Treasury unveils privatization strategy for energy industry
By : Bogda Zukowska
The Treasury Ministry last week drafted a new strategy for privatizing the energy sector and announced a timetable for selling off a large portion of the industry's assets.
Among utilities scheduled for privatization this year are the Kozienice power plant in southeastern Poland, the Zabrze and Bytom power and heat generators in Silesia and two large groups of energy distributors.
"The concentrated action by the Treasury Ministry last week marked a breakthrough in the privatization of Poland's energy sector," said Piotr Kapla, an analyst with Bank Handlowy.
The ministry's plan mandates that investors would be able to acquire up to 45% of power and heat generators, and up to 25% of power distributors. The state would retain a 25% stake plus one share in each of the privatized companies to keep supervisory rights and control over key decisions in the industry. The draft also gives priority to energy generators to be privatized ahead of distribution companies.
Despite the warm response by some analysts, others were skeptical about the strategy, which was co-prepared by the Economy Ministry.
"The treasury came up with a long overdue privatization schedule," said an adviser familiar with the sector who wished to remain anonymous. He said the strategy is proof that the treasury bowed to pressure by the Economy Ministry, which is seeking to maintain its influence on the energy industry. "Power generators will keep their dominant position over customers as the strategy does not address a key issue: how to create a competitive energy market in Poland," the adviser said.
He added that the strategy would even be counterproductive because it could result in lower prices for Polish utilities and slow down sell-offs. "The strategy aims to combine sell-offs of distributors with power generators," the adviser said. "Such a policy would result in the dropping of prices of assets up for sale and in the slowing down of the privatization process because potential investors should include this new condition (to buy distributors in a package with power generators) into their calculations."
Meanwhile, the treasury concluded the long overdue sell-off of the Rybnik power plant last week. A Franco-German consortium of Electricite de France (EdF) and Energie Baden-Wurttemberg (EnBW) grabbed 6.2% of Poland's energy-generating market through the purchase of a 35% stake in Rybnik for $120 million. The deal includes a stipulation that the consortium invest $51.6 million in a capital increase and a further $84.3 million for upgrading projects.
"Rybnik's power plant was relevant for the sector's privatization because it has been sold for a good price, along with substantial investment commitments from the strategic investor," Kapla said.
Progress was also made last week in the privatization of G-8, the country's largest group of energy distributors with a 16% share of the domestic market. Six foreign and domestic bidders were shortlisted to buy a stake in the group, which comprises eight companies based in Koszalin, Gdansk, Torun, Slupsk, Olsztyn, Elblag, Kalisz and Plock. The bidders include Belgium's Electrabel, Spain's top two power companies Iberdola and Endesa, Ireland's ESB, Germany's E.ON Energie and Poland's Elektrim group. According to a recent Bank Handlowy report on the power sector, a sell-off of the G-8 group could generate more revenue than last year's sale of a 25% stake in Gornoslaski Zaklad Energetyczny (GZE) for zl. 640 million ($150 million).
