The competition regulator, UOKiK, isn't keen on a PGE-Energa merger Roberto Galea/WBJ

The government is powering up for the privatizations of Enea and Energa, Poland’s third- and fourth-largest utilities, respectively. A number of questions remain, however, particularly with regards to the Energa transaction.

The bidders for the 83 percent stake in Energa are France’s GDF Suez, Czech firm Energeticky a Prumyslovy Holding, a consortium of Kulczyk Holding and Goldman Sachs, and Polska Grupa Energetyczna (PGE), Poland’s largest energy group. The value of the stake has been estimated at zł.6-7 billion, but the company posted good results for H1 – including a 68 percent y/y increase in net profit – generating speculation that the sale price could rise.

PGE has posted the highest bid for Energa. But acquiring its smaller peer would give state-controlled PGE an indisputably dominant position on the Polish energy market. While the Treasury Ministry has repeatedly signaled it would favor the tie-up, competition watchdog UOKiK opposes it.

“It is said that PGE would pay any price, because buying Energa would strengthen its position incredibly,” a source close to the privatization told WBJ. “But if the transaction took place, it would be a heavy blow to the Polish energy market, which would then be dominated by PGE.”

UOKiK is clear in its disapproval of PGE’s bid. “Because months of analyses have shown that such a consolidation would limit competition on the energy market, we are signaling today that we will not give our consent to the transaction,” said Małgorzata Cieloch, UOKiK’s spokesperson.

When push comes to shove, however, there’s some question as to whether UOKiK head Małgorzata Krasnodębska-Tomkiel will be able or willing to oppose a transaction which the government so obviously supports. The head of UOKiK is appointed, and can be ousted, by the prime minister.

“We will soon see how independent UOKiK really is,” WBJ’s source commented.

Enea generates less trouble

Meanwhile, the Treasury has accepted six bidders for a 51 percent stake in Enea and is scheduled to reveal their names on August 24. According to daily Puls Biznesu, the bids were submitted by Kulczyk Investment, GDF Suez, Iberdrola, EDF, Energeticky a Prumyslowy Holding and Slovenske Elektrarne.

Source: Polish Power Exchange (TGE)

This is actually the government’s second attempt to find a strategic investor; negotiations with RWE collapsed late last year when the parties could not come to terms. Swedish firm Vattenfall holds an 18.67 percent stake in Enea, purchased during the latter firm’s late-2008 IPO.

Regardless of who purchases the stakes in Enea and Energa, the transactions have been described as the last call to enter the Polish energy market for the foreseeable future. For now the Treasury intends to retain its hold on PGE and number-two utility Tauron.