Sugar holding's privatization delayed
Expected to have been finalized earlier this month, the privatization of Slaska Spolka Cukrowa, the country's largest sugar holding, will most likely not be completed until June 15, sources close to the privatization process said.
Last month, French giant Saint Louis Sucre (SLS) was selected by the Treasury Ministry for exclusive negotiations to purchase Slaska. Throughout the winter, SLS had been vying with Germany's Sudzucker to acquire at least 51% of Slaska, which is headquartered in the southern Opole voivodship. In its original agreement with the government, SLS was given until May 22 to finish negotiations for the purchase of Slaska. Due to a continuing deadlock in talks with beet growers that supply Slaska's mills, the government last week granted SLS a two-week extension period.
"Negotiations are moving ahead fast, but the issues are complicated," said Pawel Jagiello, president of Pro-Invest International, the Treasury Ministry's adviser on Slaska's privatization. "The minister evaluated (the situation) and decided it was worth extending the exclusivity period."
SLS, the second-largest sugar company in France and the fourth-largest in Europe, has been actively investing in the Central and Eastern European region. If successful in purchasing Slaska, the French could control 22% of the sugar market in Poland, the third-largest sugar producer in Europe.
While both sides are being tight-lipped about the negotiation sticking points, the main hitch has been over how the French will calculate the price of the sugar beets they purchase from Polish beet growers.
"The most difficult point is how to calculate the price until the new (sugar) law comes into effect. That's the problem," Jagiello said. "When the law comes into effect it will take care of everything."
Over much of the last year, parliamentarians have been wrangling over changes to the present sugar law. These changes are aimed at improving the way the market is regulated in Poland and bringing laws in line with those on the books in the European Union (EU). In particular, farmers and strategic investors are looking to the bill to solve the hairy issue of how the price of raw materials will be established in the future.
In the meantime, the absence of the regulation has made talks between farmers and SLS more difficult. "It would be easier if work on the law moved forward more quickly," Jagiello said.
The lack of a new law has also complicated negotiations over the purchase price for Slaska. At present, to keep sugar prices stable, the government regulates how much each mill, or group of mills, can produce. Because the new law could change the production quotas allotted to the 16 mills that make up the Slaska holding, government negotiators and SLS are having a rough time agreeing on the price of the company.
"New regulations could lead to a change in how quotas are calculated," Jagiello said. "The quota (granted) Slaska could be more or less (in the future) and this is the problem we have to deal with."
