Polish government softens stance in battle with refiners

Poland's Treasury said on Thursday it would not micro-manage state-owned oil refiners' pricing policies after talks with the companies, despite earlier claiming they had probably abused their market position.
Treasury Minister Andrzej Mikosz, who oversees state-owned firms, met with top oil groups PKN Orlen and smaller rival Lotos, along with representatives of the finance ministry and competition regulator UOKiK, in the hope of achieving lower prices at the pump.
The government had earlier criticised the two refiners, which control more than a half of the wholesale market, for failing to pass on to consumers the benefits of the previous cabinet's temporary cut in excise tax, a charge both companies denied.
Earlier on Thursday, Mikosz had told listeners on private radio station RMF, "There is a certain likelihood that these two refineries are abusing their position in the country", but sounded a different note at a news conference after the talks.
"I confirmed my strong will to support the market mechanisms used by each company; there will be no micromanagement by the treasury ministry," he said.
The talks also had implications for the country's 2006 budget and could have an influence on whether the companies' top managers stay in their jobs, said analysts.
"The whole storm over the refineries looks like preparing the ground for a unavoidable hike in excise tax on fuels," said an oil sector analyst at a Warsaw brokerage house.
"The government can now come and say: look we did all we could to ease this impact of a higher tax," he added.
The government originally said it would keep the roughly 1.5 billion zloty ($451 million) temporary tax cut, but later signalled the rebate could be abolished to help fund extra social spending and meet its 30 billion zloty budget deficit target. The rate is set at the finance minister's discretion.
A budget draft left by the previous government not only assumed that the temporary reduction would be reversed, but also envisaged a further rise on top.
Finance Minister Teresa Lubinska said the government, which took power after September's general election, would probably make a decision on a proposed raise in excise tax on petrol on Friday.
She said the scope and timing of the hike was not yet known.