Mott's Blog

The new government announced plans to compel other state-owned companies to kick in funding to bankrupt coal-mines also owned by the government. Since it costs more to mine the coal than its market value (and Polish coal is notoriously poor in quality), this is the classic maxim of throwing good money after bad. Or maybe the black hole of Poland? Animation here.

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 c...