A consortium formed by telecoms and engineering conglomerate Elektrim and Kulczyk Holding to buy a 25 per cent stake in the group of eight Polish electricity distributors and suppliers known as G8 has failed to negotiate terms within the extended deadline of 30 November. Elektrim said on Saturday that it had been unable to reach agreement with the group’s trade unions.
The sell-off of the assets now looks in jeopardy as previous front runner, Spain’s Iberdrola, also stumbled over the problem of trade union demands.
“The investor could not accept demands of the trade unions. The negotiations concerned privatisation premium for workers, employment guarantees and wage increases,” said an Elektrim spokeswoman.
Polish Treasury Minister Wieslaw Kaczmarek had earlier in the week admitted that Elektrim’s bid was in trouble but no official comment has yet come from the Treasury since the deadline passed.
Should the Elektrim bid fail, the ministry could reopen talks with other bidders – including Iberdrola, Belgium’s Electrabel, and Germany’s E.On AG or cancel the tender.
The sale of the G8, a group of eight regional distributors in Gdansk, Torun, Slupsk, Plock and Elblag is part of the Polish government’s plans to privatize the energy sector under an act passed in 1997.
The G8 group is regarded as strategically important, containing the second largest power generator, Elektrowni Patnow-Adamow-Konin (PAK), as well as the SwePol subsea power cable.
Minister Kaczmarek is believed to favour halting sales of distributors until a consolidation and restructuring scheme is drawn-up for less-lucrative energy producers. He said he would need to check the cash-strapped Elektrim’s finances before deciding on the sale.
Shares in Elektrim, which was once a jewel on the Warsaw bourse, slumped to a near six-year low of 13.1 zlotys ($3.18) earlier this month on renewed talk of default on its €480m of bonds due in mid-December.
The stock closed at 16.5 zlotys on Friday, valuing the company at 1.4bn zlotys.
If completed, the sale would give troubled Elektrim, which has recently been pulling out of costly telecoms investments and refocusing on the energy sector, a lucrative foothold in Poland’s electricity distribution market.
The sale of G-8 was initiated by the previous government, which lost power to the current leftist administration in September elections. The 25 per cent stake had been valued by the former government’s treasury at 2.2bn zlotys ($542m).