Polish Market No. 7-8 (180) 2011

RyszardFlorek

Polish M

arket :: 7–8/2

011

President of FAKRO

PUBLISHED SIncE 1996

15 yearsNo. 7-8 (180) 2011 :: www.polishmarket.com.pl

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ContentsContents

From The President’s Press Office # 8

From The Government Information Centre # 9

OUR GUESTS

Prof. Michał Kleiber, President of the Polish Academy of Sciences (PAN): We have to promote innovation # 10

Prof. Krzysztof Rybiński, Rector of Vistula University: Let us favour ambition and innovation # 11

Prof. Leszek Rafalski, Director of the Road and Bridge Research Institute (IBDiM): Research achievements and road practice # 12

Marcin Korolec, Undersecretary of State of the Ministry of Economy: Poland offers its advice and experience, bets on partnership # 14

PRESIDENT’S awaRD

The Economic Award of the President of the Republic of Poland # 18

Polish Economic Nobel Prize # 20

Fakro – we are successful on the global market # 22

INNOVaTION

Progress 2011 Innovation Gala # 24

Andrzej Najgebauer, Professor at the Jarosław Dąbrowski Military University of Technology in Warsaw and school’s Prorector for Research: Detecting threats # 37

Ecological energy for economy and industry # 39

7-8/2011 ENERGy & MINING & STEEl INDUSTRy

Biling system – how do you do it? # 40

Bogdan Sadecki: The positive energy market in Poland # 42

Ranking of companies in the energy, mining and metallurgical sector # 45

Be Smart Eco with Energa Group # 50

Grzegorz Onichimowski, President of the Management Board of Towarowa Giełda Energii S.A. (POLPX): A marketplace with energy # 52

Robert Soszyński, Chairman of the Board in PERN “Przyjaźń” S.A.: A new strategy # 54

Oil & Gas: hydrocarbons prevail # 56

The tricky mining boom # 57

Bogdan Sadecki: Coal has been and will be important to Poland # 58

Sandra Wierzbicka: Polish-US cooperation in shale gas exploration # 60

Henryk Jezierski, Undersecretary of State, National Chief Geologist: Shale gas – an inimitable opportunity # 64

Prof. Józef Dubiński, Corresponding member, Polish Academy of Sciences: Mining through an experts eye # 66

Bogdan Sadecki: Successes and challenges of steel industry in Poland # 69

The Polish steel market # 71

TRaNSfORMaTION aND PRIVaTIzaTION

Artur Woźniak, President of the Polish Pharmaceutical Holding (PHF): Haste is only good for catching fleas # 74

EaSTERN COOPERaTION

Łukasz Adamski, an analyst at the Polish Institute of International Affairs: So close, yet so far # 77

Beata Wojna, the head of the Research and Analyses Department at the Polish Institute of International Affairs (PISM): The Southern and Eastern dimentions of the European Neighbourhood Policy are balanced # 80


Contents

Markiyan Malskiy, Ambassador Extraoridinary and Plenipotentiary of Ukraine to the Republic of Poland: 2o years of good Neighbourhood on the way to EU # 81

Sandra Wierzbicka: Poland-Ukraine # 82

India: a welcome warm as the weather # 84

Poland and Thailand: friendship and cooperation # 86

MałOPOlSka REGION

Małopolska a region brimming with temptations # 87

Ranking of companies in Małopolskie province # 90

OPINION

Małgorzata Zaleska: The case of Polbank # 73

Katarzyna Niezgoda, President of Deni Cler Group S.A.: A recipe for leaders # 92

Publisher: Oficyna Wydawnicza RYNEK POLSKI Sp. z o.o. (RYNEK POLSKI Publishers Co. Ltd.)

President: Krystyna Woźniak-Trzosek

Vice-Presidents: Błażej Grabowski, Grażyna Jaskuła

address: ul. Elektoralna 13, 00-137 Warsaw, Poland Phone (+48 22) 620 31 42, 652 95 77 Fax (+48 22) 620 31 37 E-mail: [email protected]

Editor-in-Chief: Rita Schultz [email protected]

Editorial board: Jerzy Bojanowicz, Ewelina Janczylik, Janusz Korzeń, Maciej Proliński, Jan Sosna, Magdalena Szwed, Janusz Turakiewicz, Sandra Wierzbicka, Elżbieta Wojnicka.

English Editor: Sylwia Wesołowska-Betkier

Translators: Maciej Bańkowski, Grażyna Śleszyńska, Sylwia Wesołowska-Betkier, Sandra Wierzbicka

Photographers: Jan Balana, Łukasz Giersz

Polish Market Online Editor-in-Chief: Wiktoria Grabowska

Sales: Phone (+48 22) 620 38 34, 654 95 77

Katarzyna Malinowska – Sales Director [email protected] Suhoveeva [email protected] Surma [email protected]

PR: Joanna Fijałkowska [email protected]

Design and DTP: Foxrabbit Designers

Printing: Zakłady Graficzne TAURUS – Stanisław Roszkowski, www.drukarniataurus.pl

Basic circulation: 8,000

Oficyna Wydawnicza RYNEK POLSKI Sp. z o.o. Nr KRS 0000080385, Sąd Rejonowy dla m.st. Warszawy XII Wydział Gospodarczy Kapitał zakładowy 80.000,- zł. REGON 011915685, NIP 526-11-62-572

Published articles represent the authors’ personal views only. The Editor and Publisher disclaim any responsibility or liability for their contents. Unso-licited material will not be returned. The editors re-serve the right to edit the material for length and content. The editors accept no responsibility what-soever for the content of advertising material. Re-production of any material from this magazine re-quires prior written permission from the Publisher.

Marek Zuber, a financial markets analyst: Will the euro zone survive? # 93

law & TaxES

Leszek Kot, “Barylski, Olszewski, Brzozowski” Attorneys at law: Scrambling with procurement law # 94

Maja Sujkowska, Chairperson General Partner’s Board at European Center for Legal Consultations: Pursuing a career in a regulated profession in Poland # 96

CUlTURal MONITOR

In the European league of opera masters # 98

Culture is everywhere # 100

Cultural Monitor # 102

Jerzy Owsiak: Something to be proud of # 104

EVENTS

Meeting of the Friends of the Polish Success Academy # 107

Cross-border opportunities of SMEs # 108

Luxury and Beauty # 110

Deni Cler Milan Show Autumn – Winter 2011/2012 # 112

CorreCtionThe statement by LOT spokesman Leszek Chorzewski printed in the 5/2011 edition of “Polish Market” contains an error. The first paragraph of the answer to the question: “What are the advantages of LOT and what are the main ideas that will be shaping the futures of one of the strongest and high-profile brands on the Polish market?”

correctly reads as follows:

„A state-of-the-art fleet based on Embraer planes is definitely what we can call our good side. The decision that we had taken a couple dozen years ago to purchase Embraer planes from the Brazilian producer allowed us to make our fleet up-to-date. LOT was the first European airline to introduce EMB 170 airplanes. The de-liveries of EMB 195, which can board 112 passengers, has commenced this year. The first plane joined our fleet in April and is to serve our European connections. Currently LOT is using 25 planes from the Brazilian producer and we are planning to introduce three more Embraer 195’s during this year and next.”

The Editorial board apologizes for the mistake.

Editorial

7-8 /2011 :: polish market :: 7

After the catastrophe in Japan, once again we began to fear nuclear power plants and the debate whether it is worth investing in this type of energy production resumed. Polish nuclear programme is being ques-tioned, especially after Germany decided to close part of its nuclear power plants. And then, an alternative for Poland ap-peared – shale gas.

The first drilling results are promising, but we have to wait sev-eral more years for reliable and complete data on our resourc-es. Under the currently granted licenses, and there are over 90 of them, at least 120 bore holes are to be drilled.

“Many people look forward to a joint report of the US Geologi-cal Services and the National Geological Institute – the Nation-al Research Centre, which is due to be released in autumn of 2011. However, we need to bear in mind that it will also serve as a more reliable projection presenting an estimate of the Pol-ish shale gas resources,” says Henryk Jezierski, Undersecre-tary of State, National Chief Geologist, in an interview pub-lished in this issue.

Shale gas exploration and exploitation may well become the first field in Polish-US cooperation in which Poland will be a full partner and not just a sales market. “Secretary Hilary Clin-ton, as well as President Obama are interested in the possibil-ities of working together, both because it is good for Poland’s and our economic prosperity, but also it’s the kind of cooper-ation that has real strategic significance for both of our coun-tries. It is important for both of us to work to improve our own energy security on a national basis as well as promoting national security through the trans-Atlantic space,” said Lee Feinstein, US Ambassador to Poland.

But of course there are also the nuclear energy sceptics. The voices of opposition are beginning to emerge, saying that shale gas production is associated with a threat to the environment, environmentalists are beginning to vigilantly watch the pro-tests in the United States, where such production is under-way. However, one thing is certain: no risk, no growth, no in-novation, no modernity, and no inventions. Fear of progress is a universal human trait – after all we have been warned about steam engines, which were called monsters, dragons and more.

Fear of the new has always distinguished a regular mortal from a scientist.

Krystyna Woźniak-TrzosekPresidentRynek Polski Publishers Co. Ltd.

July 1 has become an important date for Po-land. Here we are, having taken over the Pres-idency from Hungary, and now leading in the EU Council is our job. Among others, the pri-ority of the Polish Presidency is that the pro-cess of signing association agreements and creating free trade zones progressed within the Eastern Partnership, particularly com-pletion or significant progress in negotiations with Ukraine and Moldova. Polish Presidency will also strive for progress in negotiations concerning visa liber-alization. Probably the key political decisions in this regard will be made during the September Eastern Partnership Summit with the participation of the heads of state and government of all member and partner states. In the case of Belarus, the aim of the Europe-an Union is to encourage this country to cooperate with the West, however, provided that the country respects basic rules of democ-racy and human rights. “It is not just about economic moderniza-tion, or modernization of legal institutions and the political system. What is needed is the modernization of the observance of human rights, and in this respect we have been observing a regress in the countries of Eastern Partnership. Even Ukraine, which used to be the ‘top student’, fell in the Freedom House ranking to the catego-ry of half-free countries,” you will read in one of the articles in the Eastern Cooperation section.

Marcin Korolec, in an interview for “Polish Market” underlines that 25 years ago Poland and Ukraine were at the same level of econom-ic development. Currently, Poland is several times more developed than Ukraine, but it should be remembered that the main cause behind the development of Poland is the integration with the Eu-ropean Union. And this – in the opinion of the Deputy Minister of the Economy – is a good argument for our Ukrainian partners that it is worth making the difficult, pro-integration decisions and that it is worth to decide to take up the challenges connected with the process of integration.

Beata Wojna, PhD, states that Polish plans concerning Eastern Partnership may have to be altered. The international situation has caused the European Neighbourhood Policy to become the priority. “The fact, that the Polish Presidency programme includes signifi-cant references to the Southern dimension of this policy, should be considered a good sign and an attempt to move away from think-ing about European Neighbourhood Policy in terms of rivalry be-tween its Southern and Eastern dimensions.”

Let us remain optimistic and hope that our priorities and coop-eration with our partners from the East will bring business part-ners and will earn Poland the opinion of the promoter of Eastern Partnership.

Rita SchultzEditor-in-Chief


President visits SlovakiaBilateral economic, trade, and polit-ical cooperation, and the priorities of the Polish Presidency of the EU, con-stituted the subjects of talks in Bratis-lava between the Presidents of Poland – Bronisław Komorowski, and of Slo-vakia – Ivan Gašparovič.

The issues of energy security and the new 2014-2020 EU budget were also discussed.

Both leaders, who before noon presided over the plenary talks of the Polish and Slovakian delegations, expressed their satisfaction with the very satisfactory mutual relations. As Bronisław Komorowski stressed at a joint press conference after the meeting with Ivan Gašparovič, Po-land and Slovakia are linked by rela-tions at “an absolutely above stand-ard level.”

“We also talked about 2011 being our year. The Slovakian Republic held the Presidency of the Visegrád Group, which it has now handed over to the Czech Republic. Hungary presided over the EU, and now the Presidency has been taken over by Poland,” ob-served Gašparovič at the conference. The Slovakian President added that it was the time for his country “to em-phasise its role, while Poland can pro-mote our interests.”

After the meeting with his Slova-kian counterpart, the Polish Presi-dent attended a breakfast organised by Prime Minister Iveta Radičová. Then he met the Mayor of Bratislava, Milan Ftacnik, a representative of the Polish community, and the Speaker of Na-tional Council of the Slovak Repub-lic, Richard Sulik. ::

German Chancellor angela Merkel in PolandAngela Merkel and her husband, Professor of Quantum Chemistry Joachim Sauer, paid a private visit to Pomer-ania at the invitation of the Polish President. During the walk, which started in the courtyard of Gdańsk’s Torture Chamber, the Presidential couple and their guests strolled through Gdańsk’s Main Town, seeing Artus Court, and St. Mary’s Church, whose steeple has been recently renovated. Merkel felt particularly connected with Gdańsk – in 1928 her mother was born there.

President Komorowski, when asked about the subject of the talks with the German Chancellor, emphasised that this was a private visit, so it had no “political agenda.”

“Of course, there are subjects that always come to mind, besides the strictly private talks, such as European issues, or the problems of Polish-German relations,” said the Pol-ish President.

In Bronisław Komorowski’s opinion, this kind of meeting is always an opportunity to tighten personal contacts and cooperation. “This is always worth doing, also in interna-tional relations. I am looking forward to this visit, hoping that it will be mostly a private one, providing rest and lei-sure to the Chancellor,” said the President before the meet-ing. ::

President’s participation in the inauguration of the Polish Presidency

“It is truly a very important and beautiful day, the 1st of July 2011,” said President Bronisław Komorowski a few minutes after midnight, when an illumination with the logo of the Pol-ish Presidency had been lit on the facade of the Presidential Palace.

“It is worth remembering that it has been exactly 20 years since the dissolution of the Warsaw Pact in 1991. So we have 20 important years for Poland behind us, good years, open-ing good prospects for the future. There is a lot to be glad about, and to be proud of. The Pol-ish Presidency of the Council of the European Union has started. It is a great success for us, a source of great joy,” said the President.

Polish President talks to the President of the European Council about Eastern policy

Eastern policy, particularly towards Moldo-va and Ukraine, was one of the issues dis-cussed during the meeting of Bronisław Ko-morowski and the President of the European Council Herman Van Rompuy.

“I would like to observe with enormous satisfaction that there is far-reaching agree-ment on the subject of the prospects of Euro-pean integration for Moldova and Ukraine,” stressed the Polish President. He added that the President of the European Council will be presiding over the Eastern Partnership Sum-mit in Warsaw, which is due to take place in September.

Both politicians met at the Belvedere Pal-ace on the occasion of the inauguration of the Polish Presidency. President Komorowski

emphasised that the meeting with President Van Rompuy was pleasant and insightful. “It is a momentous event,” Van Rompuy described the launch of the Polish Presidency. He added that the European project is still attractive to our neighbours – it is a symbol of peace and prosperity on our continent. He underlined that during the time of its membership in the EU, Poland has gathered enough experience to cooperate with EU’s partners and to know how to reach agreement. ::

7-8/2011 :: polish market :: 9

Prime Minister on the Polish PresidencyPrime Minister Donald Tusk has present-ed the priorities of the Polish Presidency in the Polish Parliament. He emphasised that dur-ing Poland’s Presidency the Polish govern-ment will not only make efforts to maintain, but also improve, Poland’s status as a respon-sible and highly-respected country.

“It is expected that the Presidency will allow us to create political leadership which does not consist of taking routine decisions but which may help the EU as a whole,” he said. “It is of paramount importance that during the Presidency we can maintain and increase Poland’s status as a country which is highly valued in internal EU debates and which demonstrates a high level of respon-sibility with regard to the EU’s foreign rela-tions,” he stressed, adding that Poland will focus on maintaining and improving its sta-tus as a responsible state which is able to deal with its economic and financial issues.

The Prime Minister underlined that Po-land has developed its image as a country which is becoming the new driving mo-tor of the European Union. “Today Poland is treated as one of the leaders - of which un-fortunately there are few in the EU - which strive to force through issues of EU-wide

significance,” said the Prime Minister. As he observed, since the beginning of the crisis Poland has consistently acted against state control and nationalism, which is visible in the actions and declarations of some politi-cians and EU Member States.

Donald Tusk remarked that it is impor-tant for good political initiatives to appear during the Presidency. “We have a signifi-cant interest in Poland’s Presidency being remembered by Europeans through issues including the finalising of long-term pro-cesses,” he said. “It is possible that during the Polish Presidency we will see the com-pletion of negotiations with Croatia, which

would mean that its accession treaty will be signed during the Presidency,” explained the Prime Minister. He also added that it is still possible to complete negotiations with Ukraine, concerning the association agree-ment and the agreement on free trade. “This would be the first successful step in the pro-cess of bringing Ukraine closer to Europe,” the Prime Minister stated.

“I think that those who are strongly op-posed to my government should for these few months attempt to act respectfully and re-frain from thoughtless and aggressive state-ments directed against the promotion of Po-land’s national interest,” he added. ::

Joint session of the Council of Ministers and European Commission“Today’s meeting has reaffirmed our mutual intentions of strong cooperation aimed at ensuring that a majority of our de-cisions are EU-oriented,” declared Prime Minister Donald Tusk after the meeting on 8 July with European Commission President Jose Manuel Barroso, and the joint session of the Council of Ministers and the EU College of Commissioners at the Prime Minister’s Office.

Joint sessions of the government and EU Commissioners is a traditional start to any Presidency of the EU. Such meetings allow a detailed discussion of the plan of the ro-tating Presidency of the Council of the Eu-ropean Union.

The first point on the agenda of the Euro-pean Commission’s visit to Warsaw was the plenary session, during which the most im-portant elements of the Polish Presidency programme were discussed. Prime Minister

Donald Tusk and European Commission Pres-ident Jose Manuel Barroso, as well as Minis-ters and Commissioners, discussed the is-sues of the new long-term EU budget, energy policy, universal EU patents, the Single Mar-ket Act, the establishment of a European En-dowment For Democracy, the new regulation concerning cohesion policy, and the legis-lative package of the Common Agricultural Policy. The subjects discussed also included the issue of Polish vegetable exports to the Russian market.

After the plenary session, a bilateral meeting of President Jose Manuel Barroso and Donald Tusk took place, while respec-tive Ministers worked with Commissioners in thematic groups. During these individ-ual meetings Ministers and Commissioners reached agreement on issues such as how the Council of the European Union (presided

over by Poland) will be working on legal Acts submitted by the European Commission in the coming months. During a joint press conference both Prime Minister Tusk and President Barroso stressed the importance of good cooperation between the Presiden-cy and the Commission. “If Europe is inca-pable of taking collective decisions based on cooperation, then all European coun-tries will have to suffer the consequences. When we speak about the EU, what is im-portant is a community approach and full solidarity,” President Barroso said. “At the moment Europe is full of pessimism. There are extreme forces questioning the essence of the EU and thereby doing their own states a great disservice. I hope that Polish opti-mism and enthusiasm will become conta-gious,” Barroso added. ::

10 :: polish market :: 7-8 /2011

ConstructionOur Guest

we have to promote innovation

There are many firms in Poland that are truly innovative, though completely unknown. For this rea-son I highly value such initiatives as the Polish Market Award Progress 2011 because they help us to find such firms and promote them as modern en-terprise models. Publicising genuine successes of innovative firms, suc-cesses that are so rarely noticed by the media, is an important part of our joint activity aimed at develop-ing our country. We all too often dis-cuss matters which are of little or no importance from the point of view of the real interests of the Polish econ-omy. I think that such a competition should be continued. We should do everything we can to make sure that innovative firms can feel everyday our respect for them and our pride in their achievements.

Risk assessmentIn Poland, there are still too many constraints hampering the devel-opment of innovation. There are ad-ministrative barriers in the form of regulations that are not conducive to risk-taking in innovative activi-ty. Among these regulations are such important laws as the law on pub-lic procurement, law on public-pri-vate partnership and the law on off-set projects, or investment in Poland by foreign suppliers of military equip-ment. In line with the letter and spirit of our law, the best thing is to carry out safe projects, which do not re-quire taking any risk. But this is no road to big success – businesses ready to take well-calculated risks, some-thing possible only in the proper reg-ulatory environment, have the great-est achievements. Another barrier

are constraints on access to high-risk capital. Paradoxically, the problem is not a shortage of money. Banks have financial means but are reluctant to take the risk of investing in an un-certain success of innovative activ-ity because it is necessary to know how to assess the risk. Our history provides a partial excuse for the sit-uation – we still have relatively few innovation successes on which such calculations can be based. But it is not true that it is absolutely impossible to assess this risk. However, confi-dence is needed that this kind of ac-tivity may be truly profitable, as is the case across the world.

wise PolandThe “Wise Poland” manifesto I have recently published is the result of my determination in fighting the wide-spread disbelief that success based on human creativity can be achieved. I know the problems that Polish in-novators are facing. But every day I meet many people who prove that creativity in thinking about a firm’s activity may bring about real suc-cesses. Unfortunately, this potential is not sufficiently exploited in Po-land. At school, there is no emphasis placed on developing students’ cre-ativity and ability to work together in a team. Apart from creativity, the eagerness and ability to work togeth-er is the key condition of success. You may be creative and at the same time cooperate with others, reach compro-mises in discussion and know how to reach agreement on the most difficult issues. Polish people do not trust in-stitutions or each other. Meanwhile, it is impossible these days to do great things all on one’s own. ::

Prof. Michał kleiberPresident of the Polish Academy of Sciences (PAN)

7-8 /2011 :: polish market :: 11


let us favour ambition and innovation

What is innovation? It means put-ting into practice an idea which cre-ates a new value for a firm or country. It is worth emphasising that one of our strengths is that Polish people are en-terprising. We can do something out of nothing. We have proven that if we only want to we are able to get involved in a social activity. The best example is our activity in the net and the web portals created.

There are several excellent exam-ples which show that we can think in terms of innovation. Luckily, it is not so that the whole Polish economy has difficulty embracing innovation. In a recently published Report on In-novation in the Polish Economy, we present the first examples of institu-tional cooperation between universi-ties and business. It is at the interface of business and science that the most valuable innovations emerge. We have many “clever guys” and young people achieving international success. It is worth investing in young people who win prestigious scientific and com-puting competitions, both at home and abroad.

