Energy ministry hopes to finalize PGE takeover of EDF Polska within the next two months

The Ministry of Energy expects to finalize the acquisition of the EDF Polska assets by state-owned utility PGE in October or November this year, Deputy Energy Minister Grzegorz Tobiszowski said. The ministry still hasn’t decided whether to keep all of the EDF assets in PGE. Last week, Poland’s antitrust watchdog UOKiK, after further analysis, said that the planned takeover could pose a threat to competition and limit electricity sales of the commodity exchange TGE. “Increasing PGE's position may also result in a decline in the turnover on the TGE, which might have a negative impact on the sales on the retail market,” UOKiK said in its statement.  Despite the objections, UOKiK said that “it’s is convinced that a dialogue will yield in a compromise that will allow for a fast realization of the transaction.” According to UOKiK, electricity sales through the TGE, reduces the dominant position of the biggest utilities, as the smaller companies can make wholesale energy purchases on the exchange. But in the recent months, the number of electricity put up for sale on TGE has decreased, and with the potential takeover of EDF Polska it will lead to further decline. As a result, PGE will be able to sell most of its power within its own capital group, which will at the same time make it difficult for its competitors to buy it. Till this year, PGE sold most of its electricity through TGE, as it received state aid and in result was obligated to put at least 85 percent of the power it generates on the commodity market. When it ceased to receive public aid in December last year, the volume of PGE energy sold on TGE dropped to 25 percent in the first six months of 2017.  Generally, utilities are obliged by regulations to sell at least 15 percent of its energy through TGE. Back in May, PGE agreed to buy Polish assets of French EDF for PLN 4.5 billion. The value of the transaction includes PLN 2.45 billion in equity value and PLN 2.06 billion in debt and is expected to be finalized the deal by January 2, 2018.  EDF Polska owns four power and heat-generating plants and a coal-fueled power plant, as well as EDF's 50 percent stake in Kogeneracja, which owns another four power and heating plants.