Polish venture falters

The Polish Treasury has cancelled discussions with National Power over the purchase of a stake in Elektrowinia Patnow-Adamow-Konin SA (PAK), one of the country`s largest power generators.

Differences between the two parties arose over the terms of an initial agreement signed late last year. The Treasury is now said to be considering cancelling the deal entirely and changing the way its electricity assets are privatized.

UK based National Power had offered $125m for a 20 per cent stake in PAK. A successful deal would have been the first significant sale under Poland`s power privatization process. National Power also offered a further $125m for another 17 per cent stake to help finance the modernisation of the generator`s lignite-fired capacity.

National Power wanted PAK to be given a long-term power supply contract with the Polish National Grid and regional distributors. According to the Treasury, this was not part of the initial agreement signed in November 1998.

Poland is now in the process of liberalising its energy sector through asset privatizations and introducing competition be- tween energy producers. The privatizations will raise between $20 and $30bn of capital needed for modernization of the sector.