A big advantage is the expansion of large metropolitan centres because this is conducive to the development of innovation. We should take advan-tage of that. Millions of people across the world have a respect for Poland and sentimental attachment to it. This is important news, one which we should also use to develop an innovation-based economy.

Unfortunately, the report also pre-sents the weaknesses of the Polish state. First of all, there is red tape, which especially hampers innovation. The fear to take a risk is still wide-spread, especially in the public sec-tor. We are still not greedy enough – I mean not only greed for money but also greed for international suc-cess or eagerness to leave behind a good business. Polish people should be more ambitious, more greedy. We think that comfort kills innovation. Real innovators work in garages, and do not enjoy luxuries or benefit from huge subsidies for developing a pro-ject or product. A trait that does not reflect well on us Poles is that we do not want to work together. The best example of this unwillingness is that more than 10 graphic marks are used to promote Poland abroad.

Polish people have become workahol-ics – instead of developing innovation, we work almost the longest hours in the world. The Polish education sys-tem and the system of financing scien-tific research are assessed very poorly. It even seems that it eliminates inno-vators. We should send our children to work so that they can learn how to be enterprising and how to earn their own money.

But the most important thing is that the drive for innovation is wak-ing up in people, something which of-fers hope for the development of our country. ::

Prof. krzysztof RybińskiRector of Vistula University

12 :: polish market :: 7-8 /2011

Research achievements and road practice

What do you think are the key transportation issues connect-ed with Poland being the co-host of EURO 2012 European Football Championship?Transportation in the context of

the co-organization of EURO 2012 is a huge challenge. According to the esti-mates, Poland may be visited by even one million football fans. Regarding land transportation, the key issue is the broad range of the planned for 2012 development of the motorways and expressways network in accordance with the Government National Road Construction Programme 2008-2012. This programme envisages the con-struction of 906 kilometres of mo-torways and 2,101 kilometres of ex-pressways by June 2012. The coming months will show what percentage of this programme will be implemented. I believe that other important issues are those connected with the mod-ernization of railways, coordination

of traffic and internal transport in host-cities.

What is the role of the Institute in the broader understood research process?The Road and Bridge Research In-

stitute (IBDiM) is a leading Polish sci-entific institution dealing with prob-lems of infrastructure. Our research and implementations, expertise and consultations support investments, modernizations and renovations of roads and bridges. We also help to in-troduce rational road network man-agement systems. We recognize the state of roads and bridges using mod-ern diagnostics methods, we create and implement innovative solutions for materials, as well as technologies for road and bridge construction. We have accredited research laboratories and we certify products used in com-munication construction. The results of our research and our experience is

used by both road administration – on the national and local level, and com-panies executing road works.

Does research conducted by the In-stitute result in a high level of inno-vation of this sector of the economy?In the recent years IBDiM partici-

pated in the development of many in-novative solutions working with other research institutions and enterpris-es. Examples of this are innovative projects like: LED Road Signs (DZD) – electronically controlled new gen-eration signs with variable content; Active, Intelligent Road and Bridge Safety Barriers (AIBDiM) using arti-ficial intelligence in monitoring and controlling of road barriers, as well as the Intelligent System of Complex Ve-hicles Identification (ISKIP) enabling automatic identification of the vehicle based on simultaneous recognition of such characteristics as colour, brand, type and the registration number.

Mobile laboratory measuring road infrastructure

Prof. Leszek Rafalski, director of the Road and Bridge Research Institute (IBDiM)

7-8 /2011 :: polish market :: 13

How do you use European experi-ence to stimulate investments and support investors?IBDiM actively cooperates with for-

eign centres and participates in nu-merous international organizations. It is associated e.g. in FEHRL – the Fo-rum of European National Highway Research Laboratories bringing to-gether the leading European institu-tions dealing with the issues of roads and bridges. This organization cre-ates strategic research programmes (SEERP) which are the basis of later research projects financed by the Eu-ropean Commission. A representative of IBDiM is an employee of FEHRL sec-retariat. This has direct bearing on the transfer of modern solutions for Polish road practice. IBDiM is also a partner of many European programmes. An ex-ample of the high level of our research is, one of the three in Europe, Mobile

laboratory of pavement parameters quantification based on non-destruc-tive testing research – SPID.

Do technologies and materials used in the construction of Polish roads meet European standards?Materials used for the construction

and maintenance of roads in Poland do not differ from European standards. Most of the materials meet the PN-EN norms. Numerous modern materi-als such as polymer pavements, poly-mer modified emulsions, thin hot and cold layers were introduced to Pol-ish road construction practice. Re-cently, work on the implementation of mineral compounds connected with foamed asphalt has been carried out. It is investors who decide about the construction of roads and the thick-ness of individual layers. One way of cost-effective building is staging the

Implementation of the intelligent system of comprehensive vehicle identification project

Researching road barriers: Crash test in a training site

Traffic speed deflectometer seen inside the mobile lab

thickness of the structure. However, this technology often makes it difficult for users to travel smoothly on the mo-torway, because performing the work requires exclusion of the reinforced lane. Another problem are the too low offers of the contractors which impede the implementation of materials and products of high quality.

What is the scale of needs and com-pletions in the field of bridge con-struction in Poland? What are the good examples of such invest-ments?It is difficult to precisely deter-

mine the overall needs in the field of new bridge construction. The analy-ses carried out few years ago show that 20 new bridges are needed only on the Vistula River in order to ensure ade-quate traffic conditions in Poland. At present, the construction of the long-awaited North Bridge in Warsaw is un-derway. Speaking about bridge invest-ments in Poland, I see the need to build small and medium-sized bridges. The fast implementation of this type of bridges, especially on motorways and expressways, is enabled by an innova-tive programme “Bridges in 3 months” developed by our Institute. Its essence is to return to pre-fabricated systems which would allow faster completion of bridges. ::

Road and Bridge Research Institutewww.ibdim.edu.pl

14 :: polish market :: 7-8 /2011


Poland offers its advice and experience, bets on partnership

“European Dilemmas - Partner-ship or Rivalry?” is the slogan of the forthcoming 21st Economic Fo-rum in the Polish mountain resort of Krynica Zdrój. The forum is the most important meeting in Po-land of politicians, business peo-ple, researchers and media people from European countries, espe-cially Central and Eastern Europe. What do you expect of the debates?I think that partnership is a fun-

damental European value, both in the internal and external dimension. The rules of the single market mean that all the countries apply very similar or identical economic regulations. There are no differences in this respect be-tween new and old European Union members or rich and poor members. One should remember that the part-nership also applies to dialogue with external countries, which is a very important item of our common dis-cussion. We need to create a new ap-proach to the neighbourhood poli-cy without dividing it into eastern or southern policy. The neighbourhood policy should be expanded by the ex-port of our economic achievements, legal regime, food safety and stand-ardisation rules, and other elements necessary in building a single mar-ket. In the difficult time of economic crisis in the world and in Europe, we will not be talking about any large-scale EU enlargement. But Poland’s and other countries’ experience shows that economic integration has a very favourable impact on the development

Undersecretary of State at the Ministry of Economy Marcin Korolec talks to Ewelina Janczylik on the eve of Poland’s presidency of the Council of the European Union.

of both a new member state and the remaining EU members. Our propos-al for discussion within the Europe-an Union Council of Ministers and with the Eastern Partnership mem-bers will be how to expand the area where the EU internal market regu-lations are in force, especially regula-tions on the free movement of goods, services and capital.

Do you expect the Eastern Part-nership programme to be a suc-cess? Will we be able to share our experience with our neighbours and win them over for some ideas?Poland has greatly benefited from

economic integration. As a result, our Polish experience is very valuable. It is an excellent argument for our partners, not only Eastern Partner-ship members but also North Afri-can countries. Twenty five years ago Poland and Ukraine were at the same level of economic development. Now, Poland is several times more devel-oped than Ukraine. And one should remember that our integration with the EU contributed the most to this development. It is a very good ar-gument for our Ukrainian partners, showing them that difficult pro-in-tegration decisions are worth taking and that challenges associated with the integration process are worth ac-cepting.

What impact can the difficult eco-nomic situation of Greece have on the EU economy? Could this crisis discourage our eastern partners? Does the European Union have any emergency plan?I think that the European Un-

ion has to cooperate with its neigh-bours, whether they are in the east or in the south. These countries should be helped – but of course only if they want to be helped. We have to propose them the integration process as an in-strument supporting their economic growth. Otherwise, the neighbouring countries will not use the opportunity offered by economic and political in-tegration. The European Union has to become again the centre of economic gravitation. It is a very bold approach but without it we will not succeed in building a positive economic vision.

21st Economic ForumKrynica, Poland, September 7-9, 2011

„European Dilemmas- Partnership or Rivalry?”

The base for the 2011 Economic Forumprogramme will be groups of topicsdiscussed during the 2011 edition:Macroeconomics, Business and Management International Politics, Forum of Regions, Energy Forum, Innovations and SustainableDevelopment, New Economy, State andReforms

» More than 120 plenary sessions and panel discussions, lectures of the personalities of the publicsphere, workshops and round table discussions;

» 2 000 invitees from Europe, Asia,USA and Middle East countries

Cultural programme: literatureevenings, presentation of movies,concerts, evening cocktails organisedby the Economic Forum partners;

Wide variety of recreational eventsscheduled for September 8 and 9 after4pm more various than in 2010

The Economic Forum in Krynicahas became an important spot onthe political map of the world andprobably the only one, where Eastmeets West on such a large scale

www.economic-forum.pl contact: [email protected]

210x290 FE_230x295 10-06-2011 16:27 Strona 1

16 :: polish market :: 7-8 /2011


On June 20 you accepted your nomination as a member of the EU-Russia Gas Advisory Council from EU Commissioner for Ener-gy Günther Oettinger. What is your most important task in this insti-tution?Just days before Poland assumes

the presidency of the Council of the European Union, this decision is very good news. The future of the EU en-ergy policy will be the main political topic we want to propose for discus-sion to the ministers responsible for energy. The European Union is and will remain a net importer of energy resources. We have to work out basic rules for our relations in this respect with external partners. Of course, each EU member state taking part in the discussion has various kinds of experience in its relations with other countries. The important thing will be conclusions from this debate adopted by member states and then commu-nicated to their external partners. I hope one conclusion will be that the EU’s external energy policy should be based on the paradigm of the inter-nal energy market, third party access rights (TPA) and the transparency of commercial contracts. I think that by appointing me to this post the Euro-pean Commission wanted to point to the process which Poland had started in relations with the Russian Feder-ation in 2010. In the near future nat-ural gas will have its “golden age” in the EU, irrespective of whether it will be imported or come from indigenous sources. Gas will probably be one of the most important resources, if not the most important one. The Russian Federation is a very important trade partner for the European Union. We have to promote our internal energy market rules towards external part-ners. This is how I see my role in the Gas Advisory Council. Interestingly, I am the only central government of-ficial in the Council.

The prospect of using shale gas has been discussed in Poland for a few years now. And you said that nat-ural gas may experience its “golden age” soon. If so, does Poland have a chance to become a shale gas super-power? Or is it too early to say so?I would very much like gas com-

panies’ estimates concerning Polish

shale gas resources to come true. As far as I know, the geological structure of the Polish shale gas deposits is al-most identical with that of the depos-its in the United States. Consequent-ly, the probability that shale gas could be used on a large scale in Poland is very high. The drilling process has only started in Poland and we know about one horizontal well that has been completed so far. Press reports are very optimistic but we cannot be certain about shale gas resources in Poland until several hundred wells have been drilled. One optimistic re-port is not enough. But if it is proved right by successive wells then I think the Polish gas sector will indeed have very good prospects, which will also be associated with decisions by our important partners in the European Union. Today, we have to wait patient-ly for more news about gas deposits.

On April 11 Poland became a mem-ber of the Council of the Interna-tional Renewable Energy Agency (IRENA). You represent our coun-try. The Council promotes renew-able energy and its use. How is Po-land going to pursue the Council’s tasks?The idea to set up an internation-

al agency for renewable energy orig-inated in Germany. And this is how the idea to promote renewable en-ergy emerged. Initially, discussion on establishing the agency was held locally. But in 2008 more countries started to declare their intention of

joining the organisation. Today, the agency is a global organisation with over 100 members. The Agency’s As-sembly, which is its highest authori-ty, held its first meeting in early April. The Assembly formally approved Abu Dhabi as the IRENA headquarters and formally elected its statutory bod-ies. One of them is the Council. It is to meet twice a year and offer advice to the Director-General about the direction in which the organisation should develop. First of all, the agency should be a platform for the exchange of information about available tech-nologies. For the European Union the problem of renewable energy means discussion about sustainable devel-opment and a reduced use of fossil fuels. But one should remember that renewable energy is the only chance for many African and Asian countries to progress to a higher development level. There are still scores of people who have no access to electricity and will not gain this access without the use of dispersed sources of renewable energy. We need an institution offer-ing reliable information about which technologies are worth promoting and adopting. An objective and ana-lytical approach to this issue is need-ed. And these are the tasks adopted by the IRENA Council. In the time of crisis the agency is not likely to have much money for loans. But we are at the start of our road and the organi-sation has every chance to play a very important role in the future.

Interview: Ewelina Janczylik

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18 :: polish market :: 7-8 /2011

President’s award

Bronisław Komorowski, the President of the Republic of Poland, has grant-ed the Presidential Economic Awards in Poznań. They went to the best four Polish enterprises selected from among 13 companies that had been nomi-nated by the Chapter of the Presidential Economic Award. The laureates were:

In the “Innovation” category: Solaris Bus & Coach S.a.

In the “Corporate Governance and Corporate Social Responsibility” category: Novol Sp. z o.o.

In the “Presence on the Global Market” category: Grupa fakRO

In the “Green Economy” category: waTT Produkcja Systemów Solarnych

The ceremony took place in Poznań during the Gala of the 90th Anniversary of the Poznań International Fair. ::

The Economic awardof the President of the Republic of Poland

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The President of Poland presents the award to Solange and Krzysztof Olszewski of SolarisBus&Coach

The President of Poland presents the award to Ryszard Florek, president of Fakro

The President of Poland presents the award to the representatives of Novol:

Piotr Nowakowski and Piotr Olewiński

The President of Poland presents the award to Marek Szymański, the executive director at WATT

20 :: polish market :: 7-8 /2011

President’s award

Polish Economic Nobel Prize

What does Corporate Social Re-sponsibility mean for you? Is it just meeting formal and legal require-ments or also social activity and eco-friendliness?P. Olewiński: Novol’s activities are

guided by the principal of sustaina-ble development because of the belief that the implementation of projects aimed at environmental protection, although it does not bring immedi-ate financial benefits, is necessary in

The President’s Economic Award is one of the most prestigious awards, which over the years were granted to Novol. It bears enormous emotional weight – after all, it is a prize awarded by the most important person in Poland on the basis of an evaluation carried out by a broad chapter consisting of recognized business and economic authorities, says Piotr Nowakowski, President of Novol Sp. z o.o. The fact of receiving it from the President’s hands is a huge ennoblement for us. This gives us the greater satisfaction that we did not enter the competition ourselves, but we were proposed by an independent organization, adds Piotr Olewiński, the Vice-President.

order to ensure ecological safety and the conservation of natural values of our surroundings.

Novol, owing to sustainable and in-tegrated policy, seeks to reconcile the need to achieve satisfactory economic performance with deep concern for the natural and social environment. Un-doubtedly, the implementation of the international programme “Responsi-ble Care” (www.rc.com.pl) is an im-portant element in achieving these

goals. It is an expression of commit-ment to voluntarily undertake effec-tive measures ensuring the implemen-tation of principles of eco-ethics, the improvement of working conditions, increase of process safety and stay-ing in touch with the environment. In order to improve the results of envi-ronmental performance, NOVOL has implemented and certified for com-pliance with the international stand-ard ISO 14001: 2004, an environmen-tal management system.

You have received the award in the Corporate Governance and Corpo-rate Social Responsibility catego-ry. It concerned companies which show particular attention to man-agement standards. How did you achieve the highest level of good organization and governance?P. Nowakowski: According to us

the key factor is the establishment of a team of responsible co-workers and perfecting partner relations in inter-nal and external contacts. Creating a proper working atmosphere and re-specting another people is an essen-tial component of our everyday work.

P. Olewiński: A steady team of peo-ple, whom we can trust is a power-ful asset of our company. Over the years, there are better and worse pe-riods in business and it is precisely in these vulnerable times that our ap-proach to this way of working pays. A good team makes it easier to nav-igate through difficult moments and solve problems faster. A confirmation of this aspect is the very low turnover of employees in our company. ::

From left: Piotr Nowakowski, President of Novol, Piotr Olewiński, Vice President of Novol

22 :: polish market :: 7-8 /2011

President’s award

fakRO – we are successful on the global market

What does the Economic Prize of the President of Poland mean to FAKRO?This prestigious award, which

FAKRO has received for the second time, is first and foremost proof that a Polish company can succeed on the competitive global market, although this still represents a great challenge for Polish companies. This means not only grappling with a capital giant, but it also is a technological race. Glob-al competition forces companies to continuously increase quality, be in-novative, motivates them to act and develop. It has the features of sports-manship, where the prize at stake is winning in the worldwide economic competition. FAKRO has successful-ly won over foreign markets. Today it is the world’s second largest producer of roof windows. The FAKRO Group,

Interview with Ryszard Florek, president of FAKRO

employing 3,300 people, consists of 12 production companies and 14 dis-tribution companies located in Eu-rope, Asia and America. FAKRO roof windows are distributed in 47 coun-tries worldwide. The company is also the world’s leading manufacturer of attic stairs.

The work of my associates and em-ployees in Poland and abroad has also contributed to winning such a prestig-ious prize. It is also thanks to our dis-tributors, roofers assembling our roof windows and customers who choose our products. It is them who give us the opportunity to develop an inter-national business. Our success is also the result of excellent cooperation with foreign partners, who are very com-mitted to building and strengthening the position of FAKRO on the global market. All this makes the company

grow and create more jobs, not only on the production lines but also in the research and development and export departments. We were also given the opportunity to be one of the compa-nies which drive the economic de-velopment of our country and create Poland’s prestige on the internation-al arena. After all, it is Poland that has become the global leader in roof win-dow manufacturing.

What, in your opinion, is the most important in managing a company?To manage a business you need to

have specific knowledge and persever-ance in pursuing goals. You also need courage. I mean the willingness to take risks. But with all this you must be able to count, predict, analyze, listen and take concrete decisions. All un-dertakings should be carried out with persistence, unconventional thinking and responsiveness to market chang-es. Flexibility in relation to market and customer requirements, as well as continuous investment in prod-uct quality and the implementation of new solutions in production are also necessary.

An extremely important element is the ability to recruit employees. The realization of an idea is only possible when the project is carried out by peo-ple, who believe that even the most fantastic visions can come true. The condition of belonging to such a group is knowledge, diligence and determi-nation in pursuing a goal. The success of a company is always built by peo-ple. In a changing economy an in-creasing role is played by the knowl-edge and attitude of employees. This is the “competitiveness factor” that allows companies to find their niche on the market.

What makes your products desir-able also outside of Poland?FAKRO always approaches individ-

ually customer needs. Due to climat-ic and architectural differences these

Ryszard Florek receives the President’s Economic Award from Bronisław Komorowski, the President of the Republic of Poland

7-8 /2011 :: polish market :: 23

President’s award

needs are very diversified. But there are many features that all our cus-tomers have in common. These are: the need to feel safe, focus on energy saving, the user’s comfort and to have as much natural light in the room as possible. All FAKRO roof windows meet these needs.

A unique feature of our roof win-dows is their safety. FAKRO roof win-dows are equipped with a special top-Safe reinforcement system, which significantly increases the window’s resistance to break-ins, and addition-ally protects against accidental open-ing, when stepping on the sash when someone is on the roof. FAKRO also offers a specialized Secure window, which apart from the topSafe system is also equipped with a package with anti-burglary P2A-class glass, a sys-tem protecting against removing the glass and a handle with lock. This way the window is in different ways pro-tected from intrusion, such as hitting from above, lifting the handle, easy disassembly or breaking the glass.

An important feature of FAKRO products is their energy efficiency, which is a result of many factors. An important element is the automat-ic air inlet V40P, which is typical-ly mounted in roof windows. By au-tomatically adjusting the size of the flow channel, the inlet provides the optimum amount of air, providing a healthy micro-climate in the attic and energy savings. It is worth add-ing that FAKRO has the warmest win-dow on the market – FTT U8 Thermo – in its product line. It is tailored to the needs of passive buildings. When assembled with the Thermo flash-ings, it has the heat transfer coeffi-cient of 0.58 W/m2K, which makes it the most energy efficient roof win-dow in the world.

The preSelect and proSky roof win-dows series are a symbol of comfort. PreSelect is a new-generation roof window with two separate functions of opening the sash: tilting and rotat-ing. The separated opening functions provide stability and increase the us-er’s safety. The tilting function allows easy approach to the edge of an open window, which increases the utility space of the room and provides un-obstructed view outside. The rotation function is used to wash the outside of the window and to install the awning.

ProSky windows have large di-mensions it terms of height and width, but are suited to standard spacing of rafters. They are ideal for lighting the room, and the handle on the bottom frame is always at hand. In turn, the increased axis of rotation allows even a tall person to comfortably stand at an open window.

FAKRO is still one of the few inno-vative companies in Poland. Where does this modern approach come from? What are the activities tak-en in this regard?Since the beginning, FAKRO has

focused on innovation, which, next to the highest quality of products, is the key to success on global markets. In the pioneering years, I personally worked on developing new solutions and constructing roof windows. Now the company has a modern R&D cen-tre which employs over 70 engineers. FAKRO has filed almost 80 patent ap-plications. We export not only roof windows, but also solutions and the creative technological thought de-veloped by Polish engineers. This way FAKRO sets new trends for the roof window industry in the world and Poland has become the world leader in their production.

Innovation opens the way for suc-cessful expansion into foreign markets. Therefore, FAKRO yearly enriches its product line by implementing new

technologies, and the engineers from the R&D department are the authors of many breakthrough solutions in the roof window industry.

