New energy giant

The government is stepping up the pace on its program for the energy sector. Polskie Sieci Elektroenergetyczne (PSE) will be an integrator of the Polish Energy Group (PGE). PGE will comprise several distribution companies as well as BOT holding, which includes Bełchatów and several other power stations and coal mines.

This will make PGE, with a value of around zł.40 billion, the largest company in the sector and one of the biggest firms in Poland. In 10 years, the group's net profit should amount to zł.3.5 billion, while next year it should turn a profit of zł.870 million. At the end of 2008,  PSE  might debut on the bourse, but only 35 percent of it could be floated, as the State Treasury want to retain control over the company.

Compared to their European counterparts, Polish energy companies are quite small and the government's goal is to consolidate the sector. A second integrated group will be created after the consolidation of companies belonging to Południowy Koncern Energetyczny (PKE). "These groups are to be stronger in terms of capital and potential to finance development investments," explains Tomasz Wilczak, Undersecretary of State in the Ministry of Economy.

The process of consolidation should be finished by the end of the year and the privatization of the sector should be completed by 2008. "We are focused on consolidation, the issue of privatization is one for the future and the final decision will be taken by the Treasury Minister," says Wilczak.

Since 1998 energy prices have risen by 45 percent, while inflation amounted to 30 percent. If the market is not liberalized, energy prices could rise 15-20 percent in the next five years, according to the Ministry of Economy. "Through consolidation we will free the market, but not create overly strong monopolies," says Wilczak.