should take legal action against Poland for violation of the European Treaty, Biela told the press in April, the process would take three years. By then, he pointed out, local farmers would be receiving 75 percent of the subsidies afforded Western farmers, and would be in a better position to compete.
Whether or not the clause is added, local refiners will use local produce simply because it will be more price competitive, the Elstar Oils CEO went on to say. It's a view confirmed by market insiders, such as Adam Pool, chief investment officer at Environmental Investments, who says, "Transport costs mean that despite differing levels of subsidies, buying raw materials abroad would probably not make sense for any refinery not placed right near the border."
Asked, what, in that case, would be the point of including such a clause, Rosnowski, who market insiders suggest has also played a key part in the history of the drafting of the bio-fuel legislation through connections in the Polish Peasants' Party (PSL) says, "We have to give a signal to Polish farmers that they are needed, that we care about them."
The first version of the bill was rejected by President Kwaśniewski in January 2003, following protests by oil giant PKN Orlen, among others, on the grounds that the bill was being pushed through hastily and denied consumer choice. Furthermore, by requiring that all bio-components added to fuel be made from plants grown within Poland, it violated rights to the free movement of goods enshrined in the European Treaty. Then, in a scandal which erupted just before the bio-fuel legislation's second airing last summer, Jan Rokita of the Civic Platform (PO) accused Aleksander Gudzowaty, owner of several bio-component refineries, of 'buying' the bill for zł.10 million.
The third version of the bill was killed by the issues of exactly how much bio-fuel should be introduced and how the mixing of bio-fuel is to be regulated, which prompted Andrzej Zoll, the Citizens Rights' spokesperson, to take the matter to the Constitutional Tribunal, which brought about the most recent failure of the legislation last month.
Whatever its wording, the now keenly awaited new version of the bill looks to make good business for all those who have been able to make the necessary capital investment in refineries. Of which, following all the struggles, there now seem to be notably few.
Some firms originally interested are pulling out of market on the grounds that the competition is too great, while other players, such as Zakłady Azotowe Kędzierznyn and Estry Metylowe, report difficulties in obtaining bank finance. Those in a position to go into production as soon as the legislation is introduced are therefore confined to Alexander Gudzowaty, PKN Orlen and the now publicly-listed Elstar Oils. Moreover, since Alexander Gudzowaty has - conveniently - opted to produce bio-elements only for gasoline, it looks as if Elstar Oils will have to share the local market for diesel bio-components with practically no-one but Orlen. And since Elstar Oils plan to produce only ten percent of the expected market needs, as Rosnowksi confimed, there's not that much rivalry either.
Meanwhile, smaller would-be bio-fuel processors may have to wait still longer to get funding to invest in refineries, as, intra-EU tensions and election politics could now combine to rock the bill. The protectionist clause rejected in 2002 was revived last month by the Senate, which proposed a clause that all bio-components be produced exclusively from domestic raw materials for a 'transition period' to last until 2013.
Since, in the opinion of lawyers, such a clause would certainly be in violation of the European Treaty, its inclusion would logically embroil this country in litigation with the EU. "The EU could sue Poland for large amounts of money," says Tomasz Tatomir, an attorney at law firm Baker and McKensie.
Nevertheless, Stanislaw Rosnowski expresses his wholehearted support for the clause. "To those who say that the inclusion of such a clause is illegal, I reply the same as Marek Belka did to German Chancellor Schroeder," Rosnowski declares, referring to Schroeder's proposals last week that tax levels be harmonized within the EU, to which Prime Minister Marek Belka replied that it would be easier to harmonize taxes once this country had reached a similar level.
Even if the EU should take legal action against Poland for violation of the European Treaty, Biela told the press in April, the process would take three years. By then, he pointed out, local farmers would be receiving 75 percent of the subsidies afforded Western farmers, and would be in a better position to compete.
Whether or not the clause is added, local refiners will use local produce simply because it will be more price competitive, the Elstar Oils CEO went on to say. It's a view confirmed by market insiders, such as Adam Pool, chief investment officer at Environmental Investments, who says, "Transport costs mean that despite differing levels of subsidies, buying raw materials abroad would probably not make sense for any refinery not placed right near the border."
Asked, what, in that case, would be the point of including such a clause, Rosnowski, who market insiders suggest has also played a key part in the history of the drafting of the bio-fuel legislation through connections in the Polish Peasants' Party (PSL) says, "We have to give a signal to Polish farmers that they are needed, that we care about them."