What are your further develop-ment plans?For years, we have been consist-

ently executing our company strat-egy of building a global business and strengthening our number two position in the world. We are aiming at reduc-ing the gap to the global market leader in roof window production. A higher share in the global market means low-er costs, mainly of distribution, while it limits the possibility of price dif-ferentiation for our main competitor, which today is the main constraint for FAKRO’s development. ::

FPP - V preSelect roof window

FTT U8 Thermo roof window

24 :: polish market :: 7-8 /2011

Innovation

The purpose for organizing this ceremony was the announcement of the most innovative firms on the Pol-ish market. The guests were greeted by Rita Schultz, the Editor-in-Chief of the “Polish Market” economic magazine. Then, Professor Krzysztof Rybiński, the Rector of the Vistula Universi-ty and the co-organizer of the event, highlighted in his speech the strengths of the Polish economy, owing to which companies who think truly innova-tively are present and successful on the market. However, Prof. Rybiński did not forget about the weaknesses of the innovative economy, which in turn cause the lack of economic de-velopment and create insurmount-able barriers. Yes, we have brilliant youth, but the system of education it-self is on a very poor level. We can also boast some examples of innovation,

however, bureaucracy known to all and risk aversion discourage inves-tors. Such examples could be mul-tiplied. The night of 28 June showed that we must think positive and sup-port companies, which are not afraid to take chances and create an inno-vative project.

Prof. Michał Kleiber, President of the Polish Academy of Sciences (PAN), also present at the ceremony, said that he appreciated initiatives of this kind because they help in discovering in-novative businesses. Such events are very important, as in Poland atten-tion is often directed towards things of little importance from the point of view of Poland’s interest. Prof. Kleib-er believes that everything should be done to encourage Polish entrepre-neurs to show their achievements, to boast them.

In attendance was also Prof. Hen-ryk Skarżyński, one of the most famous Polish researchers, who bets on inno-vation. His achievements are known and appreciated throughout the world.

The 2011 Progress Awards were granted in 7 categories. In the first one, for projects created indepen-dently, the award went to Integer.pl. In the best innovative project in the utility and versatility category two companies were awarded: Hydrome-ga and Unikkon Integral. In the ecolo-gy category the endeavours to protect the environment of three companies were distinguished: - Ecotech Polska Sp. z o.o., Ferro Sp. z o.o., and TFP Sp. z o.o. In the category project for small and mid-sized enterprises mis24.pl was awarded. For the best innovative project created with a research insti-tution Grupa TP was acknowledged. In the best innovative project in the telecommunications category Exatel S.A. was awarded and in the best in-novative project in the banking cate-gory the winner was Alior Bank. ::

Photos: Łukasz Giersz

The Innovation Gala organized by the “Polish Market” magazine and Vistula University took place in the Le Regina Hotel in Warsaw on 28 June 2011.

Progress 2011 Innovation Gala

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ALI 069 11 A AliorPrivateBankingPolishMarket230x295.indd 1 7/20/11 1:12:48 PM

26 :: polish market :: 7-8 /2011

Innovation

krzysztof Chełpiński President, mis24.pl sp. z o.o.

what are the benefits of using the iPartner24 service?Imagine a world in which your TV automatically switch-es on your favourite channel, the refrigerator orders your

favourite meal and the car takes you to the chosen destination. This is the world from which our application, the iPartner24 internet ser-vice, comes from. It is designed to help companies operate efficiently and effectively, and free the company managers from everyday care for the business, directing their attention to the outer world, where they will be able to look for new innovative ideas, find contracts, build the company’s product line in areas hitherto unknown. I believe that this is very important for the economy. iPartner24 internet service is available immediately. It does not require any initial costs or invest-ment. You pay only for the use of it. Customers have an impact on the shape of the service by reporting their needs, which we gradual-ly realize. Our service can be used by businesspeople as well as reg-ular internet users. I will admit that I use it to store my documents in order to be able to find the desired information in the shortest time possible. Our company is developing the iPartner24 service, while be-ing its user, hence the new functionalities stem from practical needs, and the service itself is very well thought out and tailored for the user.

Is the iPartner24 project the only service provided by your company?The iPartner24 is the fundamental service of mis24.pl. Its usefulness in managing a small company is proved by the fact that it was chosen to cooperate with the SZOK service in a project carried out by the Cham-ber of Commerce for Electronics and Telecommunications. It serves as an application engine there. The SZOK service, delivered also via the In-ternet, promotes process management, providing exemplary models of organization for small and mid-sized enterprises. It allows these com-panies to use process management without the need to spend money on consultants, who would help describe the processes in the organ-ization. The models provided by SZOK are proved and they were de-signed with the use of the best world practices.

In addition to the iPartner24 service, mis24.pl is also the adminis-trator of a networking portal for wine lovers – nasze-wina.pl. The por-tal was created as a private initiative of my wife and me. Our intention is to create a community of wine lovers, with emphasis on the word lovers, for whom wine is a passion. Developing this networking por-tal, we also learn how such a community is formed, something we try to use in promoting our main product.

Tomasz Sańpruch (Capital24.tv), Maja Lidke (EFL), Anna Rosińska (Enel-Med), Agnieszka Nogajczyk-Simeonow (PTE Allianz), Aleksandra and Paweł Trochimiuk (Partner of Promotion)

Krzysztof Chełpiński (mis24.pl), Mirosław Kasprzak (PTE PZU), Bożena Lublińska-Kasprzak (PARP), Paweł Trochimiuk (Partner of Promotion)

Artur Niewrzędowski (Talking Heads) and attorney Michał Wochnik

Bożena lublińska-kasprzakPresident, Polish Agency for Enterprise Development (PARP)Although there are many awards granted for innovation at conferences and by various institutions, I think that

there are never too much of them. It is definitely worth to show, re-ward and award such companies. It is worth that they and their heads become a kind of celebrities, that they are in the media. Our experi-ence and research show that these examples are important. They en-courage and stimulate creativity, which Polish entrepreneurs are not missing. And this is necessary, because Polish companies, although they say they have problems with financing innovations, are really in-terested in introducing cutting-edge innovative solutions. Innovation does not always require a lot of money. Often it can be an organiza-tional or marketing change, one that can be introduced even by em-ployees themselves. PARP has recently completed a competition “Cre-ating Tomorrow” promoting employees who, by themselves, prepare innovative projects within their companies.

STRONG POINT OF ANY KITCHENFerro kitchen battery from scratch-resistant high quality steel

www.ferro.pl

28 :: polish market :: 7-8 /2011

Innovation

Piotr Radliński President of Unikkon Integral Sp. z o.o.Daniela Grabowska Vice-President of Unikkon Integral Sp. z o.o.

a company which is to meet the needs of customers in creating new computer solutions using the best and latest technologies. How do you do it?

We implement very different projects both simple and highly complex, and innovative. Our latest system MagicScribe identifies and converts speech into text. This system is widely used by doctors, lawyers, judg-es, journalists and “common” users. In practice, spoken text is changed by our programme into written text.

who will benefit from this project? Only large enterprises and in-stitutions or any user? Is the project popular?

This is a programme anyone could benefit from, high school students, journalists, judges, doctors, lawyers. This system can also facilitate contact with the world for people with impairments. Our system has been used in medicine for a year now. The first period of promoting the programme was the hardest and we emphasize with pride that we need clients who understand modernity and want to actively par-ticipate in its implementation. The system is used not only by indi-vidual users, but also institutions, and media helping us in promoting and developing new technologies. To date we have sold over 1,000 li-cences. We create technologies which initially are very innovative, but soon it turns out that the technology is no longer perceived as a technological innovation, but an indispensable tool in everyday life. Owing to our customers and striving to cater for their needs, we cre-ate ever new, ever more perfect programmes. This is also how Mag-icScribe was developed.

Dominik wojewódka President, EcotechEach award makes me happy. In this case I am partic-ularly happy because of the reputation of “Polish Mar-ket,” as well as the participation of the academic circle

from which I derive.Granting us the award exactly on this day is very symbol-

ic for me, as today is the day when the sale of Ecotech’s shares was launched. This is a private issue addressed to a maximum of 99 shareholders. We plan to raise about PLN5 million from the stock exchange.

First we will dedicate the funds for completing the construc-tion of our plant near Opole. Part of the proceeds will be dedicat-ed to finalizing and closing the already signed foreign contracts. These are mainly government contracts. And another part of the funds will be used for further research. We plan to take up work with waste, with which no one has done anything yet: radioactive waste and explosives. This is hazardous waste, occurring mainly abroad. Because it is outside of Poland that we most often operate.

Currently we have an agreement with the government of Ar-menia considering two very large projects. We have acquired these contracts owing to the GreenEvo project supporting Pol-ish export technologies. We have also signed a letter of intent with Vietnam for the decommissioning of chemical residues re-maining after the war. It is also a major project which will prob-ably include the rehabilitation of a military airfield. We are also carrying out a project in Israel. Very soon we will launch a plant in Lithuania. We are also carrying out talks with China, Canada, USA, Belgium and Holland.

Jarosław Chałas (Chałas & Partners Law Firm), Jerzy Marszalec, PhD (Innovatech Consulting)

Ewelina Janczylik (Polish Market), Piotr and Ewelina Dziubiński (TV Biznes), Jacek Kopyra (Korporacja Radex)

Lyreco : Beata Świerczyńska, Jakub Leonowicz, Arkadiusz Maciejewski, Paweł Szymczuk, Małgorzata Malinowska and Rita Schultz (Polish Market)

7-8 /2011 :: polish market :: 29

Innovation

Krzysztof Chełpiński (mis24.pl), Krystyna Woźniak–Trzosek (Polish Market), Bożena Skibicka (MIS SA), Agnieszka Nogajczyk–Simeonow (PTE Allianz), Dorota and Grzegorz Ciechomski

Anna Rosińska (Enel-Med), Rita Schultz (Polish Market), Aleksandra Trochimiuk (Tailor&Baker)

Marek Zuber (economist) and Rafał Hiszpański (Warta)

Polish Market: Sandra Wierzbicka (editor and translator), Katarzyna Malinowska (marketing director), Maciej Proliński (editor), Błażej Grabowski (vice-president)

Mirosław Kasprzak (PTE Allianz) and Natalia Suhoveeva (Polish Market)

30 :: polish market :: 7-8 /2011

Innovation

waldemar BudzyńskiVice-president for Technical Affairs, Exatel

Exatel is one of the largest telecommunication com-panies in Poland. what entities are your services addressed to?

Exatel caters for businesses, large operators and institutions of state administration in Poland. More than 1,500 entities are our clients. We provide services related to data transmission, line lease, voice service and internet. We rely on the newest and most modern technologies, owing to which we maintain a strong position on the market. Exatel has one of the most in-novative networks in Europe with a length of 20,000 kilome-tres of optic fibres.

you have received the award for the SuperCore IP project. what is it and what are its benefits?

We have been seeing the need to increase the capacity of back-bone networks for a good few years now. Last year, Exatel de-cided to expand its backbone network through equipping it in highly efficient routers integrated with IPoDWDM links and thus increasing its capacity 8 times, from 5 Gbit/s to 40 Gbit/s. This is one of the most advanced technologies currently used in tele-communications, which reduces the necessary investment out-lays as well as the costs of maintaining the network (i.e. through reducing electricity consumption).

zbigniew zienowicz President, Hydromega Sp. z o.o.

Since the beginning of your activity you have been dealing with designing and producing hydraulic sys-tems and industrial automation, but you have also been running research.

The common feature of all our projects are actuator-based hy-draulic systems, which occur practically in all of our innovative products. The idea for the company arose almost 30 years ago in the Gdynia Shipyard, when it turned out that the realization of many interesting and innovative projects was impossible in the shipyard. The company has grown on the basis of many interest-ing ideas and knowledge, which until today is its greatest asset. Consistent policy has led to many innovative products which to-day are produced in series. One of Hydromega’s successes was undertaking export production. There would be no development without investments. Using, among others, EU subsidies we have expanded our production facilities, which was a prerequisite for the realization of the currently signed contracts.

The title which you have won is a confirmation that a well thought-out tactic, creativity and introducing innovative pro-jects are a recipe for success.

It is difficult to talk about the recipe for success when talking about the economy. The awarded project is the result of many years of work of a group of people, including research institutes and the Military Technical Academy (WAT) and the Innovation Centre of the Polish Federation of Engineering Associations (NOT). Today Lewiatan has both civil and military applications. I am happy that our designs are created in cooperation with research and develop-ment institutes. We have a certain ease in establishing contacts with the world of science. I believe than we are helped by our pas-sion with which we create and implement our projects, which, I think, are the recipe for success, about which you asked at the beginning of our conversation.

Maja Sujkowska (ECKP), Beata Sujkowska (Ecoacoustic), Jarosław Chrobociński (Le Regal)

Maja Lidke (EFL), Balbina Wołongiewicz (Natura Drogerie)

Henryk Lewiński (Israel-Poland Chamber of Commerce) and Jarosław Dąbrowski (a Finance)

7-8 /2011 :: polish market :: 31

Innovation

Rafał Brzoska President, InPost Sp. z o.o.In the short span of the last few years we have proved that as the Integer.pl Group we can create new and improve existing solutions in the field of postal and courier services. The best area for innovation is without doubt

the e-commerce market and the social shopping industry. An imitative business is not a challenge for us, therefore we treat those projects which bring original, not routine so-lutions as priority.

The award granted to the Group by “Polish Market” for self-developed independently created innovations materializes our success. We are happy, because the awards we re-ceive are solely our credit, and our original projects gain experts’ recognition and enjoy increasing popularity among their users. It is extremely motivating to continue to fight for the leadership in innovation both in the postal and courier industry, as well as in the e-commerce sector. Therefore, we can ensure that Paczkomaty and InFlavo are only the beginning of our expansion, not only on the Polish, but also on the international, markets.

We can definitely talk about innovation in regard to the InFlavo platform and Pacz-komaty service. Even for this reason that these projects are fully based on an original business concept and self-developed IT solutions developed by Integer.pl Group.

InFlavo is a completely new and first of its kind service in the world. Of course, im-plementing a platform enabling comprehensive sales of products and services through Facebook or introducing Paczkomaty was inspired by the current trends on the e-com-merce market, including the continuously growing popularity of networking websites. However the business idea and software were launched solely by the Integer.pl Group. An important issue – which despite appearances is not obvious – is whether and how quickly innovative services will gain their supporters. New solutions – despite their func-tionality – are accepted by the market with caution. It takes a lot of time to change con-sumer habits and systematically build their confidence in completely new, non-stand-ard and which is the most important – previously unknown services. We can say with satisfaction that both InFlavo and Paczkomaty – despite their yet short presence on the market – day by day increase the number of satisfied customers, who having used these solutions once, cannot imagine functioning without them.

Marek Zuber (economist); Błażej Grabowski (Polish Market); Krystyna Woźniak-Trzosek (Polish Market); Rita Schultz (Polish Market); Edward Trzosek (Bel Investment Group); Henryk Lewiński (Israel-Poland Chamber of Commerce)

Prof. Michał Kleiber

Prof. Henryk Skarżyński

32 :: polish market :: 7-8 /2011

Innovation

Marcin Bosacki Head of International & Social Media, InPostInnovations in Inpost are created in many ways. On the one hand through internal talks within the team,

on the other – we closely and carefully follow what is happening in the world, especially on the markets better developed than the Pol-ish one – the United States, Great Britain, some Western European countries. We peek, talk with our partners, actively participate in industry conferences and we try to adjust these ideas to our local conditions. It is also exceptionally important for us what our Cus-tomers think about our solutions. Also for this reason we are active in networking media and we listen to what over 250,000 people who like our services have to say. Each remark is carefully analysed by us, and later – of course, if possible – implemented... Other ideas are not thrown away. They are always on the list and step by step we try to improve our services so that they meet the expectations of all our customers.

Rafał Czekaj Director of Innovation, Alior BankThis is the first award we have received for the Dig-ital Signage project. We are glad that it is the one to be noticed, because there are many ideas important

for Alior Bank behind it.First of all, it shows that we are all the time looking for innova-

tion and ways to break the current rules of the market. Secondly, it lets us build a completely different than the existing relation with our customers. We have introduced screens, which are placed on the desks of our advisors. They allow presenting the offer in an in-teractive way, but first of all they build a completely different rela-tionship between the bank employee and the customer, than when the banker looks at the screen and the customer looks into the face of the banker, trying to guess what mysterious things he or she sees there. Now both can look at what is discussed and have a conver-sation as partners.

Thirdly, it shows our commitment to reduce the amount of pa-per documents, printed and copied in a branch. On the one hand it minimizes costs, but on the other hand, it is about environment pro-tection. When we think about how many trees less will be cut down owing to the fact that there will be less paperwork, how much less will have to be transported and stored, it begins to be really impor-tant for our natural environment.

Besides, from our point of view, it is important that a large part of the software was done in-house by our computer specialists. They were mostly students and graduates who “did not know it was im-possible” and so managed to create several unique solutions.

aneta Raczek President, FerroEvery prize makes me happy. It is a sign of recogni-tion and acknowledgement that our adopted strate-gy makes sense. The awarded VerdeLine brings ben-

efits to the users of our products in the form of savings, because we believe that business should be socially responsible. Although its core objectives are economic targets, we also take into consid-eration other factors. It is more than fashion for ecology. It is also a sign that Poland is changing, both Polish society and our project managers are increasingly aware of the impact of our everyday be-haviour on the environment around us.

Prof. Krzysztof Rybiński

Marcin Bosacki (Integer.pl) Krzysztof Chełpiński (mis24.pl)

The most prestigious regional project, gathering entrepreneurs, opinion-leaders, politicians and representatives of Silesian eco-nomic organisations.

During the Gala the “Caesar of Silesian Business” (“Cezar Śląskiego Biznesu”) prizes and diamonds for the statues, will be awarded to those who have maintained or strengthened their high position on the Polish market. A Special Prize of the Professor Zbigniew Religa Foundation of Cardiac Surgery Development – for outstanding achievements in science – will also be awarded.

The 16th Silesian Gala of the BCC (Śląska Gala BCC)

28 August 2011, Promnice Śląskie

7-8 /2011 :: polish market :: 33

The Nowy Styl Group is a European leader and one of the biggest man-ufacturers of furniture and chairs for various applications in the world. The Group’s product range includes chairs for private homes, offices and managerial offices, as well as stadium seats. The rich collection of chairs and seats is complemented by a collection of operative furniture systems and systems designed for managers’ and directors’ offices. A

new managerial office system eRange, designed by Platform Studio in London, has been created for the latter group of clients.

The Group has been committed to development from its beginnings, so it becomes involved in a lot of projects aimed at improving product quality. That commitment and desire to improve the company has been noticed and appreciated by the European Union which has provided fi-nancial support to the Group.

Currently, the Group is implementing a project called “Innovative Technologies in Furniture Industry - Construction of a Modern Produc-tion Plant at Nowy Styl Sp. z o.o. and Introduction of Innovative Prod-ucts to the European Market.” The project is being implemented under Activity 4.4 – New Investments with High Innovative Potential on priori-ty axis 4 Investments in Innovative Projects, under the Innovative Econ-omy Operational Programme for years 2007–2013.

The new furniture production plant to be developed as part of the project will offer products made of absolutely avant-garde materials manufactured on innovative production lines. Another innovation will be custom-made limited edition furniture products designed for a new segment of the furniture market, the so called SOHO market. ::

A D V E R T I S E M E N T

34 :: polish market :: 7-8 /2011

Innovation

Tomasz Nowakowski (Telekomunikacja Polska) Dominik Wojewódka (Ecotech) Waldemar Budzyński (Exatel)

Bożena Lublińska-Kasprzak (PARP)

Zbigniew Zenowicz (Hydromega) Rafał Czekaj (Alior Bank)

Jacek Kopyra (Korporacja Radex) Jacek Kliszcz (PWS Konstanta)

Aneta Raczek (Ferro)

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36 :: polish market :: 7-8 /2011

Innovation

Don’t be frogs: an innovation in cost managementWhat connects a frog with inno-vation, or rather with the lack of it? Well, a frog is not innovative. When it is closed in a room full of dead flies it dies from hunger. Why? Its brain has learned that food is only a flying fly. If it looked for sources of food other than flying insects, it would also survive in the changed environment. The similar-ity to business is significant. We know examples of companies that had oper-ated in comfortable conditions of in-come, but had been closed to changes and innovative solutions and, as a re-sult, lost their places in the market. 21st Century business means focus on in-novation in the interests of future in-come, sustainable development in the interests of future generations and costs associated with the activities of the company to raise funds for the afore-mentioned. A guarantor of dynam-ic growth and space for innovation is focus on core-business processes. Eve-rything that is solely a useful process or expenditure, rather than a strategic one, needs full control and transparen-cy, and a competent business partner.

Entrepreneurs, when asked what is most important to them in collabora-tion with their suppliers, answer: :: product/service quality, because it

ensures single expenditure without increasing the cost to cover the de-fects of a poor-quality product (ad-ditional supplies, rapid intervention purchases, etc.).

:: product/ service effectiveness, be-cause it ensures single expenditure without increasing the cost of the additional quantity of seemingly low-cost and low-capacity prod-ucts; efficient service is the mini-mum amount of time devoted to its “servicing”

:: a guarantee of non-violation of the company’s major processes ensures “0” additional costs resulting from the failure of useful processes and the possibility of focusing on energy and resources on acquiring Customers for the company. One of the areas of

useful costs present in any Company, regardless of its size or business pro-file, is the processes associated with the supply of office supplies. A neg-ligible area, provided that it works smoothly, and “it’s harmful”. Why? Every employee in the company is involved in the process of the pur-chase, receipt and consumption of these products; products and ser-vices are supported by key business processes and for this reason we want you to look at this seemingly insig-nificant process very seriously. If you care about time and costs we sug-gest doing this in cooperation with a proven solutions provider.

The Lyreco Company, by providing solutions to reduce costs based on high standards, is the largest Euro-pean supplier of office supplies. With its knowledge and commitment it has served millions of customers around the world. Uniform, developed over the years, still improving, operation-al know-how has helped to satisfy the most demanding and the most devel-oped companies; also on the Polish

market. The Lyreco projects are based on a full analysis of Customer needs with concern for all aspects of sustaina-ble development. Their goal is to trans-fer the costs associated with the pro-cess of obtaining products that support their activities from the companies to Lyreco, thus to release resources to the main revenue activities.

Lyreco is a new way of looking at old processes and their continuous im-provement without additional cost to the Customer. You just simply need to ask the Lyreco consultant what Lyreco can do to increase the cost competitive-ness of your business.

