Vattenfall has strengthened its presence in the Polish energy market through the purchase of an 18.7 per cent stake in Enea S.A., one of four state-owned energy companies.
The sale of shares in Enea is part of the Polish government’s privatisation programme, which has faltered in the turbulent global financial markets. The European Bank for Reconstruction and Development (EBRD) bought a 2.5 per cent stake in Enea.
Vattenfall has paid SEK4.5 billion for its Enea shares while the EBRD paid EUR47.8 million. The two organizations were the only two significant investors to show interest in the IPO.
Enea’s operations include power generation, electricity distribution and supply in northwest Poland. Vattenfall already has a strong presence in the country with a total market share of seven per cent.
Vattenfall sees Poland as a key market for expanding its operations and deploying its ‘making electricity clean’ strategy. Enea’s portfolio consists of small-scale hydropower and coal, and it also has plans to invest in wind capacity.
“Poland is an interesting market for us and this acquisition strengthens our presence there. We also look forward to contributing our knowledge of CCS [carbon capture and storage] technology and how the energy sector can decrease emissions of carbon dioxide and other greenhouse gases,” said Lars G Josefsson, CEO of Vattenfall AB.
The Polish government hoped that companies such as CEZ and RWE would show interest in buying Enea shares with a view to eventually taking control of the company, which supplied 13 TWh of electricity to 2.3 million customers in 2007. According to London-based The Guardian newspaper, only two-thirds of the 149 million shares in Enea on offer were sold.
Enea is one of four state-owned energy companies created in 2003 by a restructuring of the power sector. The Polish government is aiming to privatise all four energy companies and had hoped that strong interest in Enea would boost confidence in the sector and generate interest in the remaining three companies.
Proceeds from the privatizations are also needed to help fund the upgrade and expansion of Poland’s electricity distribution network, as well as investments in renewable energy, energy efficiency, grid connections and new generating capacity.
Higher efficiency and greater capacity are crucial if Poland is going to be able to meet growing demand for power, according to the EBRD.
Nandita Parshad, EBRD Director Power and Energy, said the Bank’s participation in the IPO was a strong signal of its continued support to private investors and the development of a competitive market. “The privatization of the Polish power sector has been planned for many years and that the government is moving ahead now despite the international financial crisis and challenging market conditions demonstrates its strong commitment to bring needed investment to this key sector.
“This is a bold move which we support because it will be beneficial to the Polish economy as well as consumers,” she added.
Poland undertook a power sector reform programme following its accession to the European Union. The power industry remains dominated by the four large energy companies, however, and the need to investment is placing a burden on the state.
The government made the decision to privatise the sector in April 2008.
