New Government Continues Politicization of State Owned Firms in the Energy Sector
As new management boards are appointed in the big energy companies owned by the state in Poland, the new Law and Justice Government seems bent on accelerating the politicization of these companies. The agenda is to continue and accelerate investment in new coal based energy plants and to use the cash flow of the electricity producers to under-write the bankrupt state-owned mines (15 billion PLN in debt with an annual rate that is growing).
The policy is to force the state-owned firms or firms where the state has the biggest block of shares to make decisions that are contrary to the economic interests of the company's shareholders and supportive of the politicians; agenda. This is, of course, highly illegal.
The immediate impact of PO and PiS manipulating the Government's ownership of energy company shares has been to destroy the value of the equity of the companies.
Polish state-owned energy companies are losing value much faster than the sector globally or the private concerns in Poland.
PGE is the largest company in the electricity sector and is indicative of this problem:
Energa is number three in the sector and shows the same thing:
UPDATE: Now the stock market analysts are commenting in the same vein as the above post. Just the threat of sticking the mines debt and operating lossess onto the electricity companies is killing their share prices:
The policy is to force the state-owned firms or firms where the state has the biggest block of shares to make decisions that are contrary to the economic interests of the company's shareholders and supportive of the politicians; agenda. This is, of course, highly illegal.
The immediate impact of PO and PiS manipulating the Government's ownership of energy company shares has been to destroy the value of the equity of the companies.
Polish state-owned energy companies are losing value much faster than the sector globally or the private concerns in Poland.
PGE is the largest company in the electricity sector and is indicative of this problem:
Tauron at number two has a similar problem:
The trend has accelerated since the election of Law and Justice and the new management changes just announced will likely make the rate of decline greater or at least keep values in the cellar.
The great irony of all of this is that the Polish politicians keep proclaiming that their actions are designed to save the Polish economy. Presumably such actions would be reflected in increased investor confidence and share values in the industry affected. That the opposite is happening strongly indicates that the policies will be an economic disaster.
UPDATE: Now the stock market analysts are commenting in the same vein as the above post. Just the threat of sticking the mines debt and operating lossess onto the electricity companies is killing their share prices:
09.12.2015r. 6:03
As reported "Dziennik Gazeta Prawna", on Tuesday continued to decline prices of energy companies on the Warsaw Stock Exchange, and WIG-energy lost 4.6 percent
Sale is related to investors' concerns against destabilization due to planned and made changes to the boards, they fear also revamped strategy to Treasury companies - wrote the newspaper. - Changes in management boards have less importance, investors were expecting them and basically they are already included in prices. The quotations are also reflected emerging ideas so far, that consolidation and to some extent connecting to the mining industry. Hence drops - says Krzysztof Kubiszewski, an analyst DM Trigon in an interview with the daily.
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