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The Warsaw Voice » Other » February 18, 2009
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New Challenges Ahead
February 18, 2009   
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Torbjörn Wahlborg, president of the management board, Vattenfall Poland Sp. z o.o., talks to Marzena Robinson.

Vattenfall started its operations in Poland in 1992, not long after the country's political and economic transition got under way. How has the Polish energy market changed since then?
There have been many big changes during this time. First of all, we have to remember that back then the whole energy sector was state-owned. Today, at least parts of it are in private hands. Back then there was also complete regulation on the market. All the energy prices-including electricity, heat, and gas-were regulated. By now many of these prices have been deregulated.

However, I had hoped for even bigger changes. We still believe that privatization is going too slow, and some prices are still regulated even though they shouldn't be. In particular, I have in mind electricity prices for individual customers. These prices should have been deregulated two, three years ago. But they were not, and it's a pity because this means there is no competition on the market.

The interesting thing about the Polish energy market is that it is still growing. If we look at the demand situation in Germany or Scandinavia-where we are also very active-those markets are very stable and show an only small, if any, growth in consumption. The Polish market has been a relatively fast growing market. And this means new challenges for us.

Vattenfall is the biggest investor in the Polish energy market. How would you evaluate the conditions for managing investment projects here? Have you noticed any changes for the better in this area?
To run an investment project in Poland is not that much different than in any other country. If we are talking about building a new power plant, for instance, or even a new power unit in an existing plant, there are a lot of permissions that you have to apply for, and sometimes this process can be frustrating because it takes time. But I would say it doesn't matter where you are building a power plant in Europe today, you always have to comply with lots of different requirements and standards.

Are there any issues that you are particularly disturbed by in Poland today?
Since investments in the energy sector are first of all very big and the return on these investments is usually not very high, this means they will not generate income for 20 or 30 years. When we are talking about a power plant the payback period is usually 25 years. So we think political and regulatory stability is particularly important. And that is the biggest problem in Poland. The regulatory framework here is not stable and predictable, which is a big concern for us.

Vattenfall holds 7 percent of the Polish energy market. Do you want to increase your market share and if so, in what sectors?
Yes, we want to increase this share and actually last year in November we became the happy owner of almost 19 percent of ENEA Power Group, which is the third biggest energy company in Poland. We would like to increase our stake in this company this year. But when it comes to energy sectors, today the power generation sector is the most interesting for us, so we would like to produce more electricity in Poland.

Will the global financial crisis affect your operations in Poland? Will you have to limit your investments here?
We have already seen the effects of the crisis on our businesses, especially our sales and the distribution business in the Upper Silesia region. We see that demand for electricity is going down and that also means that electricity prices are going down on the wholesale market, which in the long run will not be advantageous for us.

The financial crisis is painful for our customers, for Polish industry and business customers in general. But it is also painful for us because our revenues are going down, and profit margins are shrinking. But when it comes to investments, again as I said, our investments are very long-term, so to stop investing for one or two years really doesn't make sense. So we will try to keep our investment at an unchanged level, both in the networks and the power generation capacity.

What projects do you plan to carry out in Poland in the near future?
We are going to build a new power unit in Warsaw with a capacity of almost 500 megawatts. To an extent, it will replace the oldest units we have here in Warsaw, but it will also increase the electricity output from our plant. Hopefully, this year we will get the building permissions, and we hope that the plant will become operational in 2015.

We are also thinking of launching bigger units in other places in Poland. We have even started to think about nuclear power in Poland. But this is of course mainly an issue for the government to make up its mind. But if the government would like to go ahead with nuclear power then we are also here to help and contribute our experience-because we have a lot of experience from both Sweden and Germany, building, operating and owning nuclear power plants.

Vattenfall is known for its environmental activities worldwide. How do you care for the environment in Poland?
Vattenfall tries to be at the forefront when it comes to protecting the environment. Our power plant here in Warsaw is probably the least polluting power plant in Poland, and last year we made a decision to invest about zl.500 million in new flue-gas cleaning installations here in Warsaw. So from being at the forefront we will take another big step and then the pollution level in our Polish plants will be similar to that in our plants in Germany.

We are doing a lot of projects, sponsoring and giving support to various organizations. There is so much of it-everything from supporting and building stork nests in the south of Poland or planting trees to supporting huge climate change campaigns. We are doing many things like this to show our employees and society at large that we are here not only to make profits. We are here to be part of the community. A big part of our activities when it comes to being a responsible citizen are also directed towards ecology.
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