Tariff hike in the pipeline

Bogusław Marzec, chief executive of Polish Oil and Gas (PGNiG), Poland's dominant, state-controlled gas provider, has announced that his company would like to pay out a similar share of its net profits in dividends in 2006 to last year's 78 percent.

"We would like to pay a similar amount of our 2006 net profit as we did last year," Marzec told a news conference.

The company has designated zł.885 million of its zł.1.13 billion net profit for 2005 for dividend payouts.

Marzec also confirmed reports that the company was negotiating with market regulator the Energy Regulatory Office (URE) to raise gas tariffs in Q3 or Q4. Any rise will have to be approved by URE, which raised prices twice this year already - in January and in April - to make up for the rising price of imported gas. PGNiG buys more than half of the 13 billion cubic meters of gas consumed by the country annually from foreign sources, mainly Russia.

The group plans to diversify away from Russian gas by increasing domestic gas production and investing in a new pipeline which would bring gas from Iran. There are also plans to build a liquefied natural gas (LNG) terminal along Poland's Baltic coast.

PGNiG's first-quarter earnings rose by 14 percent to zł.620 million on the back of a 12-percent rise in prices. (Reuters)