From ZEDO to zero

The Polish government had great expectations for the privatization of the Dolna Odra power plant (ZEDO). It hoped that the sale of the state's 85-percent stake to Spanish energy company Endesa would bring zł.2.1 billion to the Treasury - more than one third of the planned revenue from privatization for 2006. Thereafter, the Spanish firm had also planned to list ZEDO on the Warsaw Stock Exchange (WSE). As the director for strategy and development of Endesa Europa, Joaquin Rodriguez, said the company has already made initial agreements with a few retirement funds that are interested in buying ZEDO's shares. "We want to sell them 25 percent of our shares," Rodriguez told daily Puls Biznesu.

But it seems that these ambitious privatization and IPO plans may never materialize, due to German concern Eon's declaration that it wishes to acquire Endesa. The proposed acquisition would severely complicate matters in Poland.

ZEDO runs on energy from coal, and the costs of transporting coal from Silesia to the Szczecin region are high. To reduce these costs the government intends to convert the power plant's energy system to gas, and link this with the plans to supply Poland with gas from the north - either from the planned LNG terminal or a new pipeline. However, Eon is set to participate in the construction of the controversial Baltic pipeline between Germany and Russia. This would probably mean that Eon wouldn't be interested in supporting any Polish gas investments, but would rather supply ZEDO with its own gas.

The Treasury Ministry declared firmly that if Eon acquires Endesa, it would halt the privatization process.