Poland's PGE calls for fast decision on coal asset spin-off as profit plummets (updated)

PGE Polska Grupa Energetyczna SA

05/04/2024 11:10

(Adds context, CEO quote in last paragraph)
       WARSAW, April 5 (Reuters) - Poland's state-owned PGE's
 PGE.WA  chief executive said on Friday that a fast decision by
the government on the spin-off of the group's coal-fired power
generation assets was crucial amid their falling profitability.
    "The key task is to separate conventional energy assets. We
will be cooperating with the government on the optimal solution
in this area, with respect for social conditions and the need
for their further operation," Dariusz Marzec said during a press
conference.
    Marzec also said that the valuation of PGE's coal assets
needs to be discussed again with the government.
    Poland's pro-European Union government, which took power in
December, has shelved the predecessors' plan to spin off
state-owned utilities' coal-fired power plants and bundle them
into a new state-owned company but hasn't an announced an
alternative scenario yet.
    Electricity output at lignite-fired power plants, which
dominate PGE's fleet plummeted 25% last year amid soaring carbon
emission costs and growing generation from wind, solar and
natural gas sources. 
        On Thursday evening, PGE reported an expected net loss
of 5.01 billion zlotys ($1.3 billion) for 2023, after booking a
severe hit from an 8.5 billion zloty writedown on the value of
its conventional power generation assets in January.
    In March, Fitch Ratings agency said Poland's state utilities
risk ratings downgrades unless the country comes up with an
alternative to the previous government's plan to allow them to
spin-off coal assets.
    The coal asset spin-off is vital given PGE's plans to expand
renewable capacity, Marzec, the CEO since March 18, told
reporters. The plans include a project to build up to 2.5
gigawatts of Baltic offshore wind capacity with Danish partner
Orsted. 
    "With the current asset structure, for some financial
institutions we can't be partners for financing investments,"
Marzec said. 
  
($1 = 3.9568 zlotys)

 (Reporting by Marek Strzelecki; Writing by Karol Badohal,
editing by Emelia Sithole-Matarise and David Evans)
 ((karl.badohal@thomsonreuters.com;))