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06/12/2016

Poland to seek EU approval for state aid to coal mines

Energy

Poland to seek EU approval for state aid to coal mines

Poland will seek EU approval for state aid to coal mines.

[Kris Duda/Flickr]

Poland is to notify the European Commission this month of plans to give state aid to some loss-making coal mines, Polish news agency PAP said, quoting the country’s minister in charge of restructuring the industry.

“We declared that we will submit the notification application on the aid programme in February,” Wojciech Kowalczyk told PAP after a meeting at the Commission.

Poland’s mining companies have been hit by falling coal prices, rising production costs, and a slump in demand, which resulted in mounting stockpiles of coal.

Earlier this year, Poland made plans to shut down four loss-making mines owned by state-run Kompania Weglowa.

But after the miners’ protests, the government, which faces parliamentary elections later this year, decided to keep them open and potentially sell them off to an investor.

Restructuring the four most troubled mines was initially expected to cost 2.3 billion zlotys (about €500 million), but the government has said the figure may rise by 10-20% after a deal with the unions.

Poland needs European Commission approval to inject government money into the mines. EU state aid rules regarding mines are usually related to mines earmarked for closure.

Kowalczyk had said before that he was optimistic about talks with the European Commission leading to approval for the state aid.

The government said that in January-November of 2014, the losses on coal sales by Kompania Weglowa amounted to 1.14 billion zlotys (about €270 million), with liabilities exceeding 4 billion zlotys (about  €1 billion).

The remaining ten mines at Kompania Weglowa, the EU’s biggest coal producer, will be transferred to an entity called New Kompania Weglowa, operating under the umbrella of Poland’s coal trader Weglokoks.

Because of its heavy reliance on coal, the country is also at odds with the European Commission over EU plans to raise carbon prices to help curb emissions. 

Positions

Brian RICKETTS,  Secretary-General of the European Association for Coal and Lignite (EURACOAL) said:

"There is no lack of demand for coal in Poland, it is just that local production is not competitive with imported coal.  Today, the biggest exporter of coal to the EU is Russia and the collapse of the rouble means Russian coal is cheap.  Poland must make a strategic choice:  allow its coal industry to fail and become dependent on imported energy, or support its industry using every means available under EU law."

"Energy (and carbon) markets should be free of political interference. The gyrations on oil markets and currency exchanges are driven by geopolitics – perhaps to damage US shale oil producers or even Russia.  For the moment, they favour European motorists over European miners.  Control of energy supply is the best way to reduce future geopolitical risks and Poland knows this, more than any other member state."