December 4, 2015 / 4:05 PM / 3 years ago

Poland to buy coal from stockpiles to help mines -PM

WARSAW, Dec 4 (Reuters) - Poland will buy stockpiled coal reserves from struggling mining companies as part of a government plan to help boost the sector, Prime Minister Beata Szydlo said on Friday.

The conservative Law and Justice party (PiS), which won a parliamentary election in October, has taken over the task of drawing up a rescue plan for Kompania Weglowa (KW), the European Union’s biggest coal producer.

“I took the decision that the Material Reserves Agency will buy the coal that is in the stockpiles so that the coal mines receive funds for operating in the coming months,” Szydlo said, without providing any details.

The agency declined to provide details on volumes, prices or deadlines.

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. It suspended a KW rescue plan in September as the European Commission (EC) was unlikely to approve it.

Kompania Weglowa is on the brink of bankruptcy due to record low coal prices and rising production costs.

Poland has around 6 million tonnes of coal in stockpiles, while power stations burn 37-39 million tonnes annually.

The chief executive at KW said this year that the company needs 700 million zlotys by the end of March to survive.

Szydlo also said that the new Energy Ministry is working on a broader strategy for the coal and electricity industries.

Two government sources told Reuters on Friday that next week a delegation from the energy ministry is going to Brussels to present the European Commission with an updated rescue plan for the industry, including KW.

The energy ministry was not available for immediate comment.

One source said that the new plan would be based on those considered by the outgoing government.

“There is no time to invent something new. But there is a plan, which would involve a number of investors. It cannot be ruled out that PGE will play a significant role in the process,” the person said.

PGE is Poland’s biggest power producer and had been expected by the previous government to invest in KW. (Reporting by Agnieszka Barteczko; editing by Michael Kahn and Jason Neely)

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