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Books on Poland
REPUBLICAN REFERENCE
Area (sq.km)
312,685
Population
38,626,349
Capital
Warsaw
Currency
Zloty
President
Aleksander
Kwasniewski
Private sector
% of GDP
70%
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Update No: 105 - (30/01/06)
Energy crisis
The New Year, 2006, opened with a bang. Gazprom assured that by cutting off gas
supplies to Ukraine for two days on January 1-2. Everybody began to reconsider
their energy options, the biggest winner being Kazakstan. Russia is not the only
energy giant on the Eurasian continent.
President Nursultan Nazarbayev of Kazakstan was re-elected in December and was
re-inaugurated on January10th in his capital. He held a number of meetings on
the same day in Astana. He could not have been given a better send-off than by
Gazprom.
"New Polish authorities wish to support well-established Polish-Kazakstan
relations. We talked to the president of Kazakstan about economic cooperation,
including the pipeline Odessa-Brody-Gdansk project," the Senate chairman of
Poland, Bogdan Borusevich, said after the meeting with Nazarbayev.
Kazakstan is a key energy state, all the countries of the North European region,
including Poland, are interested in its energy supplies. In future it seems that
Kazakstan and Latvia and others would work more productively on construction
projects, such as of a traffic road from China, through Kazakstan and to the
Baltic Sea. Discussions in Astana also touched upon supplies of Kazakstani oil
to North Europe.
Russia is of exceptional importance to Poland-President Kaczynski
Poland's relations with Russia remain immensely important of course. President
Lech Kaczynski has described Russia as a country of exceptional importance to
Poland and "a state with which we would like to have the best relationship
possible." He was speaking at a meeting with members of the foreign
diplomatic corps.
The Polish leader said he hoped "2006 will be a year when these relations
see a fundamental improvement." Gazprom did not exactly start the ball
rolling here.
Kaczynski expressed the intention to pool efforts with Prime Minister Kazimierz
Marcinkiewicz in shaping the country's foreign policy, both new to their jobs
after recent presidential and parliamentary elections. In his opinion foreign
policy is not only the diplomats' job, but also a vast field for cooperation in
the economy, culture and sports, youth exchanges and the activity of
non-governmental organizations.
Poland's conservatives appoint liberal finance minister
The new government has yet to settle in. Liberal professor of economics Zyta
Gilowska, 56, has been named to succeed Tereza Lubinska as Poland's finance
minister.
The appointment of Zyta Gilowska, a former deputy leader of the opposition Civic
Platform (PO) party, came hard on the heels of the resignation of Treasury
Minister Andrzej Mikosz amid allegations of shady financial dealings. No
successor to Mikosz has been named.
Lubinska, 53, was ousted from the country's three-month-old minority government
after her calls for higher fuel taxes and a higher budget deficit.
Under Prime Minister Marcinkiewicz, the Polish government agreed in December
2005 to reduce the 2006 deficit to 30.5 billion zloty from 32.6 billion zloty
set by the previous government. She was also criticised for her attacks on some
multinational retailers present in Poland.
"It has been my firm determination to establish order in public finances
and I have always fought against any waste of money," Gilowska told a press
conference in Warsaw. "Public spending has to be disciplined and
rational." She favours quick eruozone accession and has also vowed to fight
unemployment, which stands at 17.6%.
Poland's next general election is scheduled for 2009. However, if the 2006
budget is rejected in parliament, early elections may be held this spring.
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AUTOMOBILES
Poland's car market sees worst sales for 2005
According to an annual report by the Samar Automotive Market Research Institute,
last year Poland's car market was the worst for sales since 1991. The number of
new cars sold in Poland came to just 235,000 and dropped dramatically in the
second half of 2005, New Europe reported.
The year's figures fell short of 2004's total by almost 21 per cent. Car
producers are continuing to register dropping sales and advertising campaigns
are not increasing sales. "The market broke down mainly because the
relationship between car prices and people's salaries is disadvantageous, so
many can't afford even a relatively cheap car," Wojciech Drzewiwcki, CEO of
Samar, said. "The second reason is instability in the area of taxation -
Poles still do not know what rules apply as the law is constantly changed. The
growth in the second-hand car market is rapid."
