April 18 (Bloomberg) -- Poland’s government is discussing a new plan for the $3.7 billion Opole power plant project after PGE SA, the country’s biggest utility, scrapped its record investment on falling electricity prices.
“The decision to cancel the investment isn’t good for the Polish energy industry, but we have to take into account that PGE is a public company,” Deputy Treasury Minister Pawel Tamborski said in the Parliament today. “Among the Treasury, the Economy Ministry and the prime minister’s office we’re are working on changing the formula of Opole investment to improve its financial efficiency.”
State-controlled PGE canceled the 11.6 billion-zloty ($3.7 billion) hard coal-fired facility on April 5 after electricity prices declined 24 percent through March since the beginning of 2012. The country’s biggest power generation project was mentioned as one of eight key power plants by Prime Minister Donald Tusk in his October policy speech.
Polskie Inwestycje Rozwojowe, the government fund set up this year to boost infrastructure investments, may help finance the expansion of the Opole plant, Tamborski said. PGE shares fell 1.2 percent to 16.21 zloty at 1 p.m. in Warsaw, extending this year’s decline to 11 percent.
“There are a lot of possibilities for Opole,” Kamil Kliszcz, a Warsaw-based analyst at BRE Bank SA, said by phone. “I’m not sure if under the new plan PGE would take a leading role in the project as it earlier said it may find a partner.”
PGE and other state-controlled utilities need to take into account “dramatic” changes on the domestic electricity market while making decisions on new investments, Tamborski said.
Energa SA, the country’s fourth-biggest utility, suspended its Ostroleka power plant project last year and it’s waiting for partners to help it finance the investment. Tauron Polska Energia SA, the second-biggest utility, is pushing forward with a 5.41 billion-zloty expansion of its Jaworzno plant.
Tamborski said that the Treasury expects PGE’s Turow lignite-fired project, which was also scrapped after bids to build it were almost twice as high as the budget, will be continued.
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