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Poland starting to build large coal-energy group - PM Kopacz

Poland has started to build a large fuel-energy group with its decision to transfer the European Union's largest coal miner to a state-controlled fund to avoid the miner's bankruptcy, Prime Minister Ewa Kopacz said.

With just three weeks until a parliamentary election, government efforts to save to country's coal sector, which has been hurt by low prices, are in the spotlight.

Trying to comply with European Union rules on unwarranted state subsidies to ailing companies and at the same time save the loss-making Kompania from bankruptcy, the government decided to transfer Kompania to the TF Silesia fund.

"Kompania Weglowa safely enters ... TF Silesia, which provides financial guarantees for years," Kopacz told Gazeta Wyborcza newspaper in an interview published on Saturday.

"This is the start of building a large fuel-energy concern, which will be created by combining our power plants, energy groups and coal, which is their fuel," Kopacz said.

The European Commission, EU's executive arm, said on Thursday it had not been informed about the details of the transfer of Kompania and had not taken any decisions.

Poland has proposed a "single energy union" for the EU to reduce the bloc's reliance on Russian gas and a potential clash with the Commission on coal could make it harder for Warsaw to garner support for the union.

Poland's treasury minister told TVP Info broadcaster on Saturday the government's plan for Kompania minimises the risk the miner would have to return the state support.

That would most likely lead to its bankruptcy, leaving Kompania's 40,000 workers in the lurch.

Trade union Solidarity, the biggest in Poland, has said the government plan for Kompania made a "mockery" of miners, arguing it would most likely be opposed by the EU Commission.

Analyst warned this week that Poland's plan for

tying up state-run utilities and coal mines risks damaging the utilities' profits, their minority shareholders and Poland's reputation among investors.

State-controlled mines have lost more than $850 million since the start of 2014 as coal prices fell to decade lows.

The government, in power since 2007, has avoided a deep restructuring of the coal sector for fear of strikes.

source: http://uk.reuters.com