Anna WolskaCorporate Accounts Sales Director

Proposed innovative cost managementImprovement in the Company’s competitiveness without affecting the quality of the core business.

Phone: 801 300 002 www.lyreco.pl

High quality Cost discipline

Minimising the number

of documents

The support of sustainable development

Reporting and clarity of costs

A guarantee of non-violation of the

main processes

A wide choice of premium and budget

products Budget control

The selective limitation of useful costs

7-8 /2011 :: polish market :: 37

Innovation

Detecting threats

On March 31, 2011, the Senate passed a Development Strategy for the Military University of Technol-ogy for the Years 2011-2020. What will it mean for the school?At the turn of the century WAT was

in a rather precarious situation and in fact our closure was discussed. What saved us were our strong research teams, whose talents in obtaining funds kept us above water.

The new strategy should’ve been ready at the outset of this term, but somehow it wasn’t, so in debates with my associates I suggested six points. Each of these six points speaks about the Academy’s position in the aca-demic and military schooling system. In preparing the strategy I based on the Armed Forces Development Strat-egy Until 2030, which speaks about a modern Polish army.

The strategy’s basic part contains clauses about maintaining the to-date high level of the school’s curriculum and research work. In order to car-ry on a large number of R&D projects we need adequate technology. At the same time it must be kept in mind that

“The Military University of Technology (WAT) is the most successful in Poland when it comes to winning research funds, with the highest funding per researcher. As much as 60% of our budget comes from the market – industry, research grant contests, innovation contests, patents, etc. This kind of budget is untypical in Poland, that’s why WAT is sometimes called an ‘American school’,” Andrzej Najgebauer, Professor at the Jarosław Dąbrowski Military University of Technology in Warsaw and the school’s Prorector for Research, tells “Polish Market’s” Jerzy Bojanowicz.

since 2003 WAT is a civilian and mili-tary college. This is why our strategy speaks about education under the EU-obligatory three-tier Bologne system with a strong focus on Ph.D. studies. Three years ago we had only 140 doc-toral students, today the figure is 283. This is why we ourselves call WAT a research-oriented university. Because of our rights to confer degrees (11 in PhDs and 8 in assistant professor-ships), we can also safely say we are a technical university. In various rank-ings together with civilian technical universities we place among the top ten schools. This is a very good posi-tion considering the number of tech-nical universities in Poland and our relatively short tradition in educat-ing civilian students.

We are, however, unrivalled among military schools. In concepts developed by the National Securi-ty Bureau, the Defence Minister or the General Staff of the Polish Armed Forces, our academy functions as a school which trains officers with BSc. and especially MSc. degrees. This is also our goal as today army officers

must be well educated. Especial-ly those who are to deal with high-ly-advanced weaponry. Poland takes part in military missions worldwide, so this kind of training is extremely important.

Considering our overall teaching capacity, we’re able to ensure an op-timum study environment for 10,000-12,000 students, of which 10–20% would be military students. That’s all a professional army like ours will be able to take in annually.

And what’s your enrolment level today?In 2007/2008 we had 379 cadets and

7,484 civilian students, today these figures are correspondingly almost 1,000 and around 9,000.

WAT is growing all the time, so we do have room for more than 12,000 students. But we want to focus on R&D and if the student roll were bigger our research staff would have to take time off their work to teach. Or we’d be forced to recruit teaching staff. More-over, please bear in mind that most of our research work concerns military

38 :: polish market :: 7-8 /2011

Innovation

technology and its employment for our coun-try’s internal and external security, and in-volves a variety of scientific disciplines. This is also written down in the strategy document.

Our other field is hi-tech, especially mod-ern highly-resilient materials with high safety parameters. We also conduct studies on ad-vanced laser technology and optoelectronics, especially their applications in reconnais-sance gear used to detect biological, chemi-cal, radioactive and other threats.

What options are there for civilians in your school? And what kind of career can your civilian graduates hope for?Our courses are listed together with the

study programmes of other technical schools. However, we offer 66 rare military and se-curity-connected specialties open for mil-itary and civilian students. Our graduates have no trouble finding work, in fact they’re quite sought after. Not least thanks to our tra-ditional order and discipline, which makes them excellent employees.

Which of your research labs would you call your leading units?Quite certainly the certified labs dealing

with cryptology, optoelectronics, electro-magnetic compatibility and vehicles. These labs work on certified machinery and equip-ment. The income these labs generate isn’t very high but the fact that we do have certi-fied laboratories works like a magnet.

Poland has rich traditions in cryptology. Isn’t creating codes a neverending battle with codebreakers?Our colleagues from the Mathematics and

Cryptology Section at the Cybernetics Facul-ty are on a number of security projects car-ried out in partnership with other units. For instance the Wasko company helped us de-velop a so-called National Encryption Device which enables the rapid coding of data, in-cluding visual data. The technology involved is very innovatory. Generally speaking, this technology makes use of… or no, I’d better keep silent on this!

Much is being said about innovation and EU-funded projects.There are many, I receive them to sign

every day. Such projects are carried out un-der the operational programmes Innovative

Economy, Human Capital and Infrastructure and Environment.

In 2005–2007, when we started using EU structural funding, we received PLN2.1 mil-lion for training and investment projects. But already in 2008-2010 our school sealed con-tracts for a record PLN180.5 million. In all, we received PLN287.2 million for research work. The over-threefold rise in R&D fund-ing between 2008 and 2010 was largely due to high-budget target and EU-sponsored de-velopment projects. I may add that every year the research funding we received from the Science and Higher Education Ministry was more than ten times what we received from the Defence Ministry – and this despite the fact that our work for the Defence Ministry has been mounting in recent years. We car-ried out 264 tasks for the Defence Ministry in 2007, 305 in 2008, 316 in 2009 and 350 in 2010.

Our investment outlays have increased almost fivefold.

I wouldn’t like to single out any of the pro-jects underway at our school, there’s some-thing interesting going on in all our depart-ments and institutes and I’m sure that, as each year, many will reap a windfall on prizes and awards at technology exhibitions worldwide.

How well do you cooperate with the Eu-ropean Defence Agency?It’s the other EU countries that want to

work with us. Of course we’re willing to co-operate and currently we are in fact partici-pating on a number of grant projects, among others in battlefield survival and optoelec-tronics. I’m on one of them myself – it’s called Atena and concerns situational awareness. On Atena we work with computerized threat assessment configurations. The funding isn’t very high but steadily on the rise (PLN1.24 million in 2008, 12.3 million in 2009, 41.81 million in 2010), besides, Atena is very pres-tigious.

You say that WAT trains specialists in secu-rity fields. Next year Poland will be host-ing the Euro 2012 football championship. What can the school offer those who will be responsible for security at the Euro event?The Euro 2012 security force has an opto-

electronics team equipped to protect against biological threats. We and some other organ-izations developed the technology this team

will use. They underwent tests quite recent-ly. These technologies enable the early iden-tification of biological threats on planes from a considerable distance. During tests all we needed to do was open one of the aircraft’s holds and, from a distance of about 300 me-tres, we knew right away that there were in-fected passengers on board who had to be iso-lated from the rest.

Does this mean you’re able to say if a plane that’s just landed is carrying someone in-fected with, say, E. coli?Yes. We’ll know before the passenger in

question even gets off the plane. It’s done by directing a laser beam onto air leaving an open hold. That allows us to identify the bacteria. In the same way we can also check from a considerable distance if a driver’s been drinking.

Other technologies are used to process visual images. Generally our main field is early threat detection. What we offer here may seem like science fiction to some, but it really works.

WAT frequently hosts foreign delegations. Does anything ever come out of such vis-its?These are representatives of various com-

panies and institutions. They usually come, take a look around, and then contemplate if they should invite us as a partner in a consor-tium. Sometimes such projects need an ac-ademic school among the project partners, and we have a strong position and vast ex-perience in military technology as many of our staff work on NATO projects.

What novelties can we expect in the aca-demic year 2011/2012?We’re working on some new special facul-

ties. I think this year will be difficult because here are some new R&D centres on the mar-ket, notably the National Research and De-velopment Centre and the recently-opened National Science Centre. At the moment we don’t know what kind of projects they will be working on.

As for our teaching work, we’re prepar-ing new qualification criteria, partly dictated by changes in academic education laws. This in turn could result in considerable curric-ulum changes.

Interview: Jerzy Bojanowicz

7-8 /2011 :: polish market :: 39

Innovation

Ecological energy for economy and industry

Intensively developing economy worldwide has started contributing to severe climatic chang-es. Climatic changes at our globe threaten hu-man existence via extreme weather phenome-na, draughts, floods, reduced harvest, pollution, and greenhouse gas emissions. Greenhouse gas emissions grow three times faster than several years ago, which may cause increase in the tem-perature on our planet by from 2°C to 6°C. Sci-entists claim this is the last time for inhibiting the growth in greenhouse gas emissions. This caused a conference in Japan in 1997, where the so-called Kyoto Protocol was signed, where an agreement was resolved on limiting green house gas emissions in industrialised countries. Ac-cording to the requirements of that protocol, in-dustrialised countries are to reduce greenhouse gas emissions by approx. 5% by 2012. The dia-gram presents recommendations for particu-lar countries in the area of limiting greenhouse gas emissions. The Kyoto Protocol has been rat-ified by 55 countries, including Poland. Further works in the area of greenhouse gas emissions are conducted under auspices of the United Nations and were broadly consulted at the UN Climate Change Conference in December 2009. Further necessary measures are envisaged to improve the climate of our planet. Our country has de-veloped a policy in the area of air pollution in the

document entitled “Ecological policy of the state for the years 2007-2010 considering the perspec-tive for the years 2011-2014.” Among the most important activities of the Ministry of Environ-ment Protection, there is support of investments in the area of air protection undertaken by busi-ness entities and support of measures aimed at limiting low emissions from communal sources, as well as increase in the use of alternative fuels, including biofuels.

Industry Technology for High Pressure Sys-tem - IT-HPS is a leading Polish manufacturer in the area of offering innovative technologies and equipment for production of ecologically clean energy for municipal economy, industry and system clients. As a source of energy, out-of-system gases, biogases, landfill gases, gases from wastewater treatment plants and natural gas are used, as ecological fuels. Technologies applied are based on the use of cogeneration of heat and electricity in cogeneration systems, as well as cogeneration technology for production of heat and electricity as well as chill, aimed at reduction of the costs of primary energy neces-sary for generation of each of such forms of en-ergy separately. The application of tri-generation systems in the summer improves the economy of electricity cogenerated with heat at low cus-tomer demand for heat and the existing demand

Paweł Malkowski

for chill. From the practical point of view, tri-generation is a technologi-cal expansion of cogeneration by the possibility of producing chill.

Fig. 1 presents energy efficiency of energy generation based on the tradi-tional method and of cogeneration of electricity and heat. Innovative tech-nologies applied by IT-HPS are based on the latest technologies of gas fuel compression and their effective use in cogeneration and tri-generation systems.

The latest significant achievement of the company has been the launch of a cogeneration system for munici-pal management in Wodzisław Śląski, supplying domestic hot water to a large residential estate and two pub-lic buildings, hospital and a sports fa-cility with a swimming pool.

Planned design works include new systems for cogeneration of energy, us-ing biogases in the tri-generation sys-tem for production of heat, electrici-ty and chill, observing high ecological requirements for flue gas emissions to air. IT-HPS solutions should be used in territorial government units, in small and medium enterprises, and hospi-tals, namely wherever there is simul-taneous need for electricity, heat or chill. ::

40 :: polish market :: 7-8 /2011

Energy & Mining & Steel Industry

Billing systems – how do you do it?Billing systems which are implement-ed by energy companies support the basic processes related to paying for commercial products and services provided to clients. They are current-ly also used in the field of customer-relations management, which is why modern billing systems enable com-panies to diversify the range of their services. It is tempting to prepare a package for those markets, which are still fairly unsaturated, and where the expected margins are higher than in our core business. Thus support from IT becomes an instrument for achiev-ing a competitive edge through inno-vation, and the ability to properly pre-pare and implement a billing system becomes vital.

fields connected with implementing billingThe implementation of billing should be considered in organisational, meth-odological, equipment and systems contexts. The most important, how-ever, is the business aspect. Business needs should dictate the implementa-tion of new systems. Examples of such needs may be the readiness to conduct activities on a convergent market, the optimisation of customer service costs, and the opening up to greater flexi-bility of products provided by com-panies. Hence, besides a clear defini-tion of the business goal, it is essential

to define the requirements for the sys-tem in the form of reorganised busi-ness processes. These changes may, on the one hand, arise from the necessi-ty to adjust processes to the system being implemented, and on the oth-er, from the intention to revamp so-lutions which are not optimal. When approaching implementation it is also necessary to ensure the compliance of the system with the binding regula-tions at the time of implementation, and to formulate it flexibly to meet potential legislative changes.

It is also very important to prepare the commissioning party for imple-menting such a complex project. The organisation must be prepared for con-siderable effort, including involving people whose daily responsibilities are different in the project. The de-cision to involve specific employees/business process experts in the pro-ject is a significant factor in its success. Supporting the organisation with ex-ternal resources for the needs of pro-ject tasks (e.g. in the fields of project management and quality assurance) is also worth considering.

As for organisation, you should not forget about the proper planning and preparation of training. It is essential that the method and time of organising training should be defined, and that training should be synchronised with stages in the project and tailor-made to

Piotr Gapanowicz, Billing Manager, Business Applications Unit, Infovide-Matrix SA

the abilities of users. The readiness to give acceptance to the system should be preceded by running a relevant se-quence of tests and audits, taking into account individual operations, pro-cesses, acceptance, and performance tests. The project start should be ad-ditionally defined with the SLA crite-ria for its operation, and on the basis of this a procedure should be created to manage and implement the pro-ject start system. Switching to “go-life” should be preceded by prepar-ing a proper plan for switching from project start, and verification during its course.

IT aspects of system implementa-tion are also very important. When choosing a billing application, or a model of system implementation and the strategic conditions established before the billing platform is fixed, it is vital to answer the questions of how developed and extended a plat-form we need, and how much flexibil-ity we expect in the area of configura-tion. Another area is the selection of hardware and software for the system and database. It is important to define and stipulate these specifications early in the process, in order to not hinder the project schedule and budget dur-ing implementation. The requirements specified for the areas of reports, data migration, and interfaces are also of importance.

SummaryA company deciding to change its bill-ing system must be prepared for inten-sified involvement during project im-plementation. The above issues are the most important factors at play during the implementation of any billing sys-tem. It should be remembered that in order for such implementation to be successful, a detailed pre-implemen-tation analysis must be performed. This will allow better preparation of the project and more effective plan-ning for carrying out the investment, and also facilitates the preparation of proper monitoring and control mech-anisms for the progress of the project and the right criteria for its accept-ance. ::

Documentation

Billing application

Hardware

System and database software

Reports / BI

Data migration

Interfaces

Business processes

Training

System tests / audits

System maintenance procedures

Organisation

Switching to “Go-life”

Binding law

BIllING IMPlEMENTaTION

7-8 /2011 :: polish market :: 41


In the period of extraordinary market tur-bulences it is worth to ask fundamental ques-tions concerning not the future of Europe and the world, because then we would revolve in the sphere of hypotheses which are the result of many variables, but their presence. We need to ask and appeal for respect for the basic rules of economy and satisfying the basic needs of citi-zens. This is the only way to guarantee a relative-ly foreseeable future, or at least one that once we are in it, we will not reproach ourselves that we had sacrificed the wealth and prosperity of peo-ple for more or less proven theories that under-pin Europe’s crusade against climatic changes, which, let’s not be afraid to say it, will be a su-icide for EU member states.

Energy security of entire Europe lies in its in-terest. It can be ensured only through the secu-rity of energy systems of individual countries, taking into account their individual abilities. Polish power industry is only one and as many as one in the European energy system. We should give Europe what we have best, which is mod-ern high efficiency coal-fuelled power industry. There is no better option for Poland than the de-velopment of industries related to mining and

the use of coal in the energy sector. Of course, we should invest in renewable energy, but only within reason, keeping in mind the principles of sustainable development of the economy and our limited capabilities. We cannot afford to burn large amounts of biomass, because we do not have enough of it to allow our resources to re-new, and apart from that, paradoxically we have deprived our planet of its huge allies in reducing CO2 in the atmosphere, which undoubtedly are the forests. We also do not have the conditions to develop wind and solar energy, nor hydroe-lectric resources. Therefore we can seriously di-versify our energy mix only by gas and nuclear energy. For this reason, our company takes very seriously also these development trends in the Polish energy sector, taking up technological co-operation with major partners in the construc-tion of steam-gas and nuclear units.

Once again, I would like to underline that this needs to be spoken clearly and this should be a voice coming both from Poland and EU politi-cians and officials. Europe needs sustainable en-ergy development in each of its member states. If we do not want another crisis, we should re-spect and protect the delicate, as it turns out,

individuality of each EU member state, not only in the social and cultural aspects, but also, as the brutal reality shows, also in the scope of economy and markets. If the analysis of outstanding and reliable experts showing the risks of unrealistic emission targets, do not convince EU decision-makers, perhaps they will be moved by what is happening with the Greek, Irish and Portuguese economies. It is impossible to adapt everything and everyone to some ideas detached from life. Disregarding the basic rules of economics ends badly. ::

Wiesław Różacki, President of Rafako S.A.


42 :: polish market :: 7-8 /2011


The positive energy market in Poland

Electricity in Poland is almost en-tirely produced from the coal com-ing from domestic resources, and its share is the highest among all Europe-an Union countries. Although we can observe a growth in electricity con-sumption, it may soon stop as a result of only a slight rise in new generating capacities, combined with the necessi-ty to switch off the ageing infrastruc-ture, and stricter environmental pro-tection requirements.

The expenditures incurred by Polish residents to cover the costs of housing and energy are considerable, ranging from 15.8% of the household expenditure among the richer soci-ety groups to over 23% in the lowest income group, i.e. one in four zlotys. These are among the highest indica-tors in Europe, despite the fact that housing space per head is one of the smallest in Poland.

Nearly half the energy (44.6%) in Poland is used by the construction and services sectors, with residential buildings consuming around 70% of this amount. The major portion of en-ergy is consumed for heating purpos-es (approximately 80% in residential buildings) which results from poor insulation and loose windows, ineffi-cient ventilation, and inadequate heat-ing systems. As a result, the heating demand of buildings is considerable, which triggers high electricity bills.

Only a few percent of total energy consumption in residential buildings

The current situation on the Polish energy market is better than it was a few years ago, but a lot of things still need to be improved. Although we are a huge market with a considerable degree of concentration, competitiveness is still possible. Further market growth calls for the simplification of energy sales and provider change principles, the so-called colour certificates and extended cross-border connections.Energy consumption in Poland has declined by 30% in the last 10 years. However, it is still higher than the average values of other European IEA members.

Bogdan Sadecki

relies on electricity. It is advisable to rationally use the lighting system and household appliances, and to replace old equipment with new and ener-gy-efficient units. In single-family dwellings 65% of heat is wasted as a result of it escaping through insuf-ficiently insulated floors, roofs and ceilings.

Energy consumptionEnergy consumption in the Polish economy improved considerably af-ter the transition period, i.e. at the beginning of the 1990’s when it was twice as high as the average val-ue of the European IEA members. This situation improved by 50% in the period 1990–2000 after Poland had moved from a centrally-planned economy.

Since 2000, the average fall in the energy consumption rate in the Pol-ish economy reached 3% annually, and the trend towards achieving con-vergence with the EU and OECD levels has been preserved. Three years ago energy consumption in Poland was 30% higher than the average value for European IEA members.

ElectricityEnergy security is the priority issue in Polish energy policy. The government aims at improving the security of sup-ply of all energy sources, including coal, crude oil, natural gas and elec-tricity. This can be achieved through: :: ensuring the continual use of coal

as the principal fuel in electricity production;

:: creating new generating capacities (including nuclear power plants and new highly-efficient cogen-eration plants);

:: developing and modernising the domestic industry system;

:: expanding cross-border connec-tions in order to substitute the equivalent of 25% of the electrici-ty consumed in Poland until 2030;

:: modernising and expanding the distribution network;

:: developing renewable energy sources and increasing energy ef-ficiency, which will also trigger an increase in the level of security of electricity supplies.

The Polish electricity sector is current-ly characterised by its out-of-date in-frastructure. Nearly half the current generating capacities are over 30 years old. As a result, it was necessary to im-plement new short- and medium-term investments, in order to satisfy the de-mand for electricity and heat. (based on the IEA Energy Policies, Polish Re-view of 2011)

Institutions in charge of the energy policy in Poland: :: Ministry of the Economy,:: Government Commissioner for Nu-

clear Power,:: Energy Regulatory Office,:: Ministry of the State Treasury,:: Ministry of the Environment,:: Ministry of Infrastructure,:: Ministry of Regional Development,:: the National Atomic Energy Agency,:: Office for Competition and Con-

sumer Protection,:: Materials Reserve Agency,

The structure of basic fuel consumption in the commercial power industry

Source: Energy Market Agency SA

Fuel type 2009 2010

hard coal 58.95% 60.42%

brown coal 34.95% 32.60%

biogas / biomass 3.17% 3.78%

gas 2.92% 3.20%

44 :: polish market :: 7-8 /2011


:: Central Statistical Office,:: Market Agency,:: environmental funds.

The Energy Law Act adopted by the Parliament of the Republic of Poland on 10 April 1997 and the related ex-ecutive Acts (regulations), including especially those issued by the Min-isters of the Economy and the Envi-ronment, constitute the legal basis for the functioning of the energy market in Poland. Following the accession to the European Union, the Polish leg-islation concerning the energy mar-ket was adjusted to European law (in-cluding especially to the EU Directive on the Principles of the Common Elec-tricity Market).

The process of creating a compet-itive energy market in Poland took several years. This led to establishing specialised procedures for its func-tioning. The functioning of the energy market is based on complex and con-tinually-amended legal regulations, and especially on Energy Law and on the executive regulations issued by the Minister of the Economy. Subsequent activities have led to the development of new legal solutions, and the simul-taneous elimination of the previous-ly-binding ones.

