Polish Briefing 31 July, 2017 9:00 am   
COMMENTS: Mateusz Gibała

Polish Briefing: Brussels launched infringement against Poland. Will there be sanctions?

What goes on in Poland on the 31st of July.

Poland to be inundated by RES-related claims

“New regulations on the alternative fee were swiftly adopted by the Parliament. Investors are asking the President for a veto and getting ready to sue,” writes the Puls Biznesu daily.

The Senate adopted without amendments the update to the Act on renewable energy sources (RES), which changes the formula for calculating the alternative fee. Janusz Gajowiecki President of the Polish Wind Energy Association told Puls Biznesu that the changes may cause “a wave of claims from investors.”

The alternative fee is an alternative (or a penalty for not buying) to buying green certificates for companies that sell energy. So far the fee has been fixed, but now it will be valued at 125% of the green certificates price. The valuation will take place once a year.

According to the daily, this is a colossal change for investors. This is because the alternative fee is a point of reference for many long-term contracts on the basis of which green energy sources sell energy and certificates. The Association believes that the changes in the alternative fee’s formula may automatically change the contracts or be used to terminate the deals.

Engie may withdraw from financing Nord Stream 2 due to US sanctions

“Engie may hold up the financing of the Nord Stream 2 pipeline if the United States introduce sanctions against Russia,” Bloomberg cited Member of Engie’s Executive Committee Pierre Chareyre.

On 27 July the US Senate adopted the House of Representative’s bill, which allows to penalize every company that cooperates with Russians in the field of construction, modernization and maintenance of investments. This means European companies that cooperate with Russian businesses will be subject to the US sanctions.

“If the sanctions are introduced, Engie may stop financing the project to avoid them,” Chareyre said. However, he also pointed that currently the company was fulfilling its duties on financing 10% of the construction’s entire cost. In his opinion, the sanctions may pertain to future financial transfers only.

France’s Engie, UK and Dutch-owned Schell, Austria’s OMW and Germany’s Uniper and Wintershall agreed to cover half of the cost of the EUR 9.5 billion project. The companies believe it is crucial to Europe’s security of gas deliveries.

European petrochemical industry under Brussels’ scrutiny 

The European Commission has conducted inspections at the premises of companies that trade ethylene. Brussels is investigating whether the companies violated antitrust law and created cartels.

According to the EC’s press release “the Commission has concerns that the companies concerned may have violated EU antitrust rules that prohibit cartels and restrictive business practices.”

The investigation started in May. The Swiss company Clariant, which specializes in producing chemicals, has also reported about the EC’s probe. The company’s representatives confirmed the EU officials carried out an inspection at their premises.

Brussels launched infringement against Poland. Will there be sanctions?

The European Commission commenced an infringement procedure against Poland over the adopted bill on the Law on the ordinary courts organization. Warsaw received an official letter on the issue. The ruling party, PiS, believes Brussels had no grounds to impose sanction on Poland.

“The European Commission launched an infringement procedure against Poland by sending a Letter of Formal Notice, following the publication in the Polish Official Journal of the Law on the Ordinary Courts Organisation on Friday 28 July. The Polish authorities have one month to reply to the Letter of Formal Notice,” the EC stated in a press release.

The ruling party ensured that Poland was in dialogue with the EC on the reform of the judiciary and that there was no risk that the Article 7 of the Treaty on European Union, which allows to impose sanctions on a Member State, will be launched. The Polish opposition believes otherwise and says that Poland was at risk of using EU funds.

The EC’s recommendations published as part of the rule of law procedure that was opened in 2016 call on the Polish government to abandon any actions that would lead to the dismissal of Supreme Court judges. Otherwise, the Article 7 of the Treaty on European Union may be opened.