Mega-merger of Polish energy giants in doubt

Tapes published in February showed the CEO of Poland’s largest corporation — oil firm Orlen — in a very unflattering and potentially illegal light. Will the scandal make Poland’s biggest energy merger more difficult?

2021 is a big year for Poland’s PKN Orlen (Orlen). The state-owned oil firm plans to buy its main domestic rival, Lotos, and also its equivalent in the domestic gas sector, PGNiG. Proponents of the mergers argue a thus enlarged Orlen would be able to compete as a genuinely European-scale player in the energy market and steer Poland’s transition towards renewable energy.

Opponents of the mergers in Poland say, however, the tie-ups would effectively destroy domestic competition and, in addition, open up the domestic energy market to unwanted foreign interference.

By 2030, Orlen intends to spend 140 billion zlotys (€33 billion) on investment aimed at transforming the company into a multi-energy concern. 

The merger of all entities — Orlen, Energa, which Orlen already took over, Lotos and PGNiG — would create a company with an annual turnover of 200 billion zlotys. Last year, the net profit of the four entities was 6 billion zlotys.

On February 26, the daily newspaper Gazeta Wyborcza published the so-called Obajtek tapes, which reveal that in 2009 the current Orlen CEO, Daniel Obajtek — while mayor of Pcim, a small town in southern Poland — simultaneously managed a company named TT Plast. 

Obajtek is a close ally of Law and Justice (PiS) leader Jaroslaw Kacyznski and, at the time, was widely seen as a rising star and potential future Polish prime minister.

“When it comes to the merger, the substantial issues currently brought up by the opposition could become more problematic. Questions such as the possibility of losing control over some companies like Lotos, for example, or bringing in foreign companies that would compete with the newly merged company,” Rice University’s Anna Mikulska said.

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