State budget will suffer from slow down in energy sector privatization

Addressing an industry seminar, Treasury Minister Wieslaw Kaczmarek said that the government will shelve sales of key power firms until after Poland enters the European Union. This is partly in order to boost the efficiency of the sector, which will have to compete with European utility giants. Kaczmarek outlined guidelines for power sector consolidation, saying the process could delay, by up to two years, the sale of power distributors with access to end consumers. These power firms are viewed as potentially lucrative acquisition targets by Europe's mega-utilities. But the fragmented power sector needs to consolidate to increase efficiency and to lower wholesale electricity prices, which currently run as much as 40% higher than those in Germany. "The necessary consolidation process ... will be carried out over the next year or two and until then those companies will not be sold," he said. The only exception to this will be the two pending sales of power distributors, Warsaw-based Stoen (which is expected to bring in around $400 million to the strained budget this year) and the sale of a majority stake in the G-8 group. (Reuters)