Energy prices and taxesThe prices of such commodities as coal, crude oil and petroleum products are defined by the market. They are nei-ther regulated nor subsidised. Elec-tricity prices imposed on end-users are not subject to regulation, except for the household charges which need to be approved by the Energy Regu-latory Office. Government plans pro-vide for the complete elimination of any regulation of electricity prices. As regards gas charges for end-users, the Energy Regulatory Office still controls the prices imposed on all consum-er groups. It also approves the charg-es for network activity which entails the transmission and distribution of electricity and gas.

Final fuel prices in Poland are in-clusive of 23% VAT whereas the prices of petroleum products are additional-ly encumbered with an excise tax and a road tax. The excise tax has a con-siderable impact on the final fuel price and on the structure of fuel consump-tion in Poland. The lower tax rates

on liquefied petroleum gas (LPG) and on diesel fuels, as compared to petrol (gasoline), are among the most crucial factors influencing the growth in the LPG and diesel consumption.

As regards the commercial con-sumers sector in Poland, one may note strong competition between the pro-viders, whereas the products and ser-vices offered to households are prac-tically unattractive.

Polish energy policy until 2030The Polish Energy Policy until 2030 (PEP 2030) defines the principal objec-tives and measures to reduce the en-vironmental impact of the electricity and energy sector, to increase energy efficiency, to make use of nuclear en-ergy and to develop renewable ener-gy and biofuels. This document de-fines the overall objective of reducing CO2 emissions intensity in electricity production from the 2007 level of 0.95 tonnes of CO2 /MWh to 0.70 tonnes of CO2 /MWh until 2030.

The average CO2 emissions inten-sity in the EU/IEA countries amounts to 0.45 tonnes of CO2 /MWh. PEP 2030 further refers to the obligations im-posed in the new EU directive con-cerning the Emissions Trading Sys-tem and it provides a list of various measures which need to be taken in order to meet these obligations. These measures provide for draft-ing the CO2 reduction scheme for the facilities which will obtain free-of-charge emission licences in 2014–2019, as well as for expanding the invest-ment plans supporting the emissions reduction.

The Polish Energy Policy until 2030 also sets a new strategy for carbon capture and storage (CCS), compris-ing the introduction of CCS readi-ness standards in new power plants, active participation in the Commis-sion’s initiative to construct large CCS demonstration facilities in Poland, and intensified research and develop-ment activities related to CCS tech-nologies. Other measures stipulat-ed in PEP 2030 include promoting highly-efficient closed cooling cycles in power plants and heating plants, and increasing the use of waste coal in industry. In the face of the grow-ing prices and diminishing resourc-es, Poland, as an EU country, has to develop a competitive and sustaina-ble model of an energy policy.

Energy policy in Poland is, to a large extent, determined by EU di-rectives and requirements, and by the fact that Poland depends, to a large extent, on the importing of energy from Russia.

Poland is providing for the con-struction of at least three nuclear sys-tems by 2030 (the first one is to be launched by 2022). To put these plans into practice, it will be necessary to conduct the activities specified in the Polish Nuclear Energy Programme in a timely manner. Poland is planning to diversify energy sources and sup-ply channels, and it continually in-creases its share of gas and renewa-ble energy sources. The key issue will be to secure the necessary gas sup-plies, whether through the pipeline network or through the imports of LNG and/or domestic gas production from conventional or unconvention-al resources.

Energy consumption in Poland has dropped in recent years, though it is still higher than the average consump-tion in the European Union.

Only a few or perhaps several ener-gy groups will survive on the Europe-an energy market. This time is coming and Polish enterprises are facing the last chance to strengthen their mar-ket position. This issue was consid-ered during the European Electricity Market panel discussion, as part of the 3rd European Economic Congress or-ganised in May in Katowice. The elec-tricity sector is extremely capital con-suming, hence the natural tendency to expand the size of enterprises. ::

2015 (TWh)

2020 (TWh)

Hard coal 62.9 62.7

Brown coal 51.1 40.0

Natural gas 5.0 8.4

Petroleum products 2.5 2.8

Nuclear fuels 0.0 10.5

Renewable energy 17.0 30.1

Water energy (pumping) plants 1.0 1.0

Waste 0.6 0.6

TOTal 140.1 156.1

Share of energy from renewable sources (%) 12.2 19.3

The electricity production forecast by fuel type

Source: study based on the energy policy assumptions in Poland until 2030

7-8 /2011 :: polish market :: 45


Ranking of companies in the energy, mining and metallurgical sector

Company name Head of company Based in Sales revenue for 2010

Net profit for 2010 (in PLN

thousands)

Gross profit for 2010 (in PLN

thousands)

Operating profit for 2010

(in PLN thousands)

Employment in 2010

1 PGNIG SA GK Michał Szubski Warsaw 21281161 2457184 2936099 na 32716

2 PGE SA GK Tomasz Zadroga Warsaw 20476465 3627087 4276250 4185333 45714

3 TAURON POLSKA ENERGIA SA GK

Dariusz Lubera Katowice 15428879 991393 1257314 1399259 28480

4 ARCELORMITTAL POLAND SA

Sanjay Samaddar Dąbrowa Górnicza

12023422 230901 283027 na 12226

5 KOMPANIA WĘGLOWA SA Joanna Strzelec - Łobodzińska

Katowice 10131298 30917 50536 80904 59955

6 ENERGA SA GK Mirosław Bieliński Gdańsk 9113923 625430 797080 na 12350

7 ENEA SA GK Maciej Owczarek Poznań 7836875 639381 813216 711964 519

8 EVEREN SA Tomasz Górski Rybnik 3477060 12949 16086 na 45

9 BORYSZEW SA Małgorzata Iwanejko Sochaczew 3134800 126400 147400 188100 5 657

10 POLSKI KOKS SA Włodzimierz Hereźniak

Katowice 2952043 5545 6941 13599 46

11 WĘGLOKOKS SA Jerzy Podsiadło Katowice 2947759 179914 222204 180963 134

12 PKP ENERGETYKA SA Tadeusz Skobel Warsaw 2908682 131621 166109 136583 8038

13 RWE POLSKA SA Filip Thon Warsaw 2807400 na na na 600

14 KGHM METRACO SA Jacek Rawecki Legnica 2783246 8479 10502 10502 70

15 ALPIQ ENERGY SA Arkadiusz Zieleźny Warsaw 2533424 11645 18558 na 18

16 KOPEX SA GK Marian Kostempski Katowice 2365194 41197 56156 100087 4654

17 GDF SUEZ ENERGIA POLSKA SA

Grzegorz Górski Zawada/Połaniec

2140981 316157 389960 395333 501

18 CELSA HUTA OSTROWIEC SP. Z O.O.

Pere Petit Ostrowiec Świętokrzyski

2114591 na na na 1358

19 CMC ZAWIERCIE SA Jerzy Kozicz Zawiercie 1975504 na na na 1862

20 ZE PAK SA Katarzyna Muszkat Konin 1838686 232932 288203 na 1182

21 THYSSENKRUPP ENERGOSTAL SA

Ryszard Bojarski Toruń 1795142 58684 71496 na 724

22 STALPRODUKT SA GK Piotr Janeczek Bochnia 1732272 145627 182222 177767 2858

23 SPEC SA GK Michał Machlejd Warsaw 1440604 62287 73396 na 1802

24 ORLEN GAZ SP. Z O.O. Marek Balawejder Płock 1305864 6125 8448 14026 167

25 LUBELSKI WĘGIEL BOGDANKA SA

Mirosław Taras Bogdanka 1230447 230122 288229 276472 4087

26 RAFAKO SA GK Wiesław Różacki Racibórz 1168639 44286 56571 na 2283

27 COGNOR SA Przemysław Sztuczkowski

Katowice 1148157 -94240 -95305 -84483 274

28 KONSORCJUM STALI Robert Wojdyna Warsaw 1132874 25452 32201 34673 435

29 ZŁOMREX SA GK Przemysław Sztuczkowski

Poraj 994465 na na na 2430

30 IMPEXMETAL SA Piotr Szeliga Warsaw 908212 42712 48225 52342 660

31 HUTA POKÓJ SA Henryk Sławik Ruda Śląska 893842 9630 9333 na 441

32 FAMUR SA GK Waldemar Łaski Katowice 885819 8024 205701 94130 3110

33 BOWIM SA Jacek Rożek Sosnowiec 813125 na na na 429

46 :: polish market :: 7-8 /2011


Ranking of companies in the energy, mining and metallurgical sector (cont.)

Company name Head of company Based in Sales revenue for 2010

Net profit for 2010 (in PLN

thousands)

Gross profit for 2010 (in PLN

thousands)

Operating profit for 2010

(in PLN thousands)

Employment in 2010

34 HUTMEN SA Kazimierz Śmigielski Wrocław 747406 -16695 -12093 -4474 1029

35 ALCHEMIA SA Karina Wściubiak – Hankó

Warsaw 670609 14754 20442 22263 1582

36 ELEKTROCIEPŁOWNIE WYBRZEŻE SA

Henryk Dworakowski

Gdańsk 644471 84617 98345 na 813

37 HUTA CYNKU MIASTECZKO ŚLĄSKIE SA

Mirosław Indyk Miasteczko Śląskie

589157 7036 5698 na 685

38 MERCURIA ENERGY TRADING

Zbigniew Kędzierski Warsaw 485442 2891 3581 na 10

39 HUTA ŁABĘDY SA Zenon Górniak Gliwice 463705 42752 53152 na 487

40 FENICE POLAND Patrick Luccioni Bielsko-Biała 422230 47194 59234 na 465

41 BSK RETURN SA Sławomir Bajor Zawiercie 420000 8070 9502 na 90

42 GDAŃSKIE PRZEDSIĘBIORSTWO ENERGETYKI CIEPLNEJ SP. Z O.O.

Adam Stanyer Gdańsk 354904 32659 33918 na 313

43 GRUPA CENTROZAP SA Ireneusz Król Katowice 236261 -8677 -3100 -32888 na

44 ZETKAMA SA GK Leszek Jurasz Ścinawka Średnia

196422 5515 7354 10314 838

45 ENERGOINSTAL SA Michał Więcek Katowice 185987 -8323 -9359 na 1022

46 GRUPA POLISH ENERGY PARTNERS SA

Zbigniew Prokopowicz

Warsaw 175966 61669 79714 na na

47 TESGAS SA Włodzimierz Kocik Dąbrowa 174336 15641 19369 na 305

48 PRZEDSIĘBIORSTWO OBROTU WYROBAMI HUTNICZYMI CENTROSTAL SA

Andrzej Bryk Kielce 171401 1434 1577 1201 208

49 ELEKTROCIEPŁOWNIA BĘDZIN SA

Paweł Orlof Będzin 158311 12276 14968 15348 na

50 FASING SA GK Zdzisław Bik Katowice 151152 1918 3039 5598 556

51 FAM SA GK Dariusz Zieliński Warsaw 140890 -3153 -992 3565 na

52 WIDOK ENERGIA SP. Z O.O.

Iwona Szmaja Sopot 128741 -378114 -378114 -231610 na

53 COMPLEX SA Michał Nowacki Łódź 120877 2416 2936 6136 525

54 ODLEWNIE POLSKIE SA Zbigniew Ronduda Starachowice 78725 1356 1428 2500 na

55 GRUPA CP ENERGIA SA Mariusz Caliński Warsaw 72340 -3960 -3361 381 na

56 SZAR SA Szymon Rurarz Częstochowa 52051 1531 1787 2230 49

57 PPH WADEX SA Zbigniew Piechociński

Wrocław 22387 3344 3897 3969 75

58 ZAKŁADY CHEMICZNE PERMEDIA SA

Michał Wygrys Lublin 20327 999 1270 809 na

59 ATLANTIS SA Anna Kajkowska Płock 524 8886 12697 -630 na

60 BGE SA Dariusz Pawłowski Katowice 145 -148 -228 -209 na

Financial data in PLN thousands Source: companies

7-8 /2011 :: polish market :: 47


lOTOS for energy security in the united Europe

Grupa LOTOS has been, and wish-es to remain, an active participant in this discussion, and an initiator of change in the area of energy security. According to its management, a com-mon European debate regarding the future of the energy sector is neces-sary, and must lead to concrete ideas, and the selection of the best solutions. The Central Europe Energy Partners, AISBL (CEEP) was established in May 2010, and is an organisation based on Grupa LOTOS’ initiatives. It is the first association of its kind, and the first or-ganization with a permanent repre-sentation to the European Union, to speak for the interests of energy sec-tor companies from Central Europe. The association has become actively involved in providing support in the area of the legislative process in the energy sphere in Europe. The ambition of CEEP, a body whose members in-clude businesses, research institutions and other organizations from Central Europe operating in the broadly de-fined energy sector, is to play a key role in initiating and giving opinions on EU directives. CEEP is of the opin-ion that each EU country should have an opportunity to exploit its own en-ergy resources and that the European Commission should review the pro-posed solutions in terms of their im-pact on the consumers and the econ-omies of all member states. Before this is achieved, these solutions should be adopted by individual countries on a discretionary basis, at a pace suited to the circumstances of that country.

Is the development of a common European policy on energy security realistically achievable? With so many divergent interests amongst EU members, is it possible to reach a compromise on energy investments and environmental protection requirements? These questions touch upon an issue which is particularly sensitive to European countries and which requires decisive actions and balanced solutions.

CEEP therefore actively participates in shaping the opinions relating to the Roadmap 2050, EU’s roadmap for the energy sector. There is full agree-ment that the concept to combat cli-mate change, presented by the Eu-ropean Commission, is a noble goal. However, the adverse climate chang-es are a global phenomenon which can only be counteracted through global-scale accords and the European Union is just one of many economic organ-isms in the world.

Therefore it must take into con-sideration the fact that the elimina-tion or limitation of certain sectors of industry within Europe, will cause in-dustrial operations to move outside the EU and emission sources to emerge outside its borders, but will not solve the global problem of adverse climate changes. Moreover, a rapid increase in the financial burden for energy sector companies operating in the EU mar-ket, could translate itself into higher energy production costs, especially in member states with less developed po-tential. The effect of this will be that solutions adopted by the European Commission, rather than have a pos-itive impact on the energy independ-ence of EU members, will undermine this independence even further and consequently cause a deterioration in the competitiveness of the common European economy.

A parallel and equally important area of CEEP members’ activity is to

encourage business and science com-munities to explore new technologies, and invest in innovative solutions for the energy sector. One such project is the utilisation of salt caverns. This is a subject on which the Grupa LO-TOS went from an idea to a concrete action. On 15 June 2011, a letter of in-tent for the joint construction of un-derground reservoirs for the storage of crude oil and liquid fuels was signed with PERN Przyjaźń, a Polish major crude oil pipeline operator. Construc-tion of reservoirs is to be completed in two stages by the year 2020. Storage reservoirs created by that time will have a total capacity of 7 million cu-bic meters. In the future, in line with the growing needs of the market, the capacity may be further expanded up to 15-20 million cubic meters. The reservoirs are planned to be creat-ed in Pomerania, which will further strengthen energy security, in Poland and other countries of the Baltic Sea region. Thanks to its geographical and geological conditions, direct access to the sea and well-developed port in-frastructure, the province of Pomer-ania is a perfect candidate to become known as the regional centre for the energy sector. At the same time, in order to meet the obligations towards the EU and the International Energy Agency, Poland has to systematically increase its storage capacity for crude oil and oil-based fuels. The construc-tion of storage reservoirs in salt cav-erns represents the most economical-ly efficient and safest solution to the problem of storing crude oil and liq-uid fuels, and represents a current so-lution to one of the challenges which the united Europe will have to face in the near future. Thanks, however, to the involvement of associations such as CEEP and the goodwill of Europe-an decision-makers, these challenges will undoubtedly be successfully re-solved for the benefit of all European citizens and the security of our con-tinent. ::

48 :: polish market :: 7-8 /2011


Energy – a European challenge

We must prepare for the compe-tition that will force future changes. New offers signed by the brands of the European giants – French EDF, Italian ENEL and German RWE will appear on the combined European energy market. This race will be won only by large companies, economically strong and ready to fight for customers, at the same time prepared to fulfil the strict and extremely costly require-ments described in the EU’s climate package. Originally European poli-ticians talked about the year 2015 as the launch date of the common mar-ket. Today, 2014 is mentioned. This process is already taking place be-fore our eyes. Although some Polish officials consistently try not to no-tice that. Already today, the Polish power system has the technical capa-bilities to send/ receive almost one-third of its annual production (10 GW as compared with the 32.5 GW of the total annual electricity production in Poland).

Europe is in crisis. The sharp in-crease of energy prices under the ban-ner of environmental protection may become a source of further problems. Moving production burdened with high CO2 emissions and the associated

The Polish energy sector is in the crucial moment in its history. And this is despite the fact that today Polish power plants and transmission networks are heavily depreciated and under-funded. Conservative estimates of investment needs mention PLN200 billion. And this is only for the most necessary projects. Owing to this, the sector will be one of the main driving forces of the Polish economy in the next 10 years.

loss of jobs is a major challenge even today. Therefore the proponents of radical solutions in environment protection should be asked wheth-er they indeed mean the reduction of CO2 emissions and the reduction of energy consumption in the econo-my, or do they just want to cause en-vironmentally unfriendly plants to be moved outside of Europe? I believe that it is actually possible to develop solutions to reduce CO2 emissions and not destroy many of the industry sec-tors which have existed in Europe for years. It is worth noting that all of Eu-rope is responsible for the production of some 14% of CO2 in the world. Our successes in the field of limiting pollu-tion have a limited impact on the glob-al situation. Especially that the econo-mies of the United States, China, India and Brazil emit more and more CO2.

In my opinion it is necessary to re-kindle the debate on the EU forum concerning the CO2 emissions reduc-tion targets and ways of calculating them, as well as the size of fees for var-ious licenses and certificates. A par-ticularly important task is the debate on the fuel structure. In June, dur-ing the Euroelectric conference, the largest and strongest organization of

European energy companies, I put for-ward the proposal of the so called Eu-ropean fuel mix, or the use of the ener-gy potential of the particular European regions and the total clearance of the targets of the climate policy. Owing to this, each region would acquire ener-gy from the dominant energy sources in a given area (France – atom, Scan-dinavia – water, Poland, Germany – coal, Italy, Portugal, Spain – sun). The reduction of CO2 emissions in the EU would be a fact. Since we are building a common market for energy sales, its application should be considered also in other fields. The idea met with great interest. Now is the time to re-fine the details.

If nothing changes, Europe will soon receive a high bill for green en-ergy, which according to the World Bank will cost Poland and other EU countries the fall in the rate of GDP growth and higher unemployment. I believe that different interests can be reconciled and solutions acceptable for different parties can be developed. All that is needed is talking and listening to various arguments. It is impossible to demand the closure of all nuclear power plants and coal-fuelled plants at the same time. This would mean the collapse of the economy. Wind, solar and biomass energy is not enough for our needs. Anyone who says other-wise is leading people into making a costly mistake.

The Polish energy sector in based in 95% on coal. Therefore we must fight for coal. It is worth noting that this problem is not only Polish. It con-cerns also Germany, the Czech Repub-lic, Bulgaria, Romania and the Unit-ed Kingdom. Although each of these countries in varying degrees. PGE – the Polish Energy Group will consist-ently modernize its coal-fuelled power plants; we will also invest in renew-able energy sources and develop the first in Poland nuclear power plant. Because it is hard to imagine a mod-ern civilization without electricity. ::

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50 :: polish market :: 7-8/2010

Energy & Mining & Steel IndustryEnergy & Mining & Steel Industry

Be Smart Eco with Energa Group

Smart Eco auditing – a good beginningIn its bid to meet customer needs Energa Group has intro-duced two advanced services – an Energy Certificate and Energy Auditing.

Energy saving is possible in most buildings that serve office, service, production and housing purposes. The first step in this direction entails precise knowledge as to the amount of energy needed to heat a given facility, the re-quired amount of hot water, ventilation and air-condi-tioning conditions – and, in the case of public buildings, lighting. This data is contained in Energy Certificates with whose help users can specify their annual energy needs.

As in other EU countries, Energy Certificates are oblig-atory for public, service and housing facilities in Poland.

Energy Audits help raise energy efficiency. These pro-fessional audits analyse selected aspects of an organisa-tion to identify areas in which energy efficiency can be improved. Energy Audits also suggest solutions, including their profitability and the probable time needed for their costs to be recouped.

In Energa Group energy audits the scope of the service is agreed on in consultation with customers.

Smart Eco Management – monitoring and managing energy usageAmong Energa Group’s Smart Eco products is Actual Set-tlements enabling users to control energy consumption through meter readings.

Web users can send in monthly meter readings via eBOK customer service. Customers wishing to make their set-tlements personally can use the VIATM – Moje Rachunki (My Accounts) network upon informing the cashier about their meter readout.

Another Smart Eco Management service is PrePaid Set-tlements. Here special meters are installed in the customer’s location, which work similarly to pre-paid mobile phones. This system allows clients to purchase the energy they need and is especially recommended to tenants.

Energa Group also offers attractive payment options for the PrePaid service, including small monthly rates.

The highly-developed countries are turning to Smart Eco – ecological, effective and economical energy. This trend is well reflected in the Energa Group’s new Smart Eco product line, which will enable Polish users to tap this low-cost and environment-friendly energy.

7-8/2010 :: polish market :: 51

Economy and financeEnergy & Mining & Steel Industry

Innovation and Partnership

The company’s remote reading system for municipal customers (cur-rently embracing 3 million users) and a similar one for industrial users, as well as the Intelligent Peninsula project unique on a European scale, prove that Energa-Operator’s plans to be-come the hi-tech leader in the energy branch have a good chance for success.

“We develop and implement the best and most-advanced solutions which considerably change the ex-isting role and possibilities of power users. We are developing our IT and telecom systems, and we have not for-gotten about the modernisation of our existing infrastructure, which is cru-cial for our services”, says Energa-Op-erator President Leszek Nowak.

Energy securityEnerga’s investments in new technol-ogy are mainly aimed at improving the reliability of power supply. With this in mind the company has also centralised its network management, automated its systems and introduced modern IT to enable prompt and precise fail-ure and overload response.

Intelligent technology also enables the broad introduction of dispersed energy and renewable energy sources – even in small units like households – which will raise energy security in areas serviced by Energa-Operator. Aiding the introduction of intelligent technology is the experimental Intel-ligent Peninsula project which entails the construction of a smart grid in the Hel Peninsula, launched in partner-ship with the Institute of Power En-gineering.

