Slippery issue

A merger of the largest domestic oil refiner PKN Orlen with smaller refiner Lotos could save the firms as much as zł.800 million a year, the head of Orlen was quoted as saying in daily Rzeczpospolita.

Orlen chief Piotr Kownacki claimed that a merger would be profitable for both firms by lowering their costs. "According to cautious estimates of our advisers, [the savings] could reach up to zł.800 million a year over a period of five years," he said.

But Grupa Lotos supervisory board chairman Jan Stefanowicz admitted in an interview with daily Parkiet that he does not understand the reasons presented by PKN Orlen in favor of merging the two companies. In his opinion the merger would be disadvantageous to one of the parties. "It will be no miracle. Shareholders in both companies will not benefit from this," said Stefanowicz.

According to Stefanowicz's preliminary analysis, the new entity would have a worse balance sheet results than Grupa Lotos has at present. The merger of the two state-controlled companies, which would create a company with a market value of about zł.32 billion, has been the subject of rumors for the past several months.

Head of Lotos, Pawel Olechnowicz, said in a separate interview with Rzeczpospolita that he remained skeptical about the idea.

"There is no guarantee that a merger will be a financial and technical success and that it would strengthen the country's energy security," he said.

"My recipe for the merger is to merge to create added value and not to create problems and risks." (Reuters)