The Republic of Poland (Poland) has a rapidly growing economy which is completing its transition from a planned to a market economy -- including reforms of its energy industry. Its abundant reserves of coal provide a secure source of energy and foreign exchange, but heavy reliance on coal is also a major source of environmental pollution.
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As a result of the Solidarity movement of the 1980s,
Poland became one of the first of the former Soviet
satellite countries to hold free elections and successfully
introduce market reforms (1989). The economy has
been expanding since 1992, reaching nearly 7 percent
in 1995. The government's current economic plan,
"Package 2000," seeks to maintain steady economic
growth (averaging at least 5.5% through 2000) while
reducing inflation, unemployment, and the budget
deficit. Two important goals are to attain full
membership in the European Union and to join the
North Atlantic Treaty Organization (NATO). A major
goal was achieved in July 1996 when the Organization
for Economic Cooperation and Development (OECD)
formally invited Poland to become its 28th member.
Poland's economic reform program has eliminated most subsidies and controls on prices of consumer goods and implemented a "crawling peg" exchange rate mechanism, which fixes the value of the zloty to a basket of five Western currencies and devalues the Polish currency at a rate of 1 percent each month. However, fuel prices are still set administratively and the pace of privatization has been slow (state companies still account for 40 percent of gross domestic product and 56 percent of industrial production).
In November 1995, Poland began distributing vouchers under its mass privatization program, which covers about 500 mid-sized companies. The vouchers, which ultimately will be redeemable for shares in 15 National Investment Funds, now are being traded in a secondary market on the Warsaw Stock Exchange. The government is pursuing limited "commercialization" of major state-owned companies in designated strategic sectors (including energy) by forming sector-based holding companies prior to full privatization.
Economic reform is proceeding with significant
international assistance. Since 1989, Poland has
received about $10 billion in foreign direct investment
(including $2.5 billion in 1995 and $3.3 billion in the
first seven months of 1996). Poland's State Foreign
Investment Agency projects an additional $21.5 billion
will be needed through 2000. The United States is the
single largest investor (about one-fourth of the total).
Poland's hard coal reserves (high quality, low ash, low
sulfur) are concentrated in Upper Silesia, near the
border with the Czech Republic. It is one of Europe's
most important coal basins. Other major coal-producing basins are located in Lower Silesia and
Lublin. Poland also has potential for future
development of its coalbed methane resources.
Poland's coal industry reforms of the early 1990s
created autonomous state-owned mines and eliminated
industry subsidies. Many mines, however, incurred
heavy losses, and the government later restructured the
industry by closing some mines and combining the rest
into 6 coal companies and 1 holding company (several
individual mines continue to operate independently).
Despite these measures, the industry as a whole remains
unprofitable in the absence of aggressive cost-reduction
measures. Privatization is scheduled to begin with the
sale of the country's two most efficient mines (Budryk
and Bogdanka) by 1999.
Despite concerns over dependence on Russia, Poland
plans even larger imports of Russian natural gas from
the Yamal-Europe Transit Gas Pipeline, which is
currently under construction across Poland to Western
Europe. The Polish segment of this pipeline is being
built by Europol Gaz in a joint venture with Russia's
Gazprom at a cost of $2.5 billion (the largest
infrastructure investment in the country to date).
Deliveries are expected to begin in 1997 when Poland
is slated to receive 3 billion cubic meters (about 106
Bcf). Under a 25-year contract signed in October 1996,
annual volumes will increase to 14 billion cubic meters
(about 494 Bcf) once construction is completed and the
pipeline reaches full capacity of 65.7 billion cubic
meters (about 2.3 trillion cubic feet) in 2010.
To quell criticisms over growing dependence on
Russian energy, the government plans additional natural
gas storage facilities and is considering future imports
of liquefied natural gas (LNG) from Qatar, Nigeria,
Norway, and Algeria. It is also encouraging foreign
investment in its own upstream oil and gas sector and
has obtained loan assistance from the World Bank and
the European Investment Bank. In August 1995,
Frontier Oil Exploration Company became the first U.S.
company to sign an agreement for a conventional
exploratory concession in Poland. Other active U.S.
companies include Texaco, which received a concession
soon after Frontier, and Exxon, which in September
1996 agreed to establish the Polish Petroleum
Development Company with Shell.
Nafta Polska will coordinate industry investments and
the eventual privatization of Poland's downstream oil
industry. Immediate investment needs include refinery
modernization and possibly a new refinery in southern
Poland; additional storage capacity; and retail outlets
along major highway construction projects. Foreign
companies already operate gas stations in Poland, and
most are planning to expand their operations.
Poland's electric power sector is in the process of
restructuring (with World Bank support) into three
subsystems: generation, transmission, and distribution.
