POLISH COAL MARKET MIDWEEK SUMMARY 11/2016

Enigmatic comments and setting new date for next meeting – that’s how we can sum up discussion that took place between labor unions and KW’s management on Monday 14th March. Both sides presented their ideas of salary structure amendments, very different as we can guess. Next meeting is scheduled for 21st March and might bring some leaks from the post-audit report that everyone is expecting to read. Deputy minister Grzegorz Tobiszowski from Ministry of Energy revealed only that there were many “irregularities, nepotism and shady connections”. Will ME use the report as a whip for adamant (so far) unions to weaken their negotiations position?

In regards to PGNiG, last week we’ve wrote that Warsaw Stock Exchange treats hard coal assets like they were toxic and how every reference of energy company trying to invest some money (or drown it) in saving Polish coal industry affects the stock price. After Energa, PGE and PGNiG TERMIKA announced on Tuesday 15th March that they are willing to put some cash into PGG (respectively: 600m, 500m and 400m PLN) the stock price of that first one dropped by 9%.

Involvement of above mentioned companies still is just not enough to meet assumptions from PGG business plan, according to which the new entity needs around 2.2bn PLN. There are no signs of any messiah-company willing to put forward the missing 0.7bn PLN (Weglokoks done its job and is already out of the picture). Even if there would be one, many experts are concerned if all that effort would not be wasted by just covering the current spending (instead of investments). The first scenario is more likely to happen. PGE and Energa already stated that after these cash injections both companies won’t be able to support mining sector with any additional money inputs, at least not in the perspective of next 10 years.

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