Meeting customer needsEnerga-Operator is also busy with the mass-scale introduction of advanced remote meter-reading systems, which are crucial for the construction of in-telligent networks. These systems are the company’s response to custom-er needs as many users want precise data on their energy consumption and wish to pay only for the energy they have actually used. The remote read-ing system will also make energy us-age more efficient as it will limit dis-tribution and trade losses.

Mission–partnershipThe company’s mission is ensuring energy security in partnership-based relations with customers. New tech-nology and major infrastructure in-vestments will help the company meet the goals of its Energa-Operator 2015 strategy which provides for boosting the company’s role as an innovative competence centre on the power dis-tribution market. ::

Energa-Operator, Poland’s fourth-biggest electricity distributor, is working hard to become an innovation leader on its market.

Smart Eco advertisingA special offer for corporate clients, this entails a wind tur-bine doubling as an advertising billboard. This attractive ecological product will help Energa customers to cut both energy and advertising costs.

Smart Eco Technology– users as producersSmart Eco also offers solutions enabling energy production from renewable micro-sources (e.g. in flats).

In the Energy Home option an audit of the client’s premises helps select technical solutions and installation type. Energa also offers full post-installation services and the necessary energy. Electricity is generated by micro wind plants or solar cells, thermal energy by solar collectors.

Energa Group considers such mini-plants to be part of its dispersed Eco Power Plant project, which helps obtain outside financing for its implementation.

Eco Power Plant – small is beautifulEnerga Group’s Eco Power Plant project provides for the construction of electric and thermal microinstallations as a countrywide dispersed power plant. The mini-units will be installed in public utility buildings and private homes.

Eco Power Plant will be the first such project in Poland. It will be modern, ecological, effective and economical – in short: Smart Eco. ::

52 :: polish market :: 7-8 /2011


a marketplace with energy...

What in your opinion are the key energy issues facing Poland in the near future – during our Presiden-cy, but also later? Will a common European energy market be estab-lished? Let me first ask about the contexts in which Towarowa Giełda Energii S.A. (the Polish Power Ex-change) is now operating.Europe, despite opinions often ex-

pressed in public, puts strong empha-sis on so-called “energy solidarity.”

This solidarity is understood in a very different way from what we could have expected a couple of years, as today it is shaped by the free market and free competition. Today we achieve energy security in such a way that if someone is in the need of something, somebody else could offer it to them, obviously not for free...

But it’s not that everybody bene-fits from this turnover of money...That’s precisely what the contem-

porary market is trying to achieve – a win-win situation... For example, Poland reduces emissions, and our neighbour provides us with ener-gy from renewable sources. The EU is currently in the process of creat-ing an internal market for electrical energy, giving equal chances to all consumers. It is to be a competitive market, with uninterrupted energy supplies, compliant with environ-mental norms. It’s good that Poland is stressing the importance of inte-grating energy markets during its Presidency. It’s evident that there’s a lot to be done in this area. We also have a great deal to gain. There may be some areas of negative impact too, but that’s a different story, as it’s main-ly related to EU climate policy. It’s a challenge that extends beyond our Presidency, to the year 2013, and the climate package. This will be a huge test for the Polish power sector. The EU is currently nearing completion of the last stage of implementing its cli-mate package, which anticipates the reduction of the emission of green-house gases by 20% until 2020. The key issues of our Presidency include the rules for applying common emis-sion factors, which will constitute the basis for the allocation of free enti-tlements in the years 2013-2020 and for the form of the auction system – after 2012 over 50% of entitlements will be sold to plants through auc-tions and free entitlements within the derogation for the power sector. According to the European Commis-sion, the common European energy market will come into being in 2015, and possibly even in 2014.

An interview with Grzegorz Onichimowski, the President of the Management Board of Towarowa Giełda Energii S.A. (POLPX)

7-8 /2011 :: polish market :: 53


With regard to execution of the contracts for given hour of the electricity delivery day, share of all electricity-dedicated markets of the POLPX in total hourly demand of the National Power System in the first half of 2011 amounted to 64.74% (in average), with minimum value of 40.81% and maximum value of 84.34%.

What are the implications?It means that we are actually sup-

posed to take advantage of our exist-ing industrial capacities, mainly to safeguard against emergency situa-tions, and to transform them into typ-ically commercial trade connections, thanks to which the whole of Europe would have the same price for power. This is of course too ambitious, but an extremely important component of this mechanism for reaching a com-mon price, that is solidarity achieved by market means, is the Exchange...

So, has POLPX already entered this wider European circulation?Poland is indirectly in this mech-

anism today, and one of POLPX’s im-portant strategic objectives is our Eu-ropean activity.

We can already speak about com-bining the Polish and Swedish markets within the market-coupling mecha-nism, providing opportunities to sell energy produced in Poland to other markets, or to buy less expensive en-ergy from neighbouring countries. As regards the technical aspect, we are satisfied with the functioning of this market. We also value the coopera-tion with Nord Pool Spot, our Swed-ish partner. We have plans to extend our connections beyond the southern and western borders of Poland. Talks are under way to connect our power market with those of the Czech Re-public and Germany. In the former, we have approached OTE, and in the latter, EPEX Spot.

Our Exchange is actively partic-ipating in the process of connecting energy exchanges to create a single exchange for the entire country or re-gion. We are acting under the Associ-ation of European Energy Exchanges (Europex), which promotes the idea of consolidating energy markets through transborder connections. Represent-ing the Polish market, POLPX, is a party to agreements that influence the management of network limita-tions, the allocation of transmission capacities, the current energy trade, and financial derivatives, as well as the provision of data for projections

of demand for electrical energy. It’s also the centre of electronic data ex-change, which will be growing in im-portance in the coming years, due to the regionalisation, and then unifica-tion, of the European market.

The Polish Power Exchange has been there for over 10 years. What is the role of the Exchange in stim-ulating, or putting in order, the Polish – liberalising – market? What benefits are linked to obtain-ing the status of a POLPX member? In short, what is the core of its ac-tivities?The role of the Polish Power Ex-

change in energy turnover, similarly to role of the Stock Exchange on the capital market, is central. I’d like to emphasise, however, that we’re only a “marketplace,” where all buyers and sellers meet. Our Exchange is a place of “meetings” between enterprises intending to conclude sale-purchase transactions. Thereby, the Exchange provides an opportunity to determine an objective market price to be used as a reference point for other transactions

on the energy market. This action was partly completed in 2010, after the ob-ligation to sell a considerable part of the energy on the Exchange was im-posed by the regulations. Last year about 70% of the energy produced in our country went through POLPX. In the preceding years it was only a few percent. Our next prospect and stra-tegic goal is to enter new markets, in-cluding the gas and biomass markets.

We are witnessing behavioural changes nowadays, especially in large energy companies, which are being consolidated vertically. These compa-nies have realised that POLPX isn’t a threat to them, but rather a good tool to build efficiency within the group it-self. If such large groups wish to en-sure efficiency for themselves, they must be certain that individual com-ponents of this group are working ac-cording to market principles. And the best way to carry out such verification is to go to “that marketplace” where everybody else is.

Thank you for the interview.Maciek Proliński

90,000,000

67,500,000

45,000,000

22,500,000

0

2008 2009 2010 I‐ IV 2011

Total electricity volumes (MWh) on POLPX markets(Day Ahead Market and Commodiety Derivatives Market)

54 :: polish market :: 7-8 /2011


a New Strategy

The company’s activity is the op-eration of a network of pipelines transporting Russian crude oil to refineries in Poland and Germany and of product pipelines as well as crude oil storage. Which of these services generates the biggest rev-enue?The most important one is the

transportation of crude oil, which, depending on the season of the year gives us 60–70% of total revenue; stor-age is next and finally the transporta-tion of petroleum products.

What are the company’s assets – not so long ago in the Adamowo tank farm you commissioned two biggest and safest in Europe crude oil tanks of 200 thousand m3 vol-ume?Our infrastructure consists first

of all of about 900 km straight line of crude oil pipelines, since at some

PERN Przyjaźń S.A. together with its daughter companies is a group dominat-ing the Polish market. It is responsible for crude oil and oil-products logistics. It must be stressed that PERN, which is whol-ly owned by the Treasury, has a strategic significance for Poland’s interests and also for the interests of Western Europe, which PERN provides with crude oil via the Dru-zhba (Friendship) pipeline. When we add to this the storage of strategic petroleum re-serves and the Naftoport oil terminal, a gate way for the supply of oil, only then can we see the real picture of the company. “That’s why I do not think it will be privatised,” Robert Soszyński, Chairman of the Board in PERN Przyjaźń S.A. tells Jerzy Bojanowicz.

sections you’ll have two or even three lines, plus over 600 km of product pipelines by which fuel from refiner-ies is sent. We also have three storage – crude oil tank farms: in Adamowo on the Belarusian border, in Miszew-ko Strzałkowskie near Płock, where soon we will start the construction of two tanks of 200 thousand m3 and in Gdańsk. Their total volume is almost 3 million m3.

The tanks cubic capacity proves that they are indeed the biggest but are they also the safest?Super safe. They are double-shell,

double-bottom, which fully protects us from leakage; they are sat in con-crete bunds and equipped with a fire extinguishing system with injectors. Just imagine that a tank of 100 thou-sand cubic metres is a giant with the diameter of 90 m, the surface larger than the one of a football pitch and the height of about 20 m. In the over 50-year history of PERN there has never been an incident of fire at a tank. The older tanks are being modernised, for example by building the second bot-tom in them.

How would you characterise the companies which constitute the PERN Group?They differ in size and, what is a

certain historical heritage, in the pro-file of their activity but in general they are linked with our basic activity. And so Naftoport is responsible for oper-ating the oil port in Gdańsk and dis-charge and loading of crude oil and its products. They ensure what we call the security of deliveries and also they ensure deliveries of crude oil and its products to Poland via alternative routes. They also administrate jetties and all Naftoport’s equipment, which by the way, is very modern. Unfortu-nately, when it comes to transhipment of crude oil and oil products, the as-sisting infrastructure in the Port of Gdańsk is not that effective but we are going to revamp it.

Just next door there is Siarkopol Gdańsk, the company which we took over in 2010.

Why did you do that?The main profile of that company’s

activity is shipping sulphur for the Mine in Grzybów and transhipment

In 2015 the revenues of the PERN Capital Group will exceed PlN2 billion and for PERN that will be PlN800 mln

7-8 /2011 :: polish market :: 55


of oil derivatives on export from a shunt line to quay. The company occupies over 50 ha in the premises of the Port of Gdańsk and owns the railway infrastructure, which although a little bit worn plays a rather important role for us. Through its planned investments in that area PERN is going to inject extra cap-ital into Siarkopol over the next 3 to 4 years and bring this company even closer to PERN’s operational activity. Especially, because just next door, on 27 ha of land we are planning the construction of a modern handling and storage terminal with tanks for oil and fu-els. Soon, together with our western part-ner we will establish a company which car-ry out this project.

The PERN Group also includes OLPP (Lo-gistic Operator of Liquid Fuels) and their sub-sidiaries: Naftoserwis (dealing with mainte-nance works) and Naftor (Property Security). The main profile of OLPP’s activity is the ser-vice of 22 fuel sites, where petrol and diesel oil are delivered from Orlen and Lotos refin-eries and then they are further transported by road to petrol stations.

Other companies are: Cedria – dealing with inspection of the condition of pipe-lines and tanks and an international Sarma-tia, who deals with the analysis of a prospec-tive realisation of a transportation corridor from the Caspian Sea – commonly known as Odessa – Brody.

Towards the end of June the green light was given, which will let you complete, after 9 years, the construction of the third line of the Druzhba pipeline on the so-called eastern section. Are you not afraid that the Russians may divert crude oil transport for Western Europe through another route, as they did with gas – via Nord Stream?I think that the missing 60 km of the third

line on the Druzhba pipeline will be built within two years. The whole linear section of the third line will be 232 km and it will cost over PLN720 million but PERN is a profitable company and has systematically been saving means for investments. Commissioning the third line will be a historic event as it will fa-cilitate the transportation of crude oil in the eastern section and will make it possible to pump crude oil from Adamowo to Płock in any quantities. Currently, from the Belaru-sian border comes between 40 and 50 million tonnes of crude oil annually (1 tonne of crude oil equals about 7 barrels), out of which 45% remains in Poland, the same amount reaches

Germany and about 10% is re-exported via Naftoport. Secondly, the very high through-put costs, calculated in millions of zlotys per year will decrease because the first line has a small diameter. Of course we know that the Russians develop their delivery networks and they are not as much reliant on the Druzhba pipeline as they were in the 90’s. That is why we need to strive to be an attractive and re-liable partner for them in exporting crude oil to the West. On the other hand, one should remember that PERN is only the operator of the crude oil pipelines and we transport only as much as the refineries in Poland and Ger-many have contracted.

In the middle of June you signed a Protocol of Intent with Lotos S.A. Group about the joint construction of underground stor-age facilities for crude oil and liquid fuels.The idea to build underground storage

facilities for crude oil and liquid fuels in salt caverns has been analysed for many years by research centres and different companies, in-cluding PERN and Lotos. Such facilities are already administrated by PKN Orlen near Inowrocław. The project is especially interest-ing because such crude oil storages are huge – with no problem is such a cavern of millions of m3 leached, so the one-off cost of storage is smaller than in the ground-based tanks. Now we have to choose the best location from the ecological, infrastructural and economic standpoint. It requires detailed geological re-search but we already have a few locations in Pomerania. They need to be examined care-fully (bore-holes) and then business analyses are to be carried out to check if the invest-ment will be viable. We already have some data and Lotos has some. We are considering setting up an SPV which will carry on with further work. I think that in 2–3 years’ time we will know the answers to all questions and then we’ll be able to make a decision.

In June 2010 the PERN Group adopted a new development strategy for the years 2010–2015 on whose implementation about PLN1.8 billion is to be earmarked. What is your assessment of its implemen-tation so far?Of course, earlier PERN also had a strate-

gy but at the moment of the takeover of OLPP in 2009 and then of Siarkopol Gdańsk, the entity became so big that the strategy need-ed to be verified. In 2008 the consolidated revenue from sales by the PERN Group was PLN542 million, where PLN505 million was

PERN’s share and in 2010 it was respective-ly PLN1 billion versus PLN650 million. That is why the strategy did not need verification as much as it needed to be created anew for the whole group. The strategy presents dif-ferent matters, contains various scenari-os: optimistic and pessimistic. It takes into consideration the main, earlier mentioned investment projects which are consistent-ly carried out. As far as the internal matters go, the most important thing is the integra-tion of the companies forming the group as well as those which are to be established. So the main directions of the strategy are be-ing followed and for now there is no need for amendments. Maybe this will be needed in a year, maybe two years’ time.

What are the biggest dangers PERN may be facing?In our scenarios we take into consider-

ation various dangers which me must react to. It is hard indeed because our activity has a long term characteristics, which distin-guishes it from production of consumption goods. That is why we monitor the market, predict certain trends and react adequately: by accelerating some processes and slow-ing down others. From our point of view the pessimistic scenario envisages reductions of deliveries via the Druzhba pipeline. For al-though our partners will still be processing mainly Russian crude, an important question is whether it will still be delivered to them via the transportation route used so far or maybe by sea? The Russians are developing their in-frastructure (BTS and BTS2 systems) as well as their ports in Primorsk and Ust-Luga which may, but not necessarily must reduce trans-port through Druzhba. We are getting ready for such eventuality by enlarging Naftoport and planning the construction of a second line of the Gdańsk – Płock pipeline.

Seeing all your different activities one may conclude that oil and fuel transportation is still very profitable.In 2015 the revenues of the PERN Group

will exceed PLN 2 billion and for PERN that will be PLN800 million. In this way the com-pany is reaching the top of its capacity. Of course we are expanding the terminals, op-timising costs and maximising throughput but you can’t get more than that. But please remember that not so long ago the revenue was PLN500 million!

Thank you for your time. ::

56 :: polish market :: 7-8 /2011


Oil & Gas: hydrocarbons prevail

The current trends in the global oil and gas market include surging pric-es, a growing share of China and oth-er Asian countries, interest in uncon-ventional gas sources, a shortage of gas for domestic use in the Middle East, growing cooperation between Russia and China, and the discovery and ex-ploitation of shale gas, mainly in the United States. However, what should interest the most the existing oil and gas producers is that Deloitte experts believe that the demand for fossil fu-els will remain high in the foreseeable future and the already operating pro-ducers will not have to deviate from their core competencies.

This means that the expected alter-native source will have to be produced by specialised companies. “There is also a growing awareness among oil and gas producers that many of the man-ufacturing capabilities needed for re-newable energy production are beyond their scope. Consequently, an increas-ing number are leaving alternative en-ergy to specialized producers and in-stead focusing on what they do best: locating, producing and processing hydrocarbons as efficiently as possi-ble,” the report says.

The report finds also a significant shift in the ownership and players’ structure on the global market of oil and gas supplies. The hostile takeover of UK’s Dana Petroleum by Korean Na-tional Oil Company is mentioned as an example of the new trend of mergers and acquisitions expected to be carried out by Asian companies. “Asian coun-tries and other developing nations are prepared to go to whatever lengths nec-essary to make foreign acquisitions to secure future oil and gas supplies. This includes backing these deals with gov-ernment support and funding.”

Another market-changing event among the efforts to secure oil and gas

Despite the talk about unconventional resources taking over the energy production market amidst concerns about climate change, the future of fossil fuels continues to be bright, Deloitte experts write in the “Oil and Gas Reality Check 2011” report.

supplies was the completion of the first oil pipeline linking the world’s major energy players – China and Russia. Experts say that increasing exports to Asia is a very smart business move for Russia, whose abilities to export oil and gas to the European Union are lim-ited. The development of cooperation between Russia and other Asian coun-tries, especially Vietnam, is expected.

As for international exports of gas, the United States has entered the scene. Since the production of shale gas start-ed there, the US has become a self-sufficient nation in terms of energy. It has also freed resources to export. It is expected that the energy-crav-ing China may become one of the ma-jor buyers of American gas. Yet oth-er countries, especially those with coal-fuelled heavy industry should

be interested in switching to gas and purchasing it at a lower price at the same time reducing CO2 emissions. Canada has also emerged as a shale gas producer enticing Asian countries to look there for supplies.

China also remains very active in the field of exploring unconventional gas reserves. As one of the countries with the fastest growing demand for gas it plans to meet the needs with do-mestic supply instead of imports. Al-though China has large gas reserves they remain unused due to “low per-meability of the country’s coal and limited infrastructure for handling gas.” China is reported to be looking into technologies involving coal-bed methane and shale gas. Yet, if China does increase the amount of domestic gas it uses, this may have serious re-percussions for the economy of other countries, especially those from which China imports liquefied natural gas.

Changes on the domestic market are sought also in the Middle East. Gulf States who hold about 23% of global gas reserves are facing increas-ing gas shortages. The factors caus-ing this ironic situation are mainly the booming GDP rate and the subsi-dy policy. “The United Arab Emirates offers a case in point. Production costs of deep and mildly sour gas projects in the Gulf are between USD5–6/m Btu, but domestic sales prices in the UAE range from USD0.75-USD2 m/Btu.” Despite the damaging effects of this policy, there is a moderate chance that the subsidies will be lifted.

Summing up, there are changes in the making and changes ahead in the oil and gas sector, yet they seem to be happening at a slower pace than ex-pected. Oil and gas should remain in demand, although the players in the game may be changing. ::

Compiled on the basis of the Deloitte Touche Tohmatsu Limited’s Global Energy and Resources group’s “Oil and Gas Reality Check 2011” report.

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7-8 /2011 :: polish market :: 57


The tricky mining boom

“Tracking the trends 2011. The top 10 issues mining companies will face in the coming year” by Deloitte Touche Tohmatsu Ltd. highlights that min-ing companies are currently facing a completely new situation. It is main-ly connected with the growing de-mand for energy in China, India and other rapidly developing countries in Asia, Latin America and Eastern Eu-rope. This has boosted demand to that extent that some countries are trying to curtail commodity exports, some try to stir up investments in mining, other turn to acquisitions and merg-ers. But what are the issues all have to take into consideration?

Deloitte experts have indentified 10 such issues they found to be crucial.

financingIn the wake of the global financial cri-sis mining companies are dealing with the aftermath of the policy to prevent funding crises – halted operations, cut backs on production and many cost-cutting measures. This is a situation in which China and other nations of North Asia like Korea and Japan have stepped in with the propositions of fi-nancing. In some cases these are ag-gressive steps towards mergers and acquisitions. Therefore Deloitte recom-mends analyzing the quality of earn-ings and nature of costs, as well as clearly identifying the basis for com-peting for capital.

adjusting to demandAlthough the demand for commod-ities is sky-rocketing, mining com-panies are not able to simply ramp up production. Many countries have in-troduced steps to safeguard their own supply by curbing exports and mining

Deloitte experts have analyzed the current trends in the mining sector. They found surging commodity prices, labour shortages and demand outstripping supply. Yet they caution this is not a mining boom as known from the past. This is a challenge for mining companies who have to change the way they pursue their growth.

companies are struggling to obtain permits and licenses. Therefore De-loitte advises analyzing companies’ operating models in terms of flexibil-ity in responding to shifts in demand as well as understanding future de-mand trends.

Dealing with local communitiesLocal communities have heightened expectations from mining companies. These include fields like the impact on the environment and health, safety, land use and transparency. The re-port suggests enhancing collaboration among local communities, govern-ments, environmental groups, inves-tors, partners, employees and share-holders, as well as programmes for communities.

Government interventionGovernments of many countries have recently imposed new taxes, royal-ties and regulations on their mining industries. They serve plugging gov-ernment deficits, fighting corruption, promoting transparency and others. Mining companies should consider how they will be able to respond to the evolving national and global reg-ulatory requirements.

Strategic investingThe global crisis has significantly im-pacted on the investment capacity of mining companies who used to finance growth on the back of debt. Luckily, most of them were able to shift their capital-acquisition mode from the lit-tle available capital from bank loans to other measures. Now they need to develop long-term investment plans, especially faced with the wave of hos-tile takeovers.

labour shortageWith the changing demograph-ics, mining is particularly facing the lack of experienced middle manag-ers. Mining companies are entering partnerships with educational insti-tutions, but they seem not to be able to close the talent gap concerning the 30-50-year-old generation.

