Energy 1 March, 2018 11:00 am   
COMMENTS: Marek Zuber

Expert: The State Treasury will earn on the Orlen-Lotos merger

On Tuesday, a letter of intent was signed between energy minister Krzysztof Tchórzewski and the president of PKN Orlen Daniel Obajtek regarding the start of the process of taking over capital control by Orlen over the Lotos Group. As a result of the operation, the Płock concern is to take over 53 percent of shares of the Gdańsk company. In an interview with, Marek Zuber, an economist, emphasizes that this is an effective solution that allows expansion on foreign markets.

A merger is a good idea

– For many years I have argued that the functioning of two companies doing de facto the same does not make sense. Such competition is meaningless. The more that we are talking about the Treasury. These companies operate separately. They do not even buy oil together. This is the situation that is not the most effective – said the expert.

According to him, the reluctance to combine the two companies was due to two things. – First, from the first privatization of Lotos. In the sense of not entering the stock market and selling a controlling stake. Then there was a lot of confusion. A committee was set up. The subject of combining two companies was destroyed by a bad atmosphere. The second reason why it was difficult to talk about the merger were local activists in Pomerania. – This is a powerful company and it is known that if it was liquidated within the framework of a structural merger with Orlen, then from the point of view of the local government there are large losses resulting, among others, from from tax issues. Perhaps this formula, that is the purchase of a controlling stake of shares, will allow to maintain jobs in Lotos, where there will also be a management board and certain decisions will be taken jointly – he said.

We have to wait for the effects

According to him, it is not clear yet whether this will mean a merger in the organizational sense. – We’ll see. It does not make sense for both companies to buy oil separately. This control is similar to the one that Renault exercises over Nissan. Renault has 34 percent of Nissan’s shares. According to Japanese regulations, this means de facto control over the company. Another example is Hyundai’s control over KIA. Theoretically, these are two separate business groups but their owner is Hyundai. The combination does not exclude competition. This does not mean that Lotos stations will disappear. That will be to consider. Thanks to Hyundai and KIA, there are still two brands, two companies owned by Hyundai. At the same time, both benefit from the economies of scale resulting from joint design works, eg a floor slab. It can be the same here – said Zuber.


He stressed that some elements in the first period will be common, thanks to which the operating costs will decrease. – It will be easier to conduct certain activities. The important thing is that on the market one company will not work against the other – said the interviewee of
When asked whether in the current market conditions building such a large company is justified, he said yes. He noted, however, that the only risk associated with the said merger concerns the increase in fuel prices for individual customers. – It will be a monopoly when it comes to wholesale supplies. The only question is whether at the level of these prices we observed price competition between Lotos and Orlen? Perhaps we will pay a few groszy more for fuel, but on the other hand, combining the strength of these companies will increase the chance of expansion on foreign markets. After that, thanks to the merger with the State Treasury, the financial will benefit from this operation – Zuber ended.