Energy 14 February, 2018 11:00 am   

PLN 13 billion for the closure of mines

– Paradoxically, the PiS (Law and Justice) government, which announced in the election campaign that there would be no liquidation of mines, will spend the most money for this purpose. But I would caution those who are in favour of radical assessments, one way or the other – writes Karolina Baca-Pogorzelska from Dziennik Gazeta Prawna.

Assistance from the Commission

The European Commission has agreed that the decommissioning of the most unprofitable hard coal mining plants could be subsidised by the state budget for five consecutive years. Poland may spend another PLN 5 billion for this purpose. Let us remind you that in November 2016, Brussels gave us the green light to spend about PLN 8 billion for this purpose by the end of 2018. So, time was pressing because it was not clear whether these deadlines could be extended. The matter is all the more important because, if we were not able to benefit from state aid for mine closures, these costs would be borne by the coal companies. And that would eventually destroy them because every liquidation of a mine (taking into account both social benefits and “technical procedures,” which often last many years after the end of the yield) is the amount of several hundred million zlotys, roughly speaking.

And since we have old mines, deposits are being depleted or it turns out that it is completely uneconomical to continue to operate there in the coming years at a high cost, it is not surprising that it is in our interest to extend this process as far as possible with the possibility of public aid. Indeed, it would be difficult to maintain the profitability of the coal companies, who have been helped by high coal prices on global markets for the time being, more than by restructuring, while at the same time requiring them to finance the liquidation of the weakest mines.

Guards are needed

Yes, I know. Hate for subsidizing mining in 3…. 2… 1… However, it is a different matter to pay for mining or mining privileges in a situation where companies barely eliminate losses from previous years, and a completely different matter is a guarding program in the event of the liquidation of thousands of jobs. Please remember that not all miners from closed mines will find employment in others. It would also make no sense, because the whole process is not only about fewer “black gold” production plants, but also about the reduction in employment, as is happening. Over the last few years, employment in the hard coal sector in Poland has decreased from over 105 thousand to 82 thousand people. And it will continue to decline, as will production.

Therefore, it was with great surprise, but a really positive one, that I took the words of Grzegorz Tobiszowski, Deputy Minister of Energy, who recalled during the presentation of the strategy of Jastrzębska Spółka Węglowa that on 23 January the government adopted a three-variant strategy for hard coal mining (scenario of reducing the demand for raw material, its maintenance and growth scenario), but would rather tend to opt for a minimum scenario, as we still have the development of nuclear power generation in perspective. These are very important words of the Minister from Silesia, who is also the government representative for the restructuring of hard coal mining.

You can no longer sweep under the carpet

There is also no reason to dwell on the fact that during the PiS election campaign he said that the mines would not be liquidated, and perhaps he would put them down/phase out/extinguish* (*free choice). First of all, if someone believes in assurances from the election campaign not taking it with a pinch of salt, I congratulate them on their optimism. Secondly, I have the impression that, in the coal sector, PiS was nevertheless not entirely clear about how big a problem it would face. Yes, I will say it: “for the last 8 years” the ruling party has not given a hoot to problems of the coal sector. Because it will work out somehow. Because it always has. But in the end, the matter has fallen apart, because the problems could no longer be swept under the carpet. The PO (Civic Platform) and PSL (Polish People’s Party) reminded themselves of the mines in 2014 and there was simply a shortage of time.

When I recently spoke to Professor Jerzy Buzek, an MEP and former Prime Minister (even before Brussels decided to extend public aid) he told me that if the Polish government presented to the European Commission a clear road map for our action in restructuring the sector, there should be no problem with extending the relevant approvals. Apparently, the plan was convincing, since for the second time the government succeeded in this.