SLD to change tack on energy privatization
By : Greg Goodale
Wieslaw Kaczmarek, tipped to be the next treasury minister in a future Democratic Left Alliance (SLD) government, said last week that if the SLD won the next election it would radically slow down the pace of electricity privatization, first prioritizing producers and consolidating distribution companies before any sell-off.
The former economy minister was critical of the government's approach to energy privatization saying the current strategy, based on the sale of distribution companies, would not continue under an SLD government. "First we have to deal with the generators while distributors should be privatized at the end," Kaczmarek said. "The implementation of current plans is scandalous, they approach things from the wrong direction."
But Kaczmarek's proposed changes to energy privatization strategy were given a lukewarm reception by analysts. Michael Davies, partner at Allen & Overy, said investors will be far less interested in energy producers. "International energy companies are probably more interested in the distribution than they are in the generation," Davies said. "This is an international phenomenon, people are moving out of generation."
Kaczmarek said the privatization of the sector must concentrate on vertical consolidation of fuel suppliers, producers and distributors, which should begin by an appraisal of the costs of coal production and long-term contracts. "We will first have to assess the effects of the restructuring of the coal sector and the real cost of coal," he said. "We have to decide whether long-term contracts are a barrier for investors or a privileged position."
Davies said that lengthy deliberations about consolidation and vertical integration would mean delays in privatization and a negative effect on Poland after its borders are opened up to competition from large European producers. "If the process is delayed then these companies are not going to be in good enough shape to face the joining of the European Union (EU) and cross-border competition," Davies said.
Kaczmarek said the restructuring of the country's internal market is a higher priority than Poland's entry into the EU energy market. "There's no reason to hurry," he said. "For now, we don't intend to be an exporter of energy. First we have to get our own house in order.
"This external aspect is of little interest to us until we have a really privatized sector."
