WARSAW, Dec 4 (Reuters) - Poland needs to merge its coal mining companies with power producers, Prime Minister Beata Szydlo said on Friday, as part of a wider plan to rescue the country’s troubled coal mining industry.
The conservative Law and Justice party (PiS), which won parliamentary election in October, has taken over the task of putting together a rescue plan for Kompania Weglowa (KW), the European Union’s biggest coal producer.
The previous government failed to find investors for KW, because state-run power companies were reluctant to invest in its loss-making mines ahead of the election.
“There is a difficult time for coal mining ahead of us,” Szydlo said in the southern town of Libiaz, in a speech to mark annual coal miners day.
“But I believe that together, with joint actions of the government, the state and the coal miners it will be possible to create good prospects for the coal industry. It has to be merged with the electricity sector,” Szydlo said.
Poland has four big state-run power firms: PGE, Tauron, Enea and Energa.
Tauron has already bought a Brzeszcze mine in the south of the country that used to be owned by KW, while PGE has been tipped to make a direct investment in KW.
The power companies’ market valuations have fallen since the start of this year, mainly reflecting investors’ fears that they will have to invest in the loss-making mines. Shares in PGE fell by almost 30 percent in that time.
Potential mergers between Polish energy companies and coal miners on a large scale may negatively affect ratings of power firms, Arkadiusz Wicik, senior director, EMEA Utilities & Transport at Fitch Ratings said on Thursday. (Reporting by Agnieszka Barteczko. Editing by Jane Merriman)