The government is looking to sell its 53 percent stake in Lotos Courtesy of Lotos

Poland’s second-largest refiner, Lotos, could end up being bought by another large, state-owned energy firm, Treasury Minister Mikołaj Budzanowski suggested last week. So far, foreign firms have shown little interest in the government’s 53 percent stake in the Gdańsk-based company.

“Lotos needs a strategic investor, but given the lack of foreign interest, we are left with a choice of companies from the domestic fuel industry,” Mr Budzanowski told Polish daily Puls Biznesu.

Only two domestic companies would seem to fit the bill – Poland’s largest refiner, PKN Orlen, and gas monopoly PGNiG. Both are majority state-owned.

According to Konrad Anuszkiewicz, an analyst at Ipopema Securities, a tie-up with Orlen would provide the most synergies. “However, the competition watchdog (UOKIK) would probably not allow it,” he said.

While PGNiG offers fewer synergies, such a merger would “definitely strengthen Lotos’ balance sheet,” he said, adding that some investors are worried about Lotos’ high level of leverage. Lotos’ debt stands at zł.6.9 billion, while the Treasury’s stake has been valued at around zł.3 billion.

Treasury spokesperson Magdalena Kobos told WBJ that Lotos being bought by a domestic investor was only one possibility, and that “all scenarios will be considered and analyzed,” as the Treasury continues to reassess its strategy.

The government’s offer for Lotos opened in October 2010 and closed in December 2011. Mr Anuszkiewicz chalked up the lack of interest among foreign investors to the government’s timing, since in the first half of 2011 investors were jittery about the debt crisis in Europe. He also blamed uncertainty in the lead-up to last October’s parliamentary elections for the lack of interest.