Reuters: Hot Stocks: UPDATE 1-Poland pushes PGE to revive costly project, shares fall

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UPDATE 1-Poland pushes PGE to revive costly project, shares fall Jun 27th 2013, 12:28 Thu Jun 27, 2013 8:28am EDT * PGE's $3.5 bln new power project to relaunch in the summer * Coal miner Kompania Weglowa may be partner in the project * PGE shares hit all time low on Opole and dividend approval (Combines PGE stories, updates shares, adds analyst comment) By Agnieszka Barteczko and Adrian Krajewski WARSAW, June 27 (Reuters) - State-controlled Polish utility PGE will relaunch a $3.5 billion coal-fired power project it scrapped earlier this year, following pressure from the government which wants to boost the role of coal in the country's energy mix. Shares in PGE dropped to an all-time low after Poland's prime minister stepped in during his visit to the southern city of Opole to say PGE would revive the plan to build two coal-fired 900-megawatt units there this summer. PGE, Poland's biggest energy group, also said it had signed a letter of intent with state-controlled Kompania Weglowa, which will supply the new power blocks in Opole with coal and possibly also invest in Poland's biggest energy project to date. PGE had previously said the 11.6 billion zloty project would not make money due to falling electricity prices and weak demand. But it reconsidered after the government deemed Opole key for Poland's energy security. The state treasury, which holds 62 percent in the company, added to the pressure on PGE's shares by approving its proposed dividend payout of 1.6 billion zlotys. The market had expected the state to push for more. "PGE's shares are affected at the same time by dividend and the risk of high capital expenditures in the future," DM BZ WBK analyst Pawel Puchalski said. "The risk that PGE will face high project costs has a negative impact on future dividend expectations." Polish premier Donald Tusk heralded the revival of the project. "This is a very important step, we have been trying for this investment to happen for many months now," he said in Opole. "I am deeply convinced that thanks to today's agreement, this investment will start this summer." He added the project would be a part of boosting the role of hard coal in Poland's energy policy. The central European nation, which relies on highly-polluting coal for more than 90 percent of its electricity, is required by the European Union to meet a number of green energy targets. PGE shares fell as much as 7 percent to the session low of 14.87 zlotys. Shares some construction companies which are to build the Opole fared better, however. Builder PBG's boiler maker Rafako surged almost five percent, while Polimex and Mostostal Warszawa - a unit of Spain's Acciona - were little changed. ($1 = 3.3413 Polish zlotys) (Additional reporting by Michal Janusz; Editing by Mark Potter) Link this Share this Digg this Email Reprints

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