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Poland approves new privatisation drive

Poland's liberal government on Tuesday launched a vast privatisation drive targeting 740 companies after criticism from its own camp over alleged sluggishness in living up to its economic reform manifesto.

Apr 22, 2008, 09.19 PM IST
WARSAW: Poland's liberal government on Tuesday launched a vast privatisation drive targeting 740 companies after criticism from its own camp over alleged sluggishness in living up to its economic reform manifesto.

The plan foresees the sale of the firms from 2008-2011 and is expected to raise 27 billion zlotys (7.87 billion euros, 12.6 billion dollars).

"We have ambitious privatisation plans," Prime Minister Donald Tusk told reporters.

Stepping up privatisation was a key campaign pledge by Tusk, who led his Civic Platform to victory in snap election last October, ending two years of rule by the conservative-nationalist Law and Justice party that had all but halted the process.

Tusk, who during the campaign had promised Poles he would spur the already-robust economy to bring about an "economic miracle" has been facing criticism from some of the most enthusiastic reformers in his camp for allegedly being too slow to implement his manifesto.

Last week Stanislaw Gomulka, a deputy finance minister and renowned economist responsible for drawing up public finance reforms stepped down.

Gomulka lashed out at Tusk, saying the premier had not given him enough support and that he had been "expecting much more determination" from him.

Stanislaw Mocek, an expert from the Polish Academy of Sciences, disagreed. "I have the impression reforms are under way, but you can't do everything in a few months," Mocek said.

Tusk had also pledged to shake up the country's state health service, including turning hospitals into commercial companies, but the government has taken little concrete action.

Tusk, who is an ardent soccer fan, had also said he would step up infrastructure projects for the 2012 European football championships, which Poland is co-hosting with Ukraine -- stadium and highway construction are a major issue -- but progress has been limited.

The announcement of the privatisation plan was thus well-timed to defuse criticism.

The government is to begin the privatisation of the state-owned Warsaw stock exchange, reopened in 1991, two years after the fall of the country's communist regime, by selling off 47.8 percent of its stake.

Treasury Minister Aleksander Grad said there would be "full privatisation" of companies in the transportation, chemical and pharmaceutical, furniture and timber sectors.

In addition, the ongoing privatisation of Poland's leading bank, PKO BP, is to continue.

The Polish treasury currently owns 51.49 percent in the bank and is to remain the leading stakeholder under the privatisation plan.

Furthermore, the government said it aims to pursue the privatisation of PZU, the country's top insurer, once it has reached a settlement in a long-running legal battle with Dutch group Eureko.

Eureko, which has been PZU's biggest private investor since 1999, and the Polish government announced in February that they were working on a deal to end years of jousting over whether Eureko was entitled to take a controlling stake.

The privatisation of Poland's national airline, LOT, which has been postponed several times in the past, is to begin in 2009.

Tusk said that 40 percent of the revenues from the sales would feed a "demographic reserve fund" aimed at shoring up the Polish pension system, amid concerns about the aging of the Polish population.

Also on the list are 25 "strategic" companies in which the state intends to keep a controlling stake.

Among them are Poland's two main oil groups, PKN Orlen and Lotos, the gas company PGNiG and the copper giant KGHM, as well as the country's sea ports, the track division of the national railway company PKP, the PAP press agency and the broadcasters TVP and Polskie Radio.

Poland is one of the former communist countries in eastern Europe that began restructuring to become a market economy after the collapse of the Soviet bloc in 1989-1991.
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