WARSAW: Poland's energy minister said he wants the country's biggest power producer PGE to invest in state-owned coal mining firm Kompania Weglowa (KW) as part of a government plan to bail out the crisis-hit company.
"I encourage PGE to enter NKW," Krzysztof Tchorzewski told Reuters in an interview, referring to the government's plan to carve a new entity out of KW called Nowa Kompania Weglowa (NKW).
"(Polish power firm) Energa has also started to express its interest," he said.
Tchorzewski also said that state-owned coal trader Weglokoks and investment fund TF Silesia, along with a number of power producers and financial institutions, are expected to invest in Weglowa.
Tchorzewski, appointed energy minister at the end of 2015, estimated investors would have to pour in new capital of up to 1.5 billion zlotys ($371.25 million) to re-launch KW as a new company.
PGE, which is state-controlled, was not immediately available to comment.
The conservative Law and Justice party (PiS), which won a parliamentary election in October, has taken over the task of rescuing KW, the European Union's biggest coal producer, which has been driven to the verge of bankruptcy by low coal prices and rising labour costs.
Tchorzewski, who plans to bring all potential investors together for talks on investing in KW, also said the European Commission had initially accepted a plan to create the new company, NKW, by mid-2016.
"In the first months of operations, NKW should have at least a small net profit, which is extremely difficult with current coal prices, but possible in my view," he said.
The plan is similar to one from the previous government and assumes new investors -- including power companies and financial institutions -- will become the new owners of KW, whose liabilities amount to some 4 billion zlotys ($995 million).
Investing in KW could prove a tough ask for Polish power companies whose market value plummeted last year on fears the government would force them to invest in loss-making mines. Last year shares in PGE and its smaller rival Energa fell by 32 percent and 45 percent, respectively.
Tchorzewski said direct investment in coal mines could help power producers secure stable coal supplies. The country generates nearly all its electricity from coal.
The energy minister also expressed optimism about the country's oversupplied coal market, saying estimates of 7 million tonnes of excess supply on the market were "exaggerated."
By the end of 2018, some state-owned mines, which were moved to a special restructuring company, will close, leading to what Tchorzewski said would be a significant fall in Polish coal production.
"Our analyses show coal stocks on the market are not too big and that an increase in demand may result in coal shortages," Tchorzewski said.
Tchorzewski played down calls to consolidate four state-run power companies - PGE, Tauron, Enea and Energa and a project to merge Poland's oil and gas companies PKN Orlen, Lotos and PGNiG.
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