G-8 unions stick to social package
Trades unions with the northern group of eight power distributors (G-8) said last week they would stick to their demands for a post-privatization social package in talks with a consortium headed by Elektrim, recently granted exclusivity with the Treasury Ministry to buy 25% of G-8, the company's union chief told the Business Journal.
"The basic element of our negotiations with any investor, old and new, is to guarantee jobs at the G-8 plants," said Jan Bachorski, head of the joint trade union team set up to negotiate with investors. "We think our proposals in this area with Iberdrola were reasonable. We asked for two- to 10-year job guarantees." In negotiations with Iberdrola earlier this month, the unions asked for job guarantees before the talks failed.
The eight distributors are represented by three trades unions: Solidarity, which has the most members; another representing engineers and technicians; and a third representing auxiliary staff. It is not clear whether the investor will be required to sign social packages with each plant, which may slow down the sale considerably, industry insiders said.
The treasury pulled the plug on talks with Iberdrola and invited a consortium headed by Polish conglomerate Elektrim to take part in exclusive negotiations for G-8. Exclusivity expires on Nov. 19. Observers said the key reason for the failed bid with Iberdrola was an inability to agree on a social package with the distributors' unions.
"Iberdola's offer was too loose, with too many ifs and buts," Bachorski said. "They also played some negotiating games that we weren't totally happy with and wanted guarantees that buying 25% of the company would effectively give them control of the company. That simply could not be."
He said the union's joint negotiating team had not yet been invited to talk with Elektrim. "We are ready, but we will not change our demands for job guarantees," he said. "We are also somewhat worried about press reports that the company is experiencing financial problems."
An Elektrim representative, who asked not to be named, said talks with the company's management and unions were set to start early this week. He said Elektrim had been unable to gain access to Iberdrola's proposed social package, which may potentially slow down talks as Elektrim would like to improve the offer. The official said restructuring at the G-8 group was inevitable, given "poor local market conditions," but it would not be based on job cuts. "The package has to be cost effective," he said. Elektrim reportedly offered $490 million for the 25% stake, about $90 million more than Iberdrola.
Bachorski said the unions would also be looking to change a proposal that sets a lower price for employee shares. "If they are set at about 80% of the value of the other shares - and that offer is still, as far as I know, on the table - we could not agree to that," he said. Employees are granted 15% of the company's shares under privatization regulations.
He acknowledged, however, that redundancies were likely. "You would have to be a great optimist to believe there will be no redundancies at the company after privatization, but we are working on the basis that there will be none - that is our position," he said.
When asked whether the unions preferred a domestic or foreign investor, Bachorski said: "We don't care if the chosen investor is Polish or foreign, the negotiations come down to jobs and the legal footing of any social package."
The G-8 sale would be the largest energy-sector privatization of the year, covering distributors in the northern regions of Koszalin, Słupsk, Gdańsk, Elbląg, Olsztyn, Toruń, Płock and Kalisz.
The eight companies account for 14-16% of the nation's total distribution market. The group supplies electricity to 2.6 million customers and has assets of zł. 3 billion ($714 million). Net profits last year were zł. 49.5 million ($12 million) on sales of zł. 3.6 billion ($878 million) - down from zł. 66 million ($16.1 million) and zł. 3.85 billion ($940 million) respectively in 1999.
Joe Harper
