Who's in the sugar bowl?
By : Juliet D. Golden
After months of controversy and delays, the government last week was due to announce its final verdict on the number of sugar factories that would ultimately figure into a national sugar holding, Polski Cukier.
While no announcement was made by press time last Wednesday, unofficial reports suggested that the government was leaning toward including only 25 mills in Polski Cukier, opening the door for the other 24 mills to be sold off to foreign investors.
To date, the absence of a clear verdict on the issue has not only blocked the sell-off of sugar factories to foreign investors, but the rumpus over the sector's future has also spilled over to the national political scene. Earlier this month, sugar figured prominently in MPs' bid to oust Aldona Kamela-Sowinska from her position as treasury minister, an office she has held for four months.
Any move to include fewer than 49 mills in Polski Cukier would deal a serious blow to farmers groups and some Solidarity Election Action (AWS) MPs, who for more than two years have moved to halt the sugar privatization process.
However, the decision to include as many as half of the mills in Polski Cukier still means a setback for foreign investors who in recent years have all but sealed deals with the Treasury Ministry to buy up the majority of Poland's sugar-production potential, the fourth-largest in Europe. To date, the government has come close to signing on the dotted line in deals to sell 32 mills to four major European sugar producers.
For one of those firms, Germany's Nordzucker, the lack of a clear stance on the issue has stalled plans to restructure the six factories it has already bought. Nordzucker is the second-largest foreign player on the Polish market, controlling 9%.
"We can't start restructuring, because we don't know how many sugar mills will belong to Nordzucker," said Adam Koziolek, proxy for Germany's Nordzucker.
In addition, if 25 mills are earmarked for Polski Cukier, Koziolek said Nordzucker would likely lose three Szczecin-based mills, which they're looking to acquire.
For another foreign player, France's Saint Louis Sucre (SLS), the government's decision may mean the rapid completion of its bid to purchase 16 mills that make up Poland's largest sugar holding, Slaska Spolka Cukrowa (SSC). Since signing a zl. 600 million ($150 million) agreement with the Treasury Ministry last November to acquire 95% of the holding, SLS has not been able to finalize the transaction due to the Interior Ministry's (MSWiA) refusal to sign off on the deal.
Barring a change of heart on the part of the government, Poland's court system may have the final say over the future of SSC. Next month the Supreme Administrative Court (NSA) is due to make a final ruling that SLS hopes will force the MSWiA's hand on the privatization deal.
