Polish Business Survey
Railway infrastructure stays problematic
This month Polish State Railways, PKP, will receive PLN1.4bn from the state. Financial requirements may be even greater. The railways claim they need PLN1.8bn, experts from the EU think that up to EUR1bn may be necessary.
The opinion of the PKP is that state subsidies are insufficient. Ryszard Bandosz, spokesperson for the PKP says that 12,200km of track needs renovating of a total network of 24,000km. On an average year 1,640km needs to be renovated. This year work will be done to 133.5km of line. The transport ministry thinks that to bring the railways up to EU standards PLN35bn will be needed over the next twenty years.
The plan for the restructuring of the railways does not forsee any infrastructure privatisation. As it will remain in state hands, it will continue to need subsidies from the public purse. About 40 percent of costs on the railways are infrastructure costs. There are plans to eliminate 25 percent of the most unprofitable lines in Poland which will be shortly implemented. This will increase the amount of wear on the remaining tracks. These added costs could be met by private operating companies but according to Piotr Faryna of ZDG TOR the PKP has successfully blocked any competition on its lines.
Language law hinders business
German companies trading in Poland are worried that after 8 May they will be forced to present documents in Polish. The language law passed on 7 October 1999 states that Polish must be used if one of the parties is Polish speaking. Customs officials have claimed that this does not apply to external trade. German exporters have claimed that this law will add more costs and lead to delays. Furthermore the German press has criticized this law saying that it is putting up more trade barriers at a time when Poland is seeking EU entry.
Salty decision questioned
In the summer coal miners Nadwiślańska Spółka Węglowa are to build a desalination plant at a cost of around USD120m — USD140m. Experts from the World Bank are questioning the wisdom of this decision. The desalination plant is necessary as water used for mining at depths of more than 650m comes out as waste heavily salted. Up until recently the water was dumped in the Vistula, however new environmental laws have put up a fine of up to PLN200m which the company cannot pay because it is already heavily in debt. The opinion of the company is that the damage caused is around PLN21m annually. The desalination plant is to be located at Oświęcim in Upper Silesia and will produce 300 tons of salt per annum. The extra costs of this plant mean that it is unlikely that any foreign investor would be interested in the company.
Netia could buy Telbank shares
Netia, the largest private telecoms operator in Poland may buy between 25 and 49 percent of the shares of Telbank. This is possible thanks to agreements made with small shareholders which was revealed in a recently published Netia prospectus. Telbank supplies telecommunications services largely to the banking and finance sector. It is not yet known if Netia will purchase these shares or indeed for what cost.
More red tape
The government has updated the laws relating to funds being sent to tax havens, making this process more difficult. Nonetheless those companies that have business in these territories will find that the new laws only add to the pile of bureaucracy they currently have to wade through.
Impexmetal strengthens steel plant
Impexmetal, which currently hold a 72 percent holding in Huta Zawiercie steelworks, has announced that it will add PLN34m to the capitalisation of the mill. This will increase the value to PLN174.1m. Impexmetal agreed to take the extra five percent of the company in exchange for meeting some of its debts. Impexmetal plans to sell its stake during the third quarter of this year. Impexmetal is quoted on the Warsaw stock exchange.
Pension funds merge
Arka-Invesco and Winterthur pension funds have announced that they are to fuse. After the merger Winterthur, owner of the pension fund of the same name, will possess the largest holding.
Leasing shares bad buy
Whereas the law on leasing has not been changed for some time, it is unlikely to help shares of the Wrocław based Europejski Fundusz Leasingowy. Despite initial interest in their share offer, on the first day of trading the stock plummeted to below the offer cost.