Polish utilities suspend coal-fueled plant project

WARSAW, Feb 13 (Reuters) - Polish state-run utilities Energa and Enea have suspended financing of their joint project to build 1 GW power plant in Ostroleka, which could freeze construction works which have already started, they said.

Construction of the plant, which was supposed to be Poland’s last coal-fired one, has already started, but Energa and Enea have not yet secured full financing as banks have shied away from backing such projects for environmental and sustainability reasons.

Poland’s biggest oil refiner, state-run PKN Orlen, which in December announced plans to take over Energa, signalled that it may opt to replace coal with less carbon-heavy gas as a fuel source for the plant which is built in north-east Poland

Energa and Enea said that PKN Orlen’s plans as well as EU climate policy and a shift in European Investment Bank financing policies have all had an impact on the decision to suspend the project.

“The decision to suspend financing the project could also result in suspending the construction works,” the companies said in a statement.

The agreement signed with contractors - GE Power and Alstom Power Systems - allows for suspending the construction for up to 90 days. Construction works at Ostroleka were advanced in 5% as of end of January.

Poland, which still generates most of its electricity from coal, was the only European Union state which did not pledge in December to become climate neutral by 2050, arguing it needs more time to do so.

Government officials say that they see gas as the transition fuel that can help Poland shift its energy system from coal to cleaner sources, including offshore wind, solar and nuclear power. (Reporting by Agnieszka Barteczko; Editing by Toby Chopra)