Most power plants burn coal, and more than half are
combined heat and power (CHP) plants. Poland's
electric generating capacity exceeds current demand, so
investment needs relate primarily to improving
effectiveness and competitiveness and addressing
environmental concerns. Proposed actions include the
introduction of an electricity exchange and electricity
contract market; privatization of electric power plants,
CHP generation plants, and the power grid; voluntary
mergers of certain power stations; and freeing prices of
heat and electricity in 1997. Pilot sales of selected
power plants and distribution companies are planned.
Future capacity additions will include a 1000 megawatt
combined cycle gas-fired plant in Zarnowiec being built
by two U.S. companies (AES and Failure Analysis) on
the site of an uncompleted nuclear plant (Poland has no
nuclear power plants, and no plans for building any).
Natural gas is the preferred substitute for coal, and by
2010 Poland plans to generate at least 10 percent of its
electricity with natural gas (compared with about 3
percent currently); however, coal will still generate the
vast majority (90 percent) of Poland's electric power.
Specific environmental needs related to Poland's energy
sector include: improving coal quality through
desulfurization or enrichment of coal dust; modernizing
combustion methods in power plants (e.g., fluidized bed
combustion and low-emission burners); substituting
natural gas for coal; improving heating system
efficiency; and using alternative energy sources (mainly
geothermal, hydropower, and wind). Environmental
impacts of energy production are also a concern.
Poland's three largest coal mines (Ziemonwist, Crenott,
Piost) are among the country's largest polluters.
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File last modified: October 31, 1996
Contact:ENERGY POLICY AND PLANS
In September 1996, Poland's Cabinet approved a
blueprint for implementing reforms in the energy sector;
a related energy law, which would establish an energy
regulatory authority and allow third party access to the
national electricity transmission grid, is awaiting final
action in Parliament. The reforms aim to create a
competitive energy market through demonopolization
and privatization, and to attract investment needed for
industry modernization and environmental protection.
Poland's guidelines for energy policy through 2010
(adopted in late 1995) emphasize greater use of oil and
natural gas, but coal is expected to remain the dominant
fuel, particularly in the electric power sector.
COAL
Coal is not only the dominant fuel in Poland's
economy, but also the main source of foreign exchange
earnings for the country. Together, hard coal (mostly
bituminous) and soft coal (lignite) provide 97 percent of
the fuel consumed in power plants (many of which
provide heat and hot water as well as electricity). Coal
exports go primarily to customers in Europe and the
former Soviet Union.
OIL AND NATURAL GAS
Poland currently produces small volumes of crude oil
and natural gas, but relies heavily on imports to meet
nationwide demand. Traditionally, oil and natural gas
imports have come via pipeline from Russia. To reduce
dependence on Russia, Poland has begun to import
North Sea and Middle East crude oil and has opened a
cross-border exchange link integrating its natural gas
transmission system with Germany.
DOWNSTREAM PETROLEUM INDUSTRY
Poland took the first step towards restructuring its
downstream oil industry when it established Nafta
Polska as a joint stock oil holding company in May
1996. Nafta Polska comprises Poland's two major
refineries (Gdansk and Plock), 5 smaller refineries in
Southern Poland, and the Central Petroleum
Distribution Company (CPN). By the end of 1996,
CPN is to be divided into three companies: CPN, S.A
(gas stations), DEC Ltd. (railway tank company), and
Naftobazy Ltd. (oil storage).
ELECTRICITY
Until 1989, Poland's power system had been heavily
integrated with neighboring Communist countries.
Poland, the Czech Republic, Slovakia, and Hungary
withdrew from this system in 1992 and formed their
own power supply organization, which operates under
European Union standards and is now integrated into
the West European system. Poland has major
international connections with the Czech Republic,
Germany, and Ukraine, and is planning an
interconnection with Sweden via underwater cable
through the Baltic Sea. A future connection to
Lithuania as part of the European Union's Baltic Ring
concept is being studied.
ENVIRONMENT
Environmental issues are a high priority in Poland. The
country has a Ministry of Environmental Protection and
a National Environmental Policy, which it began
implementing in 1991. The policy is based on the
"polluter pays" principle. Clean coal technologies and
energy efficiency and energy conservation measures are
important investment needs, given the country's high
dependence on coal, the high level of carbon emissions
associated with coal consumption, and the existence of
widespread inefficiencies in energy consumption. U.S.
assistance includes a $20 million program to reduce
emissions from coal-fired utility boilers and home
stoves in Krakow, and a project to install flue gas
cleanup technology at the Skawina Power Station.
