Poland will return to talks with six bidders for its top utility group G-8 (a combination of eight regional power companies) following the failure of negotiations with E.On, said treasury minister Wieslaw Kaczmarck. The sale of the G-8 utility, which was expected to raise 75 per cent of the state's target of $1.6 billion in privatisation revenue this year, is in doubt after E.On's three-week exclusive negotiation period expired without result.
E.On had wanted to reduce its bid for 60 per cent of the power utilities, mainly because a Polish excise tax on electricity, introduced in March, has reduced the valuations of local distributors. Poland told E.On in August that a lower bid would remove E.On's right to exclusive negotiations.
Kaczmarek said that Poland would invite the six original bidders (E.On, Tractebel, Iberdrola, Endesa, ESB of Ireland, and local investor El- Dystrybucja) back to negotiations, risking delaying the deal by up to six months. The government's leeway in negotiations over the sale is limited because the treasury desperately needs the revenue. Without the sale, it will have to increase borrowing to finance the budget deficit.
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