Skoda is the market leader with 11.7 per cent market share. Its sales decreased
by 26 per cent in 2005 against 2004s numbers. Toyota is next in line, with 10.9
per cent, while Fiat was forced into third spot.
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AVIATION
Polish budget airlines continue to grow
It is uncertain if the Hungarian WizzAir, which is currently the leader among
budget airlines in Poland as it carried 1.3m passengers in 2005, will be able to
keep its high position, as its main competitors - domestic Centralwings and
Irish Ryanair - say they are about to launch an offensive, New Europe reported.
All budget airlines plan to increase the number of aircraft in their fleet, the
year 2006 will see a boom in the carrier market. Ryanair hopes to carry 1.4m
people over the next 12 months, whereas WizzAir plans to increase the number of
its passengers to two million. This would translate into growth of more than 53
per cent and would secure the company the leading position for this year as
well. Judging by the declarations of the six largest budget carriers, the market
will continue to expand in 2006 by as many as 2.6m passengers, but since the
smaller players have not revealed their projections yet the market could double.
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BANKING
Bank Millennium opens 160 outlets
With a major promotion and investment campaign Bank Millennium plans to build
its best ever financial results. Currently, Bank Millennium has 234 branches in
Poland but plans to build a further 160 outlets, approximately 100 of which will
be placed in big cities, especially in Warsaw developing its business model and
launching a long-term advertisement campaign with an investment of 190 million
zloty during the next three years, New Europe reported.
Bank Millennium's CEO, Boguslaw Kott, said, "The promotion campaign will
last until May 2006 and the bank's infrastructure will be rebuilt during the
next three years. We are also going to put more care into e-banking. These
latest moves follow hot on the heels of the bank's record financial results for
2005."
The bank earned 567 million zloty in net profit, almost double compared to 2004
and hitting a new record in the bank's 16-year history. The value of loan,
credit card and investment-fund commissions increased by 17.9 per cent in 2005
and the company's individual share value rose by 65 per cent.
Moreover, the company is going to alter its business model by putting its
individual-banking, key-client and small- and medium-enterprise operations under
one roof. The Polish bank is fully supported by the Millennium BCP group.
Millennium BCP group's CEO, Paulo Teixeira Pinto, said, "Bank Millennium
has become a pillar of the group and Poland has become one of the three most
important markets for us. As our group changes from Portuguese to European, we
fully support Bank Millennium's strategy."
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ENERGY
Poland urges Kazakstan to participate in Odessa-Brody
Poland sees cooperation with Kazakstan in the oil and gas sector as a guarantee
of not only its own energy stability, but of that of the whole Europe. The
latest gas conflict between Russia and Ukraine has forced the Polish government
to intensify its efforts to look for new and more stable ways to supply
hydrocarbons to the country. Polish Economy Minister, Piotr Wozniak, talked to
New Europe in an interview in Astana about transporting Caspian hydrocarbons to
Europe.
Minister, how can you explain such a growing interest of Poland in Kazakstan
hydrocarbons lately?
Kazakstan is an important partner for us from the point of view of possible
diversification of the energy sources. Today it is the most important task of
our new government. A way to achieve this objective may be the construction of
Odessa-Brody-Gdansk oil pipeline. And we are seriously interested in Kazakstan's
participation in this project.
But there have been talks about this project for years, and so far it is only
talks…
Not only Poland is interested in this project, but also the EU. So the interests
of our country intertwine with the interests of all Europe. As you know, as
early as in 2003, a trilateral declaration was signed that evaluated this
project as "a project of energy security of Europe." Already some real
steps have been made. Last year the EU allocated two million Euro for a
feasibility study and appointed a consortium to work on it. And already in
January this year we expect to receive the first information about economic
expediency of this project.
With respect to Kazakstan's involvement in this project, as far we know, this
country is looking for new export markets for its oil, of which the annual
production will hit 150 million tonnes by 2015 according to the (Kazak) minister
of energy. We can see Kazakstan's efforts expanding its transport opportunities,
and the construction of an oil pipeline to China is a step in this direction.
Since you have mentioned energy security of Europe, how would you evaluate
the recent "gas row" between Russia and the Ukraine?
