enron in europe : emerging europe : enron plugs on in poland - - - power market ' s vast . . .
vicek - sadzilem , ze moze bedziesz chcial to przeczytac .
pozdrowienia - jarek
- - - - - - - - - - - - - - - - - - - - - - forwarded by jarek astramowicz / war / ect on 2000 - 04 - 17
17 : 15 - - - - - - - - - - - - - - - - - - - - - - - - - - -
iona maclean
2000 - 04 - 13 08 : 23
to : jackie gentle / lon / ect @ ect , eric shaw / lon / ect @ ect , jarek
astramowicz / war / ect @ ect , brian stanley / eu / enron @ enron , philip
davies / lon / ect @ ect , ed cattigan / eu / enron @ enron , nigel
beresford / eu / enron @ enron , andrew morrison / lon / ect @ ect
cc :
subject : enron in europe : emerging europe : enron plugs on in poland - - - power
market ' s vast . . .
- - - - - - - - - - - - - - - - - - - - - - forwarded by iona maclean / lon / ect on 13 / 04 / 2000 07 : 23
- - - - - - - - - - - - - - - - - - - - - - - - - - -
enron capital & trade resources corp .
from : djcustomclips @ djinteractive . com 13 / 04 / 2000
07 : 30
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subject : enron in europe : emerging europe : enron plugs on in poland
- - - power market ' s vast . . .
emerging europe :
enron plugs on in poland
- - -
power market ' s vast potential holds allure , but an uncertain future
- - -
after six years , profit from company ' s power operations remains years
away
by elizabeth williamson
04 / 13 / 2000
the wall street journal europe
9
( copyright ( c ) 2000 , dow jones & company , inc . )
nowa sarzyna , poland - - from a small power plant humming among the
birches near the ukrainian border , enron corp . has staked its claim on
the polish energy market .
yet after six years , the company is still seeking a mother lode .
the houston - based energy producer and trader entered poland in 1994 ,
nabbed one of the first power - trading licenses to go to a foreign
company and began work on elektrocieplownie nowa sarzyna , poland ' s first
new , foreign - operated heat - and - power plant .
other companies followed , including electricite de france , rwe ag of
germany , vattenfall ab of sweden and tractebel sa of belgium .
the prize could be a rich one . all of these companies hope to profit
as poland sells its state energy assets and frees prices before joining
the european union .
a wholesale power bourse is due to open in warsaw in july . and the
country ' s transmission links to markets east and west could make poland
the power - trading hub of central europe .
but after six years in poland , enron has yet to earn a profit . net
income from nowa sarzyna , which is to begin commercial production later
this month , is at least five years away . power - trading operations might
generate profits next year , if the new bourse gets moving . but that is
" one big question mark , " says jarek astramowicz , enron poland ' s
president .
indeed , despite its promise , poland ' s energy sector remains a
sizzling tangle of aging plants , archaic market agreements and complex ,
shifting regulations .
enron , with $ 40 billion ( 41 . 69 billion euros ) in annual revenue , is
an innovator and an investment bellwether for its peers . but in a power
market as negatively charged as poland ' s , the company also is an example
of how shaky market conditions can keep even the savviest competitors
offline .
" these are very large operations and to some extent they can bear
some risks , " says pawel kaminski , energy - sector operations officer at
the world bank in warsaw . " but eventually they have to generate some
return . "
enron pioneered wholesale gas and electricity trading in the u . s . it
entered europe in 1989 , setting up in london as the u . k . ' s energy sector
liberalized . it entered the nordic market in 1996 , and today is the nord
pool ' s largest - volume trader .
enron says it takes about two years to find a site and obtain permits
for a power plant , and a further 29 months for construction .
just four years after entering the u . k . , enron finished its
1 , 875 - megawatt teesside plant . teesside ' s capacity and cost , at gbp 795
million ( 1 . 32 billion euros ) , are many times larger than nowa sarzyna ' s .
yet teesside was completed in only two - thirds the time . the company
declines to compare development times in various countries .
