Treasury fires up energy sector privatization plans
As the Treasury Ministry shows signs that it will make good on assurances that 2000 will see more than just privatization rhetoric in the energy sector, eager multinationals are preparing to go on a buying spree.
Germany's RWE, for instance, is on the shortlist for a 40% stake in distributor Gornoslaski Zaklad Energetyczny (GZE) and has gone public in its hunger for Belchatow, Poland's largest power plant. Klaus Bussfeld, an RWE board member, said at a press conference recently that RWE which saw O38.4 billion in revenue in 1999 and has investments all over Europe plans to invest zl. 4 billion-zl. 5 billion ($909 million-$1.13 billion) in Poland over the next few years.
"The suspicion has always been that RWE would essentially like to control the energy distribution sector in western Poland," said Zach Allen, managing director of Pan Eurasian Enterprises, a joint energy development/consultancy firm in Warsaw.
Allen describes the German company as one of the "most qualified companies in the world" to take over Belchatow and said it will be a leading contender after the company is privatized.
Marek Palonka, managing director of RWE's new Warsaw office, said his company also has its sights set on Warsaw distributor STOEN, which has about 12% of the market. It was also a member of the consortium bidding to build the suspended Belchatow II plant.
In addition, Volker Heck, press chief of RWE's Essen headquarters in Germany, said the company was interested in all areas of Poland's energy sector generation, distribution, marketing and sales especially if those facilities are in upper Silesia or Warsaw.
"Poland is a very attractive investment region for us," Heck said.
And RWE isn't the only big-time energy player looking to expand. Electricite de France (EdF) and a consortium of Japan's Marubeni Corp., NRG International and General Electric Capital Corp. are also looking for inroads.
EdF recently paid O62 million along with Gas de France for a 45% share in Gdansk-based power and heating plant Wybrzeze. The investors have agreed to up the stake to 50.12% by investing an additional O12 million during the next month.
EdF also controls more than 15% shares of Wroclaw power and heat plant Kogeneracja and is a strategic shareholder in Krakow CHP, a heat and power plant.
EdF announced at a press conference Thursday that it has invested more than O150 million in the Polish power sector and plans to contribute another several billion euros to secure 15% of both the production and distribution markets.
EdF is in competition with Germany's Energie Baden-Wurttemberg for eventual control of Kogeneracja.
"This is quite interesting," said Pawel Zach, senior research analyst at Citibank (Poland). "Both EdF and (Energie Baden-Wurttemberg) took part in the IPO and are accumulating shares on the stock exchange. Who knows who will be the management board's favorite."
The German company has 17.3% of Kogeneracja, which has indicated it will choose a strategic investor from among major investors in its IPO, Zach said.
The Marubeni consortium, for its part, looked set a few weeks ago to take 35% of the Rybnik power plant in southwestern Poland, but the deal stalled over disputes concerning coal supplies. An agreement has apparently been signed between Rybnik and Weglokoks, Poland's largest coal exporter, and the treasury has indicated the sale should be finalized within days, Zach said.
The consortium is also on the shortlist for GZE. If it were to acquire both GZE and Rybnik, Pan Eurasian's Allen said, it would control both a distributor and a generator company in Silesia.
"That's what I call a local monopoly," he said. "If it's successful, they're winding the clock backward."
The state treasury seems fairly determined nevertheless to keep any one investor from getting too much of the market.
"The privatization (of the energy sector) in Poland is more like a beauty contest, not a tender," Zach said. He added that the sector, unlike the telecom industry, can be divided among numerous interested parties that satisfy the treasury's requirements.
So far, of Poland's 33 distribution firms, 17 power plants and 19 power and heating plants, two power and five power and heating plants have been sold. The government wants to have the entire sector in private hands by the end of 2002. The generation sector alone is estimated to be worth $5 billion-$6 billion.