The gas situation in the Ukraine has affected not only Poland, but also Austria,
Italy and France. All Europe has felt the impact of this problem. We had to use
severe saving measures and to cut gas supplies to our industrial enterprises.
This is not new to us. A similar situation happened in February last year when
the Yamal gas pipeline was shut off for two days. And this issue has already
been discussed in the EU. In Poland supplies are controlled by private companies
and not by the government. And we have asked our firm about the reasons for such
a situation. But nobody has provided any official explanation to it as to what
had happened. This is the risk. And we could live with such a risk, but for that
we should know when and for how long the supplies will be reduced so that we
could prepare ourselves accordingly. But it's not the case now. This is exactly
why we are looking for alternative gas supplies. And this partly explains our
interest in Kazakstan.
Did Poland influence the gas conflict between Russia and the Ukraine?
Poland, as a EU member, must resolve all issues in accordance with the EU
principles, therefore we acted through the official channels. But in any event,
all gas supplies from Russia are carried out under Gazprom contracts and it is
Gazprom that should comply strictly with its obligations. In case of any
difference with the Ukraine, the Russian company should provide alternative
supplies to us. But it has not been the case. That is why we now intend to
revise the contract conditions with Gazprom. We intend to receive gas at the
Ukraine-Russia border and then to sign separate contracts with the Ukraine for
the transit of our gas through its territory.
Minister, as it is known, Polish PKN Orlen competed with KazMunaiGas in
another deal - acquisition of Unipetrum refinery, Czech Republic, and it
purchased the plant. Now their interests have met in Lithuania. Why did PKN
Orlen decide to buy Mazeikiu Nafta as well?
Orlen has ventured this acquisition because it was interested in expanding its
product market. Although a private company, it is large and strong and its stock
trades high at the exchange. The company has strategic interests in the east.
And after the acquisition of Unipetrum in Czechia, the company is primarily
looking at enhancing its commercial opportunities. Orlen owns a large network of
service stations in the country, and Mazeikiu Nafta is attractive not only
because of its proximity to Poland but also because it is not just an oil
refinery but a whole complex that has an access to the transit terminal in
Butinge, which creates additional opportunities for successful export and import
of oil products.
And how many refineries does the company own?
Today two: a refinery in a Polish town of Plotzk and Unipetrum in Czechia.
Should it get the new deal, Mazeikiu Nafta will become the third refinery on
Orlen's assets.
You have also mentioned joining the forces and capabilities of two oil
companies: Polish Orlen and Kazak KazMunaiGas in the Mazeikiu Nafta tender in
Lithuania. It's an interesting position, how can you explain it with the two
companies being competitors in essence?
This is a question to the company rather than to me. But I think that Orlen is
looking for good oil suppliers at the same time. And KazMunaiGas with its
obvious potential is a good partner as far as oil supplies are concerned, as it
has good relations with Transneft. Besides, considering Kazakstan's ambitious
plans, not entire oil produced will be sold through Russian and China. And this
was discussed openly with (former Kazak) Minister of Energy, Valdimir Shkolnik.
And (former Kazak) Minister of Economy (Kairat) Kelimbetov, also mentioned that
Kazakstan is interested in diversification of its oil export routes. Cooperation
in the oil and gas sector is mutually beneficial. Poland and Lithuania are EU
members and this provides a guarantee of a stable legal environment and thus
firm guarantees for KMG, as the agreement will be based on standard European
conditions. And Orlen is a good brand in Europe. It may therefore make sense for
the two companies to join their forces and to detail the conditions on which
they can cooperate.
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FOOD & DRINK
Dried fruit and nuts sector, two large groups
Domestic dried fruit and nuts producers are about to consolidate. The market may
soon be composed of two large groups based on two companies, Atlanta Poland and
Uno Fresco Tradex (UFT), New Europe reports.
The value of the retail raisins and nuts market in Poland is estimated at 3.500
million zloty, and it is expanding by five to six per cent annually. At the end
of last year the market was divided among a number of players. One of the
purposes of the merger would be the expansion of the new entity outside Poland,
especially in countries to the East.
