April 19, 2016 / 11:55 AM / 3 years ago

UPDATE 1-France's Engie looks to sell Polish coal-fired power plant

(Adds Engie comment and background)

WARSAW, April 19 (Reuters) - French energy company Engie wants to sell its Polaniec coal-fired power plant, the company said on Tuesday, confirming a report in a Polish newspaper.

Puls Biznesu, quoting unnamed sources, reported that Engie had put its assets in Poland up for sale, including the 1800 megawatt (MW) coal-fuelled power plant in the south-eastern town of Polaniec, for 500 million euros ($567 million).

An Engie spokeswoman in Paris said Engie had decided at the end of January to invite potential investors to express their interest in the Polaniec power plant assets as part of a strategic review of the firm’s holdings.

Engie plans some 10 billion euros worth of asset sales by 2018, including fossil-fuel fired power generating plants, as it refocuses on gas networks, renewables and energy services.

Polaniec constitutes around 5.5 percent of power capacities installed in Poland and is the fifth electricity producer in the country. Earlier this year, Engie’s French rival EDF also launched the sale of its Polish assets.

Coal-fuelled power generation in Poland is mostly loss-making due to high CO2 emission costs and ageing infrastructure that requires constant investment.

Local power groups make up for these losses in other business areas, including distribution, but Engie does not have its own distribution network.

Puls Biznesu said that the potential sale of EDF and Engie’s assets is a challenge for the conservative pro-coal government, as they own around 10 percent of Poland’s installed power capacity.

Poland could push on some of its state-run power groups, including PGE, Energa and Enea to look at the assets as a result, the paper said.

“We are constantly analysing the market from the point of view of potential acquisitions,” Puls Biznesu quoted Enea’s spokesman, Slawomir Krenczyk, as saying.

Polaniec burns coal produced by Bogdanka, which is controlled by Enea.

“We will be looking at the process of possible asset sales by Engie also because the seller is the client of Bogdanka, which we control,” Krenczyk added.

PGE was not immediately available to comment. Energa declined to comment. ($1 = 0.8825 euros) (Reporting by Agnieszka Barteczko and Geert De Clercq; Editing by Alexander Smith)

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