Electrabel allowed to pursue Polish power plant

19 September 2002 – Poland’s cabinet approved Tuesday the sale to Belgian utility Electrabel the remaining shares it hold in the Polaniec power plant – responsible for generating six per cent of Polish power.

The 1800 MW power station in southern Poland near Krakow is already 38 per cent owned by Electrabel and negotiations are now likely to proceed foe the sale of the remainder.

“We are happy to hear we can carry on with the negotiations to boost our stake in Polaniec,” said Jean-Claude Dorcimont, vice president of Tractebel Electricity and Gas. “The main issue is now to agree at the number of shares and the price at which the state will want to sell and we will want to buy them,” he added.

The sale will boost the treasury’s much needed cash flow and reduce the need for borrowing.

In April 2000 when Tractebel bought the initial 25 per cent in Polaniec, it paid €87.5m ($85 million) and agreed to a five-year investment of another 45m.

Tractebel, along with five other bidders, is also talking with the government about the purchase of a majority stake in Poland’s largest power distribution group, the northern G-8 cluster, which the treasury had hoped to sell for around $1bn.

Negotiations with two preferred bidders collapsed last month, reportedly over the price, and the treasury had to return to talks with all the initial bidders

Dorcimont said that Belgian group was willing to negotiate the G-8 but indicated that the introduction of new excise taxes on power sales would lower the offer.

“We are still interested in G-8, but we do have to look into all conditions, also the power excise tax, which is dramatically reducing the value of all power firms,” he said.

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