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FOREIGN INVESTMENT
KSEZ signs 2 investment deals
At the beginning of the year 2006 the Katowice Special Economic Zone (KSEZ)
signed two investment deals. Steel company Ugine & Alz has agreed to invest
9.4 million Euro (36 million zloty) in KSEZ, and lubricant producer Smart Plus
has committed to a three million zloty investment. Last year, the zone also
attracted a 35 million Euro (134 million zloty) investment from metal parts and
components producer, American Johnson Controls, New Europe reports.
Piotr Wojaczek, KSEZ's CEO said, "Surpassing 2005's record high investment
value in our zone will be quite hard, but we have ambitious plans to at least
achieve equal results. We want to have approximately 25 new investment projects,
worth 200-250 million Euro (765-956 million zloty) and delivering 3,000 new
jobs. We are already involved in negotiations with eight companies, four of them
being interested in rather big projects worth 40-50 million Euro (152-190
million zloty."
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INFORMATION TECHNOLOGY
Profits for Teta in 2005 and acquisitions for 2006
IT company, Teta, forecasts a healthy net profit of 2.65 million zloty on
revenues of 23.3 million zloty for 2005 financial results. Jerzy Krawczyk,
president of Teta said turnover was 7.2 per cent higher compared to 2004, while
net profit increased by almost 30 per cent, New Europe reported.
According to the company's president, in 2006 Teta plans to maintain net profit
growth, while its revenues should increase by at least over 10 per cent, which
is the anticipated increase of the ERP market. The company is considering
acquisitions of ERP producers to the south of Poland and final decisions should
be expected within at least two months. The anticipated purchases will not
exceed much more than 10 million zloty and they will be financed from the
company's own capital and bank loans.
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MINERALS & METALS
Mittal Steel privatisation process of JSW
Puls Biznesu, the president of Mittal Steel Poland (MS), Vijay Kumar Bhatnagar,
officially announced that the enterprise will attempt to participate in the
privatisation process of coal mine Jastrzebska Spolka Weglowa (JSW). "Our
strategy is based on rational investments in coal, whenever there is an
occasion," said Bhatnagar. The privatisation of JSW will be conducted
through flotation of the company's shares on the Warsaw Stock Exchange (WSE) and
although the issue prospectus is ready while the final details are being
discussed, it is still unknown when precisely the IPO will take place, New
Europe reported.
The steel concern needs coal for its two coke plants in Zdzieszowice and Krakow,
which it acquired while taking over Polish Steel Mills. Up until now it was
buying coking coal, now it wants to buy the producer. Bhatnagar revealed that
the company plans to invest 600m Euro (2,277 zloty) by the first quarter of 2007
in four coal mines that belong to MSP.
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TELECOMMUNICATIONS
Vodafone looks at doubling its stake in Polkomtel
Vodafone could double its stake in Polkomtel at an estimated cost of 860m Euro (£585m)
after one of its fellow shareholders in the Polish mobile operator put its
holding on the market, The Financial Times reported on February 4th.
The UK mobile operator said it was looking at the possibility of increasing its
stake but would not confirm that it would be willing to pay the 214.04 Euro per
share price that is being demanded.
The 19.61 per cent stake - the same size as Vodafone's current holding - is
being sold by TDC as a result of the Danish telephony company's takeover by a
consortium of private equity groups.
Vodafone has stated its interest in expanding further across central and eastern
Europe, and said that Polkomtel was obviously a business we know very
well."
It may face competition for the stake from the other shareholders in the
company, including PKN Orlen, a Polish fuel group.
The company's portfolio of minority stakes has been one of the concerns raised
by some shareholders since it issued a profit warning in November.
The question of whether such stakes leave the company with insufficient control
of its assets has been raised by several investors, who have expressed some
broader concerns about Vodafone's performance under Arun Sarin, chief executive.
The company has all but completed a round of shareholder meetings following the
publication of its key performance indictors recently.
Most large shareholders have expressed concerns, publicly or privately. Standard
Life, among others, has called on the company to divest itself of its investment
in Verizon, the US operator, but Insight, Vodafone's ninth-largest investor, has
gone on the record to support the company.
Some shareholders said they were waiting for the arrival of Sir John Bond as
chairman in July before exerting more pressure, although others hoped their
concerns would be addressed sooner.
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