OREANDA-NEWS. The consolidation of Polish state-owned power utilities is essential to raise the finance needed to modernise the country's generation infrastructure, the chief executive of Poland's third-largest utility Enea has said.

Poland's new government, formed this week, will need to consolidate utilities as "there is no alternative" for the companies to increase investment in generation assets, Enea chief executive Krzysztof Zamasz said.

Polish grid operator PSE hinted recently that the country will face a generation shortfall in the coming years as a number of plants built in the 1960s-70s are decommissioned.

Zamasz estimated that 7GW of new capacity needs to be built in the next decade on top of projects already under construction. But utilities will not be able to raise financing for more projects based "on existing balance sheets", he said.

Tauron, Poland's second-largest power producer, also expressed support for the consolidation of state-owned utilities last week.

Zamasz stressed that utilities' management boards "have no authority to speak about consolidation" as the decision has to be made by the government. Consolidation of state-controlled electricity assets — including coal mines and possibly oil firm PGNiG's gas supply business — is expected to be one of the new government's priorities, Zamasz said.

Poland has four vertically integrated state-controlled generators, suppliers and distributors — PGE, Tauron, Enea and Energa.

New prime minister Beata Szydlo did not comment on the electricity and coal mining sectors during a presentation of the government's plans to the Polish parliament this morning. But new energy minister Krzysztof Tchorzewski is expected to outline the government's ambitions in the coming weeks.

Zamasz added that state-owned utilities will need to take the lead in investment in new generation assets amid signs that foreign utilities in the country — including France's EdF and Engie and Czech firm Cez — are unwilling to do so because of a lack of profitability.