Poland accelerates privatisation programme(3)

The country’s treasury unveiled plans to privatise approximately $12.3bn of state-owned assets by the end of 2010, including numerous utilities. However, assets as diverse as spas and vodka factories are among the 740 business enterprises earmarked for sale.

The Polish government plans to accelerate its privatisation programme, selling as much as zl. 36.7 billion (€8.7 billion; $12.3 billion) worth of state-owned utilities, industrial and financial companies by the end of 2010.

The government expects to realise zl. 10 billion of the sales in the second half of this year and about zl. 25 billion in 2010, according to a statement by Polish Treasury Minister Aleksander Grad.

KGHM: for sale

Topping the government’s list of priorities is the sale of power utilities Enea, Tauron, PGE, Energa and ZE PAK, according to the statement. Industrial chemical manufacturers Ciech, Zaklady Azotowe Pulawy, Zaklady Azotowe Tarnów and Zaklady Azotowe Kedzierzyn are also slated for sale, as is the Warsaw Stock Exchange and the government’s stake in commercial bank Pekao.

Additionally, Grad proposed the government sell between 10 percent and its entire 41 percent holding in Polish copper miner KGHM – a move opposed by Interior Minister and Deputy Prime Minister Grzegorz Schetyna.

The sales could come as a boon to private equity firms in the Central and Eastern European region, which has seen increased appetite from investors in recent months. For example, Swedish private equity firm EQT, which recently raised a €1.2 billion infrastructure fund, opened a Warsaw office in October of last year.

Grad said the privatisations would help Poland cope better with the effects of the financial crisis, which has significantly slowed the growth of the Polish economy. Once growing at upwards of 8 percent per quarter, Poland’s GDP is expected to grow between .1 percent and .3 percent in the second quarter of this year, Deputy Finance Minister Ludwig Kotecki said in a statement.

As a result of the economic slowdown, Poland’s debt level will equal to 50 percent of its GDP this year, Kotecki told reporters on Friday, according to Reuters. However, he also said it will stay below 55 percent. The country must keep its public debt below 60 percent of GDP under European Union rules.

The privatisation income, part of an ongoing 2009-2011 privatisation plan previously unveiled by Polish Prime Minister Donald Tusk, is expected to help the government avoid breaching the 60 percent threshold.

In the 18 months since the Tusk-led government came to power in Poland, the Polish government has successfully privatised 144 business concerns, Grad said in the statement.

As of 30 June 2009, the Polish Treasury was in “an advanced stage of the process” for 431 additional privatisation projects, Grad said. Of these, 74 are undergoing pre-privatisation analysis, 115 are being prepared for the privatisation process, 126 are in the process of selecting advisors and 116 are in the process of being shopped around to investors.

As of 31 March 2008, the Polish Government had rights to stocks and shares in 1,237 business enterprises, according to the 2008-2011 privatisation programme. Of them, 740 were slated for privatisation schemes.

They span sectors as diverse as banks, utilities, oil and gas, mining, chemicals, engineering, shipbuilding, defense, manufacturing, metals, transportation, food processing, publishing, pharmaceuticals and tourism.

Ten government-owned spas and the Silesian Quality Vodka Company, a liquor manufacturer, are also earmarked for sale.