" i wouldn ' t necessarily put poland into the same category as russia , "
says philip davies , regulatory and government - affairs manager at enron
europe in london . " but obviously , given poland ' s ( planned economy ) past ,
it probably takes a bit longer to work through the regulatory process
and get to the starting point . "
at nowa sarzyna , it took enron nearly twice the usual time to reach
the starting point , even though mr . astramowicz already knew the site ,
and the polish power industry ' s rules .
the nowa sarzyna plant was mr . astramowicz ' s brainchild , and he
burned out the engine in his first bmw as he traveled between warsaw and
the town to craft the deal . a freelance energy - sector entrepreneur
before joining enron , mr . astramowicz sold his interest in nowa sarzyna
to enron in 1998 .
enron has spent $ 132 million to build nowa sarzyna , a 116 - megawatt ,
gas - fired combined heat - and - power plant . quiet , clean and efficient , the
plant stands in stark contrast to most of poland ' s belching , coal - fired
behemoths . when it starts up this month , it will sell its electricity to
the polish power grid , the country ' s high - voltage network , under a
20 - year power - purchase agreement , or ppa , that enron won in 1997 . steam
output goes to organika , the chemical company next door , and helps heat
the town of nowa sarzyna .
the nowa sarzyna plant is more than 80 % financed by commercial - bank
loans for which the only collateral is the plant ' s concluded contracts .
" they were betting on their good name , " says michael davies , a
partner with allen & overy , the warsaw law firm that advised enron
poland ' s lenders . " they are pushing envelopes all the time . "
that is especially true in a market with 30 % overcapacity , where an
energy law didn ' t even exist until 1997 .
says peter bisztyga , emerging europe utilities analyst at solomon
smith barney in london : " because enron signed a ppa , they are ok . . .
( but ) i ' m really not sure building nowa sarzyna was such a good idea . "
mr . bisztyga says enron could have generated a faster return by
renovating an existing power plant . but , he acknowledges , nowa sarzyna
" allowed enron to get into the polish market early and stamp their name
on it . "
in 1994 , polish power plants weren ' t for sale . energy asset
privatization , discussed for years , began in earnest only this year . by
2002 , the polish government proposes to sell off stakes in dozens of
power plants , 33 distribution companies and the polish power grid , a
12 , 000 - kilometer national transmission network of high - voltage lines .
the assets have a total book value of 33 billion zlotys ( 8 . 4 billion
euros ) , but murky regulations have driven prices down .
" the regulations don ' t promote competition and so you don ' t really
know the price of electricity , " says bengt wegemo , president of
vattenfall poland . earlier this year , vattenfall paid $ 235 million for
55 % in warsaw - based elektrocieplownie warszawskie , promising $ 340
million in investment in the heat - and - power plant over the next 10
years .
investors hope the new power market will bring clarity over pricing .
ultimately , 170 licensed energy traders and 200 large power users will
trade on the bourse , setting the wholesale price of electricity . the
polish bourse will be modeled on its nordic counterpart . enron , the nord
pool ' s largest trader , hopes to post polish trading profits by 2001 .
but first , say market experts , poland ' s 1997 energy law must be
amended to ease functioning of the bourse , and free up access to
poland ' s distribution network .
further , the government says it must solve the competition problem
posed by the polish power grid ' s power - purchase agreements , which
account for 70 % of energy sales in poland . some state - owned plants used
the agreements as collateral to secure modernization financing . when
prices are freed , these plants might go bankrupt if forced to compete
with plants that didn ' t spend money to modernize .
the government is contemplating a special fund to compensate the
modernized plants for their extra costs . though nowa sarzyna is a
private plant , the price enron must charge for its power is about twice
what outmoded plants charge .
" we are hoping that continuous , efficient operation of the plant will
generate us a ( bigger ) profit , " mr . astramowicz says .
another problem is cross - border power trading , where contradictory
legislation essentially gives a monopoly to the polish power grid , also
known as pse . enron and others protest that pse shouldn ' t compete with
electricity - market participants who contract with it for transmission
service .
pse intends to stay in the trading business , says marek zerka , pse ' s
vice president . in late march , pse and local company kulczyk holding
signed an agreement with preussenelektra ag of germany to export
electricity and coal to eu countries via germany .
" this is great news , " mr . astramowicz says . " if this joint venture
gets access to pse ' s cross - border transmission capacity . . . i would
expect pse to confirm open access to all market participants . "
enron and others are pushing hard for that access . " as soon as the
market becomes open , free and non - discriminatory , we will come out at a
decent profit , " mr . astramowicz says .
folder name : enron in europe
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