Polish chamber rejects foreign firms' appeal on power plant deal

WARSAW, March 25 Mon Mar 25, 2013 11:28am EDT

WARSAW, March 25 (Reuters) - Poland's National Chamber of Appeals (KIO) ruled that local firms Rafako and Mostostal Warszawa should carry out a $1.7 billion contract for utility Tauron, rejecting appeals from two rival foreign consortiums.

Earlier this year, state-controlled Tauron picked the two Polish companies for the 5.4 billion zloty deal to build a coal-fired power generation unit.

China National Electric Engineering Co (CNEEC) with China Overseas Engineering Group Co, and a consortium of Canada's SNC-Lavalin Inc. with Hitachi Power Europe GmbH - part of Japan's Hitachi Ltd - appealed to the KIO, which examines disputes between bidders for public contracts.

Following the Chamber's ruling on Monday, the foreign consortiums can still appeal to a district court.

State-controlled Tauron, whose power plants are among the most outdated in Poland, planned to sign the deal in the second quarter but the appeals could delay the process.

Polish builders are relying heavily on contracts arising from a revamp of the energy sector after finding business tough last year.

A burst of road-building fuelled by European Union funds left many construction companies saddled with loss-making contracts and huge debts.

Shares in Rafako and Mostostal Warszawa, which have shed around one third this year, continued to slide despite the ruling, undermined by last year's weak results.

Rafako was down almost 7 percent at around 1500 GMT, while Mostostal Warszawa was down 2 percent, both underperforming the Warsaw index WIG which was down 0.4 pct.