ResourcesThe global competition for resources is becoming fiercer. Apart from geo-graphical expansion, mining compa-nies will need to find innovative so-lutions to extract a greater percent of materials.

Climate changeMining companies keep their struggle to respond to mounting environmental challenges and the standards are get-ting higher. A greater rate of disclo-sure is expected and environmental risk assessments should be integrat-ed into the overall risk management framework of the companies.

InfrastructureMining industry is particularly vul-nerable to infrastructure shortages in the fields of transportation, water and energy supplies. A solution found by some mining companies is to en-ter partnerships to construct railways and ports, power plants and alterna-tive energy generation.

New revenue opportunitiesAccording to Deloitte these may in-clude: turning coal into carbon off-sets, providing energy for the future, investing in renewables and recycling waste. ::

Compiled on the basis of the report “Tracking the Trends 2011. The top 10 issues mining companies will face in the coming year” by Deloitte Touche Tohmatsu Ltd.

58 :: polish market :: 7-8 /2011


Coal has been and will be important to Poland

The steam coal market analysis shows that in the second report in April 2011 the prices of coal in the dis-charge ports in Western Europe grew in terms of value, and the coal in-dex exceeded 129 USD/t DES1 ARA2. These changes, reflected in the price growth, were triggered by the contin-ual lack of confidence concerning the supply of energy from nuclear power plants, and by the growing oil prices. As a result of the announcement that the crude oil fields in Libya had been bombed, the price per barrel of Brent-type oil on the London Stock Exchange reached the level of USD125. At the end of April (following the stabilisation pe-riod in the middle part of the month), more transactions were concluded. The price for coal shipments with delivery, planned in the 4th quarter of 2011, ex-ceeded 130 USD/t DES ARA. Grow-ing interest in these purchases among coal consumers on the European mar-ket was mainly caused by the weak-ening of the dollar in relation to other currencies, and by the growing pric-es of natural gas. The average month-ly coal index (DES ARA) in April 2011 amounted to 128.02 USD/t, which cor-responded to a growth of 2.88 USD/t, as compared to March (based on infor-mation on the functioning of the coal mining industry in April, and in the period January – April 2011, provid-ed by the Ministry of the Economy).

Considering the current pace of hard coal extraction, Poland may run out of its resources after 2035. The

Coal resource management in Poland is still highly irrational. Coal mines are oriented towards profit maximisation, without making any prospects or plans to protect natural resources. Accidents, resulting mainly from human errors and the negligence of procedures, are still proliferating. Due to sales and price growth, proceeds from the sales of coal in mining industry have increased after 4 months of 2011.

Bogdan Sadecki

Supreme Audit office has announced that the guarantee of coal supply is threatened by the irrational, and of-ten predatory, extraction of coal by enterprises.

Polish coal mines still contin-ue a highly irrational coal resource management, which is oriented to-wards profit maximisation, without any prospects of resource protection (e.g., coal resources are exploited se-lectively; more problematic sections are left aside, which results in an in-complete use of resources). In the Pol-ish mines, coal is usually extracted us-ing the long-wall method. On the one hand, this allows cost-efficient extrac-tion but, on the other hand, it gener-ates high resource losses. Reducing such losses would be possible through extracting the so-called residues.

The report issued by the Supreme Audit office indicates that creating a balance between the maximum prof-itability sought by mining companies and the necessity to fully use the re-sources available are crucial to ensure the security of domestic coal supplies.

The high proceeds of mining companiesIn the first four months of 2011, the state-owned coal companies gener-ated a net profit of PLN902.8 million, according to data provided by the eco-nomic department. In the correspond-ing period of the previous year, their profit amounted to PLN144.8 million.

From the beginning of 2011 to the end of April (according to data provid-ed by the Ministry of the Economy), coal mines extracted over 23 million tonnes of coal, which is approximate-ly 1 million tonnes (i.e. over 4%) less than in the corresponding period of the previous year.

Despite the extraction decline, the sales of coal were growing and they exceeded 23.9 million tonnes at the end of April, against over 22.2 mil-lion tonnes a year before (a growth of approximately 7.5%). Sales on the do-mestic market grew by several per-centage points (to 21.8 million tonnes) whereas for exports they dropped by over 44% (to over 2.1 million tonnes).

According to data for the first three months of 2011, the coal import figures were similar to those recorded a year before. The imports of steam coal in-creased (from over 2.7 million tonnes to nearly 2.9 million tonnes) contra-ry to the imports of coking coal (a de-cline from over 772.6 thousand tonnes to nearly 627 thousand tonnes).

In comparison with the previous year, there was a noticeable growth in the average price of Polish coal. In the first four months, the selling price of coking coal amounted to PLN659.6 per tonne, against PLN416.58 a year be-fore. The steam coal price amounted to PLN272.4 per tonne, against PLN253.69 in the corresponding period of 2010.

Due to the sales and price growth, the proceeds earned by the mining in-dustry from the sales of coal (main-ly in this country) were over PLN1.8 billion higher, exceeding the level of PLN8.1 billion.

It is worth noting that the amount of unsold coal on the mine heaps ex-ceeded 2.5 million tonnes, which was less than half of that in the corre-sponding period of the previous year, when the stocks exceeded 6 million tonnes.

Employment in the mining indus-try at the end of April 2011 amounted to 109.2 thousand persons (as compared

7-8 /2011 :: polish market :: 59


to over 113.5 thousand persons a year before). This decline stemmed from the fact that a number of miners had retired, whereas others had been de-leted from the statistics concerning the staff employed in the Silesia coal mine which was sold by the Kopalnia Węglowa coal company to a private investor.

From January to April 2011, the mining industry generated profits of over PLN8.1 billion from the sales of coal (against nearly PLN6.3 billion a year before). This corresponds to near-ly PLN1.6 billion proceeds from the sales of coal, i.e. from the principal ac-tivity (against the considerably lower amount of PLN381.9 million earned a year before). Upon deducting the loss-es from other activities (including fi-nancial ones), net profit exceeded the level of PLN902.8 million.

Jastrzębska Spółka Węglowa (which entered the Warsaw Stock Ex-change on 6 July 2011) had the highest share in the mining result. In the 1st quarter of 2011, this group generated a net profit of PLN619 million.

The investment expenditure of coal companies, up to the end of March 2011, amounted to PLN409.9 million in total, i.e. PLN8 million more than in the corresponding period of 2010.

The state-owned coal companies closed the year 2010 with a net profit exceeding PLN1 billion and 160 mil-lion.

Poor supervision and accidents in coal mines – a still-unsolved problemIn 2010 the number of accidents occur-ring in hard coal mines and in related

service enterprises exceeded 2.6 thou-sand (10 per each working day), as a result of which 15 miners died. In January 2011 alone coal mines took a toll of 7 people. The main causes of these tragic events include human er-rors and the negligence of shoring-up procedures.

According to mining experts, turning a blind eye to the violation of procedures, combined with the lack of authority – and often also of essen-tial qualifications of the supervising staff – as well as insufficient or inad-equate prevention measures, have a

Total sales of hard coal by major consumers

2010 2011

AprilShare (in %)

From the beginning of

the year

Share (in %)

AprilShare (in %)

From the beginning of

the year

Share (in %)

Total sales 5,219 688 100.0 22,258 778 100.0 5,689,645 100.0 23,918,578 100.0

Domestic sales in total:– commercial power plants– industrial power plants– industrial and municipal heating plants– other industrial consumers– coke plants– other domestic consumers

4,135,3362,148,505

94,138282,445

39,721808,246762,281

79.241.2

1.85.40.8

15.514.6

18,396,8139,168,631

497,8491,519,240

97,7563,256,6033,856,734

82.641.2

2.26.80.4

14.617.3

5,139,4222,735,416

79,640374,786

24,817786,187

1,138,576

90.348.1

1.46.60.4

13.820.0

21,780,00411,477,113

470,4011,678,849

168,8573,594,0234,390,761

91.148.0

2.07.00.7

15.018.4

Exports to the EU – in total– through sales agents– directly by coal mines

1,084,352980,253104 099

20.818.8

2.0

3,861,9653,498,181

363 784

17.415.7

1.6

550,223462,293

87 930

9.78.11.5

2,138,5741,737,628

400 946

8.97.31.7

Source: www.mg.gov.pl

Extraction, sales, selling price and the status of hard-coal resources in the period of January-april 2011

January 2011 february 2011 March 2011 april 2011

Extraction (in thousand tonnes) 5,616.1 5,529.1 6,342.6 5,589.4

Total sales (in thousand tonnes) 5,944.1 5,781.4 6,503.4 5,689.6

Stocks at the end of the month (in thousand tonnes) 3,449.0 3,019.6 2,722.2 2,536.2

Total sales price (in PLN/tonne) 327.25 332.91 335.22 361.97

Source: data published on www.mg.gov.pl

Sales and selling prices of hard coal in the period January-april 2011 (by coal type)

January 2011 february 2011 March 2011 april 2011

Sales of steam coal (in thousand tonnes) 4,925.7 4,739.8 5,387.2 4,751.8

Sales of coking coal (in thousand tonnes) 1,018.4 1,041.6 1,116.2 937.8

Selling price of steam coal (in PLN/tonne) 266.37 272.08 273.90 278.51

Selling price of coking coal (in PLN/tonne) 626.51 609.74 631.20 784.86

Source: data published on www.mg.gov.pl

The employment structure in mining enterprises

Data published

as of

workers Technical supervisionadministrative

staff

Other surface workers

TotalUnder ground

Above surface

Under ground

Above surface

Hard coal mining in total

31.12.2010 75,512 14,674 13,080 5,569 4,235 51 110,121

30.04.2011 71,811 14,472 13,048 5,626 4,250 50 109,257

difference -701 -202 -32 57 15 -1 -864

Source: www.mg.gov.pl

considerable impact on the frequen-cy of mining accidents.

Miners often perform their duties by taking short cuts, which is widely accepted by their principals, or which results either from the timidity or lack of competence of supervisory staff.

Once entrusted with certain tasks by the supervisory staff, miners usu-ally do the work their own way, fol-lowing their own habits. Therefore, the supervisory staff should focus not only on the outcome of work but also on its performance in the right and safe way. ::

60 :: polish market :: 7-8 /2011


Shale gas exploration and exploitation may well become the first field in Polish-US coop-eration in which Poland will be a full partner and not just a sales market. “Secretary Hillary Clinton, as well as President Obama are inter-ested in the possibilities of working together, both because it is good for Poland’s and our economic prosperity, but also it’s the kind of cooperation that has real strategic significance for both of our countries. It is important for both of us to work to improve our own ener-gy security on a national basis as well as pro-moting national security through the trans-Atlantic space,” said US Ambassador to Poland Lee Feinstein. Why is this so important?

Despite today’s technological advance-ment in raw-material obtainment, the world faces mounting resource shortages, hence every rise in demand causes a simultaneous rise in prices. The only way to ensure stability

in this respect on national energy markets and the global market is to raise raw-mate-rial supply. Polish energy industry is facing its own challenges connected with the rising demand for power, insufficient and outdated infrastructure, dependency on imported gas and oil, and environmental obligations. “One may say that the government’s reply to these challenges is a November 2009-adopted Ener-gy Policy Until 2030 document with clearly-defined development paths and instruments. The priorities contained in it include raising energy efficiency and the security of energy and fuel supply, diversifying power genera-tion by means of nuclear energy, raising the share of renewable energy in overall energy consumption, the development of competi-tive energy and fuel markets and environ-ment protection. The new energy policy’s main aim is raising energy efficiency, in other

words – maintaining zero-energy econom-ic growth and bringing energy consumption down to the EU+15 level,” said Maciej Kali-ski, head of the Oil and Gas Department at the Economy Ministry. As Kaliski stressed, it will be impossible to build an innovative economy without incurring costs, moreo-ver these changes will be more difficult for Poland than for others as its economy bas-es on coal. A chance here could lie in the ex-ploitation of Poland’s own energy raw-ma-terials, hence the raised interest in shale gas.

Can the US, the world’s biggest shale gas producer, help Poland in this respect? Quite certainly. What must be kept in mind, how-ever, are the legislative and technological dif-ferences between both countries. “The main difference between the US and Poland lies in resource ownership. Contrary to the US, oil and gas in Poland is property of the State Treasury, represented by several ministries,” explained Marta Wągrodzka, chief expert in the Geology and Geological Licensing Depart-ment at the Environment Ministry.

Polish-US cooperation in shale gas exploration

The process of granting gas exploration and exploitation licences in Poland

(from a presentation by M. Wągrodzka, Environment Ministry)

Poland and America have surprisingly much in common when it comes to energy. Especially promising in this context are shale gas and nuclear power, concluded the participants in a Polish-American Energy Round Table on May 11 and 12 in Warsaw.

Exploration concession

Geological documentation of the deposit

Exclusive right to apply for production (2 years)

Application for production concession

Environmental issues (environmental decision required)

Local authorities approval

Ministry of Economy Approval

State Mining Authority approval

Production Concession

62 :: polish market :: 7-8 /2011


Until today the Environment Ministry has issued around 300 mineral exploration licens-es and 86 for unconventional gas exploration between the Pomorze and Lublin regions. To-date 7 drillings are underway, planned until 2017 are a further 120 obligatory and 100 aux-iliary drillings.

Gas drillings are a prime example of suc-cessful Polish-US cooperation. The leader in hydraulic fracturing is the Halliburton compa-ny. The process involves the pumping of large quantities of water with chemical softeners into rock drillings. To-date all hydraulic fractur-ing attempts in Poland have been successful. “On July 9, 2010, Halliburton achieved a major milestone in Poland by performing the first-ever, large-scale hydraulic fracturing opera-tion for PGNiG, the state controlled Polish oil

and gas company. On July 18, on the same well, another major milestone was achieved when Halliburton performed the first-ever shale frac in Poland,” said Marek Karabuła, Vice-Pres-ident of PGNiG. Halliburton began with hy-draulic fracturing in the 1980s and has since completed more than 270 fracturing projects in Europe. Thanks to special casings the fractur-ing does not endanger natural water resources.

“Is Poland ready for success in shale gas exploration and exploitation?” Kaliski asked. And answered his own question: “We must or-ganize ourselves. We won’t have too many al-lies on this undertaking. EU policy as well as statements by EU state leaders show that Eu-rope is very moderately enthusiastic about un-conventional gas sources.” ::

Compiled by: Sandra Wierzbicka

Marcin korolec Undersecretary of State at the Ministry of EconomyPoland and the U.S. share similar energy conditions. Both countries have a rela-tively large share of coal in

the energy structure and, like the US, Poland is striving for innovative green economy using its own energy resources. Unconventional methods of obtaining natural gas provide a new prospect for cooperation. Over the last decade, the industry of gas exploration and production, has undergone a true evolution, particularly in the USA, where the possibility of extracting gas from unconventional sources, particularly shale gas, has been recognized. The US is the world leader here. Exploration of un-conventional gas resources requires mutual coop-eration. The exploration of unconventional gas re-serves is a priority project for the Polish economy. This year, a report appeared on the shale gas re-sources developed by the US Government’s Ener-gy Information Agency, which shows that Poland might have as much as 5.3 billion cubic meters of gas in the shales. The expectations are enormous, but we must remember that more reliable informa-tion about shale gas resources will be known af-ter the exploration and verification of the geologi-cal documentation of licensed companies. It should be noted, however, that in the coming years, Po-land’s energy and power sector will transform to-wards a greater demand for natural gas exploita-tion. First, as a reserve fuel for renewable energy, and secondly in relation to the entry into force of the CO2 emissions trading scheme in 2013. ::

Participants in the 2nd Polish- american Energy Round Table: Marcin korolec, Undersecretary of State, Economy Ministry, lee feinstein, US Ambassador to Poland, Edward McGinnis, Deputy Assistant Secretary for International Nuclear Energy Policy, US Department of Energy, Dariusz lubera, President, Polish Cham-ber of Power Industry and Environment Protection, Chuck ashley, Deputy Commercial Counsellor, US Embassy, Maciej kaliski, Oil and Gas Department, Economy Ministry, Marek karabuła, Vicepresident, PGNIG S.A., Marta wągrodzka, Chief Expert, Geol-ogy and Geological Licensing Department, Environ-ment Ministry, Mark Swift,Area Manager for Con-tinental Europe, Halliburton, dr John Damanti, Vice President, Oil&Gas Business Development EMEA, URS Corporation, Elżbieta wróblewska, Project Head, Environment Protection and New Technol-ogy Team, Energy Department, Economy Ministry, waldemar Ostrowski, Chief Engineer for Technolo-gy, PKE S.A. Tauron Group, Bogusław krztoń, Direc-tor, Foster Wheeler Energia Poland, dr leigh Hack-ett, VicePresident Sales&Marketing, CO2 Capture

Systems Alstom Power, Mall Reddy, Vice Presi-dent, International Operations, Fluor Limited, Ilya Solovev, Commercial Director, GE Energy, Power & Water, andrzej Chwas, Head, Nuclear Energy De-partment, Economy Ministry, Marcin Ciepliński, Director for Strategy and Development, PGE En-ergia Jądrowa S.A. (PGE Nuclear Power), Profes-sor Grzegorz wrochna, Director, Andrzej Sołtan Institute for Nuclear Studies in Świerk, Mats Ols-son, Customer Project Manager for Northern Eu-rope Region, Westinghouse Electric Company, zi-mowit Iwański, Region Executive, Market Growth, GE Hitachi Nuclear Energy, Chris Maslak, Bech-tel, Peter M. Perez, Deputy Assistant Secretary for Manufacturing, US Department of Commerce Service, Grzegorz wiśniewski, President EC BREC, Institute for Renewable Energy, krzysztof Sadow-ski, Board Member, Director for Strategy and De-velopment, Białystok S.A. Thermal-Electric Plant, Mariusz Radziszewski, Head, Renewable Energy Sources Section, Energy Department, Economy Min-istry, krzysztof Pilch, Senior Development Manag-er, AES Wind Generation Europe, Brian Thompson,

Alter NRG (waste-to-energy), USA, Michael wag-ner, Marketing Director GE Jernbacher – USA, Grze-gorz Tomasik, Board Member, PSE – Operator, To-masz Dąbrowski, Director, Energy Department, Economy Ministry, Dr Bartosz wojszczyk, Global Director, Smart Grid Technical Solutions, GE En-ergy, warwick Charlesworth, IBM Global Busi-ness Services, CEE Utilities, IBM and the compa-nies: Arup, AES Poland Sp. z o.o., Białystok Heat & Power Plant Co., Elsamprojekt Poland, EM&CA S.A., Emerson Process Management, Energore-mont Sp. z o.o., Foster Wheeler Energia Poland Sp. z o.o., Fluor, Geofizyka Toruń, Hochtief, Andrzej Sol-tan Institute for Nuclear Studies, Interco Trade Of-fice, Lotos, Miller Canfield, Metso, Orlen Upstream, PKN Orlen, PGE, PGNiG S.A., Polskie Sieci Elektro-energetyczne Operator SA (PSE Operator), Relpol, SSW Spaczyński, Szczepaniak i Wspólnicy sp.k (at-torneys at law), Seminars Conferences Consulting, Tauron Poland, Wachelka Inergis, Alstom, Babcock Power Inc., Bechtel Power, GE Hitachi, Shaw, URS Corporation, Westinghouse Electric Company LLC.

64 :: polish market :: 7-8 /2011


Shale gas – an inimitable opportunity

What are the advantages of ex-tracting shale gas?The extraction of shale gas on a

commercial scale can bring a lot of tangible benefits, including especially: :: independence and security of our

energy industry – a large amount of shale gas would make Poland in-dependent of Russian gas supplies;

:: increased competitiveness of the Polish economy in relation to other EU countries – if the shale gas re-sources turn out considerable, we will be able to export this raw ma-terial;

:: new jobs in the extraction regions and general improvement of their economic situation;

:: technological development, ac-quisition of know-how and high-er number of well-trained special-ists in the search and exploitation of hydrocarbons;

:: state budget and local government proceeds from taxes and utility charges;

:: environmental benefits – com-pared to crude oil and coal, the lat-ter constituting the basis for ener-gy production in Poland, gas is an environment-friendly fuel; there-fore, it constitutes a good link be-tween hydrocarbons and renewa-ble energy sources;

:: better image of Poland in the in-ternational arena – even today the pace and scale of exploratory work in the country is viewed as impres-sive.

Interview with Henryk Jezierski, Undersecretary of State, National Chief Geologist

Shale gas is a great opportunity for Po-land, not only in the economic sense, but also in the social, geo-political and image-building dimension. We must not miss it.

Do you think that the seven bore holes make so far allow us to infer that Poland may become a shale gas superpower, or is this a premature enthusiasm aroused by a few press releases?The results based on the first bore

holes appear promising but the relia-ble and complete data on our resourc-es will not be available until a couple of years later.

Under the current licences, there are over 90 bore holes whereas at least 120 of them are planned to be made. Possibly, this number will be high-er. Not until the exploratory work is more advanced can we confirm the ac-tual resources of shale gas and assess whether its extraction is both possible and economically profitable.

Many people look forward to a joint report of the US Geological Servic-es and the National Geological Insti-tute – the National Research Centre,

which is due to be released in autumn of 2011. However, we need to bear in mind that it will also serve as a more reliable projection presenting an esti-mate of the Polish shale gas resources.

Theoretically speaking, will the shale gas extraction have a negative environmental impact, as seems to be suggested by the USA?The harmfulness of shale gas ex-

ploration and exploitation is highly exaggerated. Obviously, as any pro-cess of this kind, it interferes with the natural environment but it does not damage the environment to the ex-tent suggested by shale gas opponents. For instance, a lot has been said about the toxicity of the liquids used in the hydraulic fracturing process and re-lated threats to underground waters. However, the U.S. Environmental Pro-tection Agency has not identified any instance of underground pollution re-lated to this process, although it has already been conducted in the Unit-ed States over million times!

The recent foreign press releas-es show that the State of New York, which has introduced a moratorium on

7-8 /2011 :: polish market :: 65


hydraulic fracturing, is now consider-ing the reversion of this ban. Apparent-ly, the New Yorkers have finally real-ised that shale gas can be utilised safely and can bring considerable benefits, as those which have been derived by other American states for many years.

