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PGE May Buy Utilities Outside Poland, Plans to Update Strategy

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Nov. 14 (Bloomberg) -- PGE SA is looking at acquisitions outside Poland as the country’s largest power utility prepares to release a new strategy in December to expand in wind power, gas-fired plants and nuclear generation.

PGE is mulling 10 to 20 potential targets and may complete one or more takeovers next year, Chief Executive Officer Tomasz Zadroga said at a press conference in Warsaw today. He declined to name the targets, their countries of domicile or the value of potential deals.

PGE is holding preliminary talks to buy assets including gas- and coal-fired generation capacity and distribution business in southern and western Poland, Zadroga said.

Warsaw-based PGE, which today said its third-quarter net income rose 12 percent to 837.4 million zloty ($260 million) on higher sales and energy prices, needs to cut its reliance on coal as the operator of Europe’s biggest thermal plant is seeking to diversiy with investments in renewable, nuclear and gas energy.

The foreign acquisition may also include offshore wind farms, Chief Financial Officer Wojciech Ostrowski said, as PGE is aiming to increase the value of PGE Energia Odnawialna SA, its renewable energy unit, before returning to the subsidiary’s initial public offering previously planned for this year.

The IPO was delayed and will now be held in 2013 at the earliest, the CFO said. The unit, which bought 108 megawatts of onshore wind power this year, will use the share sale to “mainly” seek funds to help finance the 1,000 megawatts of first domestic offshore farms that PGE plans to build by 2020.

Offshore Costs

The cost of building one megawatt off shore is about twice as high as the 1.4 million euros to 2 million euros it costs to build the equivalent of onshore capacity, the CEO said.

To finance a buyout, PGE would turn to Eurobond markets, the CFO said, as the 15 billion zloty that PGE secured in domestic bonds will be spent on building power plants, including a 1,800-megawatt facility in Opole.

The builder of the Opole plant will be picked in the “coming days,” Zadroga said. Alstom SA and a group including Rafako SA, Polimex- Mostostal SA and Mostostal Warszawa SA bid 9.3 billion zloty and 9.4 billion zloty respectively to build the plant.

PGE, which was picked by the government to build the country’s first nuclear plant, will announce a public tender for the builder of the facility this year, it said in the website presentation today.

The utility plans to complete the plant’s first unit in 2020. It may also start seeking a builder for at least one of its planned gas-fired plants this year, Zadroga said.

To contact the reporter on this story: Maciej Martewicz in Warsaw at

To contact the editor responsible for this story: James M. Gomez at

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