POLAND'S POWER SECTOR FEELING THE CONSOLIDATION HEAT

摘要

The Polish energy sector was by far the largest "new entrant" to the joint EU energy market in May 2004. Now, one year into Poland's EU membership, are there any Polish players visible in the market? Or has EU membership finally helped along Poland's stalled privatization process, paving the way for large European utility companies to buy up Polish companies? The answer to both questions is a clear "no", and this article will explain why this is the case. It will then go on to describe possible scenarios for mid-term development of the Polish power sector. The debate in Poland has to be seen against the background of the European energy industry, where consolidation is in full swing again. This is illustrated by the marked increase of M&A activity in 2004 and if looking at the combined market share of E.ON, RWE and EdF, which grew from about 14% to more than 25% between 1998 and 2003, and is bound to rise further. All major European utility companies are active in Central and Eastern Europe, and Poland, as key target areas for expansion. As in most CEE countries, Polish companies appear to have little to oppose to such powerful competitors. Neither do they possess the necessary critical size for substantial investments, nor do they grow fast enough, let alone internationally, to maintain their relative market position. CEZ, the Czech power generation and distribution company might be the only exception to the rule in the region. The threat of Polish companies not surviving this consolidation has called both companies and politicians to action. A heated debate on the creation of one or more national champions by permitting vertical integration has dominated energy policy and sector lobbying efforts in Poland throughout 2004 and early 2005. The power generators make the case together with the State Treasury that allowing them to take over distribution assets would greatly increase the privatization proceeds for the state budget. The distribution companies with the Ministry of the Economy and the Energy Regulator on the other side, fear that competition and, ultimately, the customer, suffer if they are to be gulped by generation-focused generation giants. While not concluded yet, this discussion has at last defined an alternative to the previous, piecemeal approach of privatizing assets in the energy sector whenever budget emergencies demand it, while defining other assets as "strategic state properties" exempt from privatization in order to avoid "national sell out". This paper outlines some possible scenarios regarding further consolidation and privatization in the Polish power sector. The authors argue that there exists no alternative to vertical integration and privatization. What Poland needs are strong, vertically integrated, privately-owned utility companies with a growth perspective and a substantial degree of value creation within the country. Whether generators take over distributors or vice versa is as secondary, as is the country of origin of the investor. Important is that the Polish economy profits from the presence of viable, growing energy companies rather than just supplying generation or sales outlets of subordinary significance in international energy groups in the mid to long term perspective.