COUNTRY OVERVIEW
President: Aleksander Kwasniewski
Elected 11/95 to a 5-year term
Prime Minister: Jerzy Buzek (since 10/31/97)
Independence: November 11, 1918 (proclaimed)
Population (7/96E): 38.9 million
Location/Size: Central Europe, east of Germany/120,728
square miles (about the size of New Mexico)
Major Cities: Warsaw (capital), Lodz, Krakow, Wroclaw,
Poznan, Gdansk, Szczecin
Language: Polish
Ethnic Groups (1990E): Polish (97.6%), German (1.3%),
Ukrainian (0.6%), Byelorussian (0.5%)
Religions: Roman Catholic (95%); Eastern Orthodox, Protestant
and other (5%)
Defense (1994): Army, 185,900; Air Force, 78,700; Navy,
19,000
ECONOMIC OVERVIEW
Currency: 1 zloty (Zl) = 100 groszy
Note: 10,000 old zlotys replaced with 1 new zloty on 1/1/95
Exchange Rate (10/96): US$1 = 2.8 Zl
Current Account Deficit (1995): $2.1 billion
Reserves, Non-Gold (9/96): $17.6 billion
External Debt (1994): $40 billion
Gross Domestic Product, GDP (1994): $58.6 billion
Note: In
1987 dollars at market exchange rate; on purchasing power
parity basis, 1994 GDP is an estimated $191.1 billion.
Real GDP Growth Rate (1995E): 7%
Inflation Rate (1995): 21.6%
Unemployment Rate (12/95): 14.9% 8/96: 13.8%
Merchandise Trade Deficit (1995): $1.8 billion (including
$112.6 million with the U.S.)
Exports: $22.9 billion ($663.8 million to the U.S.)
Imports: $24.7 billion ($776.4 million from the U.S.)
Major Exports (1993): Intermediate goods (26.5%), machinery
and transport equipment (18.1%), miscellaneous manufactures
(16.7%), foodstuffs (9.4%), fuels (8.4%)
Major Imports (1993): Machinery and transport equipment
(29.6%), intermediate goods (18.5%), chemicals (13.3%), fuels
(12.5%), miscellaneous manufactures (10.2%)
Major Trading Partners (1994): Germany, Italy, Russia
ENERGY OVERVIEW
Economy Minister: Janusz Steinhoff (since 10/31/97)
Proven Oil Reserves (1/1/96E): 31.3 million barrels
Oil Production (1995): 5,060 barrels per day (bbl/d)
Oil Consumption (1995): 302,000 bbl/d
Net Oil Imports (1995): 296,940 bbl/d
Crude Refining Capacity (1/1/96E): 352,000 bbl/d
Natural Gas Reserves (1/1/96E): 5.3 trillion cubic feet (Tcf)
Natural Gas Production (1995): 170.2 billion cubic feet (Bcf)
Natural Gas Consumption (1995): 424.5 Bcf
Natural Gas Imports (1995): 254.3 Bcf
Recoverable Coal Reserves (12/31/93): 46.4 billion short tons
Coal Production (1995): 217.7 million short tons (MMst)
Coal Consumption (1995): 177.9 MMst
Net Coal Exports (1995): 37.1 MMst
Electric Generation Capacity (1994): 29 gigawatts (GW)
Electricity Generation (1994): 127 billion kilowatthours
ENVIRONMENT OVERVIEW
Environment Minister: Jan Szyszko (since 10/31/97)
Total Energy Consumption (1994): 3.96 quadrillion Btu
(76% coal, 15% oil, 8% natural gas, 1% hydroelectric)
Energy Consumption Per Capita (1994): 103 billion Btu
Energy-Related Carbon Emissions (1994): 93.7 million metric
tons (1.5% of the world total)
Carbon Emissions Per Capita (1994): 2.4 metric tons (vs. 5.5
metric tons in the United States)
Major Environmental Issues: Air pollution, acid rain;
hazardous and industrial wastes; severe water pollution; sulfur
dioxide emissions from coal-fired power plants.
ENERGY INDUSTRY
Organization: Oil and natural gas - Polish Oil and Gas Mining
Company (exploration and production); Oil Pipeline Operating
Company, PERN (crude and product pipelines); Europol Gaz
(natural gas pipelines); Nafta Polska (downstream holding
company); Centrala Produktow Naftowych, CPN (petroleum
product distribution); Ciech Petrolimpex (trade); Electric power -
Polish Power Grid Company (transmission); Coal - State Hard
Coal Agency; 6 joint stock companies (49 mines), Katowice
Holding Company (11 mines), state-owned independent
companies (4 mines), Weglokoks (exports), Weglozbyt
(domestic sales)
Major Coal Regions: Upper Silesia, Lower Silesia, Lublin
Major Ports: Gdansk, Gdynia, Szczecin
Oil Refineries (1/1/96 Capacity): Petrochemia Plock (260,000
bbl/d), Refineria Gdanska (60,000 bbl/d)
Links to other sites:
Latest EIA Detailed Annual Data (1994)
1997 CIA World Factbook - Poland
U.S. Department of Commerce/StatUSA (Big Emerging Markets)
Central and Eastern Europe Business Information Center, U.S. Department of Commerce
EIA Privatization Report - Poland
Erik Kreil
ekreil@eia.doe.gov
Phone: (202)586-6573
Fax: (202)586-9753
URL: http://www.eia.doe.gov/emeu/cabs/poland.htm