Mott's Blog

Now with the stock value of Polish energy companies that have government ownership plunging, the new Minister of Energy says that the plans to force electricity companies to buy or invest in mining companies are still not firm. Eventually almost everything that Law and Justice said in the election will be contradicted by the economic realities on the ground or by European Union rules and treaty obligations. So let's go to Emily Litella for a comment (click her name to hear).

The politicians cannot face the truth. But every good analyst already knows the outcome of the faltering coal sector in Poland. Less coal needed every year, higher priced domestic coal-fired electricity than our neighbors energy prices, most mining of coal cost more per ton than the market value, massive negative cash flows from the state-owned mines..... the end will not be pretty. This latest detailed article  in "High Voltage" lays out the numbers. By connecting the electricity utilities owned by the state to the mines going bankrupt the Government has basically used the financial resources of the utilities to achieve a political goal which will have a bigger economic price tag every year, before it hits bottom. The state-owned utilities have already signaled the same inevitable problem with their aging coal blocks as we have seen in Western Europe - a write-down of unprofitable assets. This occurs in the face of the Polish energy sector needing over 100 billion PL...