The fracturing process (in the case of trouble-free boring) does not pol-lute underground waters. In Poland, this process will be conducted at the depth of 3000 metres, that is much deeper than the level of underground waters from which we extract drink-ing water (set at approximately 200 below land surface). Therefore, the fracturing liquid will be separated from underground waters with a 2.5 km rock layer – this is an impenetrable barrier. The bore holes are also prop-erly secured (case-hardened) to iso-late underground waters. Addition-ally, the Ministry of Environment has obliged the companies performing the

fracturing procedures to indicate the composition and concentration of the substances used.

Both enterprises making shale gas bore holes and those searching for conventional gas have to satisfy severe EU requirements and they are subject to strict supervision by the State La-bour Inspectorate, mining supervi-sion bodies and environmental pro-tection bodies, like for example the Province Environmental Protection Inspectorate.

We can more often hear about the negative impact of shale gas ex-traction on the local community’s health which worsens the quality of life. How would you refute the arguments expressed by the oppo-nents?Each branch of extraction indus-

try – surface and underground min-ing, crude oil exploitation, and finally

shale gas extraction – has an unques-tionable environmental impact. For us the raw materials obtained are neces-sary to live. On the one hand, there is the natural environment and, on the other hand, the raw material exploi-tation. Therefore, we have to main-tain the balance between these two values, using our resources so that their negative impact could be mini-mised. For the time being, we cannot do without oil or gas, but we can take care of the environment through cer-tain regulations and institutions, such as the Regional Directorate for Envi-ronmental Protection, the Province Inspectorate for Environmental Pro-tection and the Regional Water Man-agement Authority.

As the National Chief Geologist, I would like to stress that Poland is ready to fully control the explorato-ry process, and to extract shale gas in the foreseeable future. ::


66 :: polish market :: 7-8 /2011


Mining through an expert’s eye

Where does Polish mining indus-try stand on the global hard and brown coal market?There’s certainly a difference be-

tween the hard and brown coal mar-ket. Hard coal production is on the rise worldwide, the leading produc-ers are China, the United States and India, who jointly account for near-ly 65% of the global output. The un-questioned leader is China, which in 2010 raised production by 9% from the previous year, producing a whole 3.24 billion tonnes of hard coal – 48.3% of the global output. Other leading coal producers include Australia, who is also the world’s biggest coal exporter, Indonesia, South Africa, and Russia. With its 76.6 million tonnes in 2010, Poland placed in the bottom half of the top ten coal countries, but its entire production accounted for not much more than 1% of the global output. I believe, however, that important here is not just output but also production costs, as this has a direct bearing on coal prices. Looking from this angle I feel uneasy when I see over 10 million tonnes of foreign coal roll into Poland almost every year. Why is our coal los-ing against the imported coal? The an-swer, of course, is in the price.

At 58-60 million tonnes brown coal production in Poland has been on a rather steady level over recent years. Poland is a leading brown coal produc-er, currently 8th on the global scale. Global brown coal production in 2009 came to 962 million tonnes. The big-gest world producer is Germany with an annual output between 170 and 180 million tonnes. Other major brown coal suppliers are China, Turkey, Russia, the United States, Australia and Greece. Nonetheless, when I look into the pos-sible future of Polish brown coal in-dustry I have my doubts whether the

present production level will keep up in coming years. The currently-exploited beds are nearing exhaustion, and al-though Poland does have more brown coal resources, work on their devel-opment for mining is not progress-ing very well. Also, plans to build new brown coal mines often fail due to local protests. I must stress that Poland has vast resources of brown coal and could produce much more than it does today.

More European states are thinking about withdrawing from nucle-ar energy. Could this be an open-ing for Polish mining industry and clean coal technology?Personally I don’t quite understand

what is going on. We need techni-cal checks on existing nuclear plants, where necessary there will also have to be decisions about their future. But closures should be rationally motivat-ed and not undertaken for any other than purely technical reasons.

Personally I don’t think the with-drawal from nuclear power by coun-tries like Germany will mean bigger openings for the Polish mining indus-try, if any at all. There are no plans to replace nuclear power with coal en-ergy. In fact Germany wants to close down its entire coal mining industry in the next years. Although it is a fact that at 240 million tonnes annual-ly Germany is a major European coal consumer. Nonetheless when we speak about coal-based energy we must take account of the EU’s energy and climate package, which has very little support for coal energy. If nothing changes in this respect the EU countries will be forced to resign from coal-based pow-er. So-called clean carbon technolo-gies may help, but this is still a rather distant perspective. We should work on developing such technologies, but

more important – and in my opinion much more effective – will be rais-ing efficiency in energy production from coal and energy saving. Only af-ter achieving success in these spheres will it be sensible to talk about tech-nologies like CCS.

For quite some years now you are President of the World Mining Con-gress. This year’s 22nd congress will take place in Istanbul. What will its motto be and what will Pol-ish companies have to show?Turkey will host the congress for

the second time, it will take place on September 11-16. Traditionally, every congress has a motto, this time it will be “Innovation and Challenges in Min-ing.” We will turn attention to the fact that mining in the 21st century needs innovation. In my opinion most impor-tant in this respect will be the problem with raw-material resources, which, of course, aren’t renewable. Turkey and other countries are developing their mining industries, hence the impor-tance of areas like coalpit design, ac-cessing resources, work planning. Also planned are special sessions on rock mechanics, work safety, environment protection in mining areas, automa-tion and coal processing. There will also be an interesting debate on “in-telligent mines.”

The participation of Polish firms in the congress is supervised by the World Mining Congress Polish Com-mittee at the AGH University of Sci-ence and Technology in Kraków. We expect around 30 delegates from Po-land. During the debates the Poles will focus on issues in which we specialize, like work safety, environment protec-tion in mining areas, new machinery and monitoring systems, legislation and others. ::

Interview with Professor Józef Dubiński, Corresponding member, Polish Academy of Sciences

7-8 /2011 :: polish market :: 67


The Mining Restructuring Com-pany (SRK SA) is one of the largest operators in the coal industry offer-ing attractively located, revitalized, brownfield land properties and build-ings. These estates once were the in-frastructure of currently closed coal mines and were used as storage are-as or accompanying areas not direct-ly associated with the functioning of the mines. As of today we have assets of about 1,100 hectares of developed and undeveloped land properties. All properties offered by the Company are located in the vicinity of the ex-isting transport networks or in are-as where such infrastructure is mod-ernized or built from scratch. We offer former mining sites forming compact complexes of 10–20 hectares perfectly suitable for the location of large retail-services networks and logistics cen-tres in the Upper Silesian conurbation in cities with over 100,000 residents such as Sosnowiec, Jaworzno, Kato-wice, Zabrze and Bytom.

We have very attractive offers for developers located in Katowice at Bocheńskiego Street in the vicinity of the A4 motorway, which in the local development plan are designated for housing development ensuring the en-largement of the Śródmieście district.

The same applies to the site of the liq-uidated mine „Katowice – Kleofas” in Katowice at Obroki Street, which the city has also earmarked for hous-ing development enlarging the Załęże district. The post-industrial buildings located in this area can be converted to attractive and spacious lofts. We also offer properties located in the Special Economic Zone within the city limits of Sosnowiec. They are perfectly connect-ed to the necessary utility infrastruc-ture. This is a unique offer giving the possibility to quickly invest and devel-op on favourable terms which are pro-vided by operating within the Kato-wice Special Economic Zone. We have property listings in the areas of the for-mer coal mines: “Jan Kanty” in Jawo-rzno, “Miechowice” in Bytom, “1 Maja” in Wodzisław Śląski, “Moszczenica” in Jastrzębie Zdrój, “Niwka Modrzejów” in Sosnowiec and “Siersza” in Trzebin-ia. Investment projects on the prop-erties can quickly move through the phase of implementation as they have

a clear legal status, access roads and are earmarked for services and in-dustry in the local development plans. In the offer of the Company is land freed in the process of liquidation of the mining infrastructure. It can be an opportunity for investors interest-ed in running coal mining of depos-its at greater depths than the deposits extracted by the mining industry or making available the deposits in the immediate vicinity. This offer is ad-dressed to entities licensed to engage in work providing access to or exploit the specific coal deposit. These prop-erties are located in the former col-lieries: “Barbara Chorzów” in Cho-rzów, “Modrzejów” in Sosnowiec and “Jan Kanty” in Jaworzno. The sales offer concerning these real estates is

currently partially available and the full range will be available at the turn of 2011 and 2012.

Modern workplaces, higher educa-tion schools and residential build-ings are developed on our sites. This is a breakthrough in the perception of post-mining sites by investors, who using their convenient location in the vicinity of the Upper Silesian conur-bation, develop complex industrial, commercial and entertainment com-pounds. This is proof of the reliability and professionalism of the employees of the Company in the preparation of post-mining properties for sale and proof that we offer attractive proper-ties at attractive prices. ::

Spółka Restrukturyzacji kopalń Spółka akcyjna41–914 Bytom, Strzelców Bytomskich 207Tel. 32 35 13 316, 32 35 13 301,fax 32 35 13 309, 32 35 13 310www.srk.com.pl

68 :: polish market :: 7-8 /2011


What is the current situation on the Eu-ropean steel market?The Europe of today has a demanding eco-

nomic environment and though exciting in many aspects is the subject of large expend-iture in the realms of workplace safety, so-cial funding and environmental protection. The European Steel Market is no exception to this rule in that many European producers are unable to operate within the lower margins of their Asian counterparts where metal prod-ucts in large quantities are available to the global arena at comparatively lower prices.

Are there any significant changes on the horizon?The most significant transformation is in

the current strategy for most metal producers

being directed toward the “downstream steel sector” yet strictly maintaining the efficiency of the business. Virtually all European metal-lurgical companies are expanding their dis-tribution networks in the hope of generating maximum additional profit.

Therefore the product being sold across Europe is not simply “steel” but a package, “steel product-plus-service” as a complete solution. Clients are looking at methods to increase efficiencies in production by out-sourcing initial processing.

How are these changes influencing your work?This methodology affects our activities

in that, Severstallat in Latvia, together with its Polish subsidiary, Severstallat Silesia, are

European companies belonging to the Sales division of Severstal, which, in addition to sales, also handle processing. With the pro-duction of tubes, steel strips and blanks we provide our customers with high-value-add-ed products.

Produced for specific clients and taking into consideration the precise requirements of each, these products provide additional profit, which is why the further development of processing activities has been chosen as a strategic goal for our enterprise.

In 2008 processing activities did not ex-ceed 30% of our total sales, whereas now this share is 50%, and we have plans to push this further to 70% by 2012.

Such is the direction of our investment projects. ::

Andrejs AleksejevsPresident of the Board of JSC Severstallat (Latvia) and Severstallat Silesia Sp. z o.o. (Poland)

about the company

The Severstallat group of companies compris-es the Polish trading and industrial company Severstallat Silesia and the Latvian company Severstallat. The target markets of the group are those of Central and Northern Europe. The company’s activities focus on the production of welded tubes, steel strips, and blanks, as well as other steel products. Severstallat forms part of the multinational vertically-integrated mining and metallurgical company Severstal.

7-8 /2011 :: polish market :: 69


forecasts for the steel sector are favourable, which is the effect of the re-cent market revival. However, steel in-dustry insiders warn us against taking excessively optimistic viewpoints. The steel market has recently shown con-siderable fluctuations as regards pric-es. The figures on steel production and use, after the first months of this year, are optimistic.

The access to raw materials has a considerable impact on the

Following the recent crisis, the steel industry in Poland has returned to the growth path with more favourable prospects – the steady growth is continued in 2011. The demand for steel has been growing and producers no longer forget about related threats. Still industry has to face a number of challenges which influence the competitiveness level of this sector. Climate change, according to some industry insiders, plays the principal role in this field.

Bogdan Sadecki

competitiveness of this sector. Un-fortunately, their amount in Europe is declining, and their prices have been soaring. This may imply that steel pro-duction in the foreseeable future will be conducted mainly outside Europe – in the Far East, in China or India.

The number of consumers of steel products has been growing, both sys-tematically and rapidly. The develop-ment in such fields as the machine in-dustry, car industry, construction and

the household appliance sector trig-gers an increased demand for steel products, not only on the European market but also on the domestic one.

In 2010 Poland produced around 8 million tonnes of steel. After four months of 2011, steel production in Poland was still growing to reach 2.85 million tonnes (9% more than in the corresponding period of the previous year). In 2011 steel production may grow to 8.6 million tonnes, accord-ing to Romuald Talarek, President of the Polish Steel Association, who ex-pressed this view during the Europe-an Economic Congress in Katowice, which took place in May this year.

“If the situation from the 1st quar-ter and the 1st half of the year persists, I believe that producing 8.6 million tonnes of steel should not be a prob-lem for us,” said Mr. Talarek.

The use of steel products has also been on the rise. It should be noted that the share of imports in the domes-tic steel use is still high, reaching 60%.

Successes and challenges of steel industry in Poland

70 :: polish market :: 7-8 /2011


It can be stated that there is no distinction into the eastern and the western steel industry – this industry is uniform and it has a common market. However, the steel industry in Poland is still not efficient enough, as compared to the western one.

In the 1st quarter of 2011 there was a revival in steel trade and growth in imports accelerated. The trade balance was negative, both in terms of quanti-ty (729,000 tonnes) and value (PLN2.6 billion). In the same period the im-ports of steel products amounted to 1.69 million tonnes, which was 12% more than the imports in the corre-sponding period of the previous year. In the same period, the Polish steel-works sent 964,000 tonnes of steel products abroad, 8% less than in the first three months of the previous year. The value of Polish exports amount-ed to PLN2.7 billion, and the value of imports to PLN5.3 billion.

In the 1st quarter of 2011, the num-ber of persons employed in the steel industry grew to 25,700, which is 1.1% more than the employment level at the end of 2010.

The European Commission’s Decision on reducing CO2 emissions in the Eu-ropean Union is a vital issue for the competitiveness of the steel industry. The access to raw materials, which are indispensable to steel production and whose resources are shrinking in Eu-rope, is another crucial factor. Pro-ducers are increasingly apprehensive for the growing prices of electricity.

The unfavourable climate chang-es still force the necessity to modify technologies and business practices in steelworks.

The steel industry has to face a number of challenges which will soon prove decisive to the level of compet-itiveness of this sector.

The steel industry is responsible for 4% of the total pollutant emis-sions. In accordance with EU direc-tives, this level will have to be re-duced by 20% in nine years’ time, i.e. until 2020. 2012 will see the in-troduction of an excise duty on ener-gy products, amounting to PLN35–40 per 1 tonne of steel, which will create

a considerable constraint on the com-petitiveness of the steel sector, given the already high electricity prices. “The steel industry should be exempt from this excise duty. The power in-dustry should not pass the costs re-lated to CO2 reductions onto the steel sector. The steel industry has done a lot to reduce pollutant emissions and therefore should be treated by power plants as an ally, and not as competi-tion,” said Romuald Talarek.

In the 1st quarter, steel production increased by 9% worldwide, reaching 372 million tonnes, as compared to the corresponding period of 2010. China, producing 170 million tonnes of steel in the reference period, acted as the major growth stimulus.

It can be stated that there is no dis-tinction into the eastern and the west-ern steel industry – this industry is uniform and it has a common market. However, the steel industry in Poland is still not efficient enough, as com-pared to the western one.

Steel distributors in Poland have returned to the growth path, which is reflected in the ranking compiled by the Polish Union of Steel Distrib-utors (PUDS). The companies which made considerable changes to their business following the 2008-2009 cri-sis can now enjoy exceptional results.

Things should look more and more promising. ThyssenKrupp Energostal is the ranking leader, having recorded the highest result in terms of turno-ver in the entire history of the PUDS Ranking.

Considering the recent price trends, one may expect that the dy-namic growth in turnover may soon be followed by record-breaking prof-its in this sector. On average, distrib-utors sold 15% more steel (in tonnage terms) than in 2009, and the turno-ver growth exceeded 30%. This is an obvious sign that the good times have returned for the steel industry. ::

No. Name of the company Steel turnover in 2010 (in

PLN thousands)

1. ThyssenKrupp Energostal S.A. 1 705 385

2 Konsorcjum Stali S.A. 1 132 877

3 BUDMAT Bogdan Więcek 980 145

4 Bowim S.A. 813 125

5 Grupa Pruszyński 792 542

6 Grupa Polska Stal S.A. 751 644

7 Stalprofil S.A. 592 906

8 Stalprodukt Centrostal Kraków Sp. z o.o. 541 693

9 Nova Trading S.A. 513 000

10 MG Murbet sp. z o.o. 298 001

11 Sambud-2 sp. z o.o. 278 000

12 PZM Vimex S.A. 240 646

13 BSK Return S.A. 218 400

14 Montan Stal sp. z o.o. 212 436

15 Staler Grupa Kapitałowa 208 901

16 Ekoinstal Sp.j. 197 837

17 ThyssenKrupp Stal Serwis Polska Sp. z o.o. 189 536

18 PRH Bobrek Sp. j. T. Niewiadomska, J. Małek, B. Macianty

183 317

19 Centrostal S.A. Kielce 171 584

20 Drozapol-Profil S.A. 166 103

No. Name of the company Net profit in 2010 (in

PLN thousands)

1. ThyssenKrupp Energostal S.A. 58 684

2 Grupa Pruszyński 33 472

3 Stalprofil S.A. 29 333

4 Konsorcjum Stali S.A. 25 875

5 BUDMAT Bogdan Więcek 17 604

6 MG Murbet sp. z o.o. 15 303

7 Sambud-2 sp. z o.o. 10 000

8 PRH Bobrek Sp. j. T. Niewiadomska, J. Małek, B. Macianty

6 601

9 Maxstal sp. z o.o. 6 094

10 BSK Return S.A. 4 850

11 Drozapol_Profil S.A. 4 449

12 PZM Vimex SA 4 114

13 Ferona Polska SA 3 817

14 IMS Stalserwis sp. z o.o. 2 805

15 ThyssenKrupp Stal Serwis Polska Sp. z o.o. 2 781

16 Staler Grupa Kapitałowa 2 515

17 TM Steel Sp. z o.o. 1 495

18 Centrostal S.A. Kielce 1 397

19 PUH Odmet Sp. z o.o. 1 395

20 Stal Service Sp. zo.o. 1 339

Ranking of Polish Steel distributors, Polish Union of Steel Distributors – 2010 data. Steel turnover in PLN thousands

Ranking of Polish steel distributors, Polish Union of Steel Distributors – 2010 data. Net profit in PLN thousands

7-8 /2011 :: polish market :: 71


“The raw-materials market is known for its fast-changing prices, which means we have to be cautious in our dealings with it. Nonetheless, the Polish steel industry has high hopes connected with preparations for the 2012 European Football Champion-ship and the steadily-rising demand for consumer goods like cars, household articles, radios and TV sets and ma-chinery”, Romuald Talarek, head of the Polish Steel Association (HIPH), right-ly wrote in his preface to the Associa-tion’s Polish Steel Industry 2011 report.

The 3rd European Economic Con-gress in Katowice (May 16–18) devoted three panel sessions to the steel mar-ket and steel industry. Here is what the delegates said:

“The Polish steel industry is in good condition, we have raw-materials and a modern-day steel processing indus-try. Hence, if Polish economy manages to return to 2007’s steel consumption in the next 2 years – 12 million tonnes of steel products – it would be advis-able to cut steel imports by 3–5%. It would also be worthwhile to make it

clear to the central government, that Poland needs a modern steel industry. Although steel industry only accounts for 23% of the GDP, it has a considera-ble bearing on services which generate 60%. However, a modern steel indus-try needs modern-minded employees and feasible proposals from the R&D sector on matters like emission reduc-tions”, said Romuald Talarek.

Krzysztof Walarowski, CEO at Ferrostal Łabędy Sp. z o.o. (Złomrex Group), producer of over 600,000 tonnes of steel products: “The fu-ture looks promising, however cer-tain EU regulations which raise the production costs of better-quality steel may lead to a rise in imports from neighbouring countries which do not have to carry such high costs. Quali-ty will be an alternative as long as we have a technological advantage. Our sheet steel lines, which among oth-ers produce for the automotive indus-try, work today at 110–115% of their capacity, hence we are seeking ways to raise this production, which is the most profitable of all today.” ::

Sanjay Samaddar CEO at ArcelorMittal Poland SA and director-general of the group’s Eastern European flat-rolled product section

ArcelorMittal Poland (formerly Mittal Steel Poland) is the big-gest steel manufacturer in Poland accounting for around 70% of the domestic steel industry’s production potential. Arcelor-Mittal Poland SA employs over 10,000 in six plants in Chorzów, Dąbrowa Górnicza, Kraków, Sosnowiec and Świętochłowice in southern Poland. The company’s annual output comes to 7.6 mil-lion tonnes of crude steel and about 6.5 million tonnes of rolled steel products. A large scale investment programme (almost PLN 4 billion between 2004 and 2010) made ArcelorMittal Poland one of Europe’s most advanced steel manufacturers.

andrejs aleksejevs President of the board of Severstallat Silesia Sp. z o.o. and JSC Severstallat

Severstal is the major Russian industrial group with assets in metallurgical, raw material extraction, pipe and tube making and other sectors. Severstal is a full-production-cycle operation which includes iron ore, coal and gold mining enterprises, scrap collection, steel mills and rolled product plants, as well as down-stream production and distribution businesses. In 2010 Sever-stal, which employs over 90,000 people, produced 14.7 million tonnes of steel, achieving USD 13.573 billion revenue (revenue in 2010 went up by 41% from 2009 level).

Severstal comprises three business divisions: Severstal Re-sources, Severstal Russian Steel and Severstal International.

Severstal Russian Steel is a leading steel producer in Russia with focus on value-added flat steel products for the construc-tion, automotive, machinery, and oil and gas industries. Our Rus-sian integrated manufacturing facilities are one of the largest in the CIS and offer some of the widest varieties of products. Today large quantities of our steel products already are sold via Sev-erstal’s steel service centres in Latvia and Poland. We gained enough competence in tubes and closed sections production and flat steel processing. We have chosen two strategic loca-tions and created European distribution centers in Poland and in Latvia in order to supply Central Europe and Baltic Sea coun-tries with client-adjusted products.

Jerzy Bernhard CEO and Director-General, Stalprofil SA

The present boom is an encouragement to take out credit and invest. It’s also possible to get EU funding. The best investment will be in broadening the product and service line and in pro-cessing as Europe is the site of numerous energy, gas, environ-mental and railway projects.

“The steel market in recent years went up and down, with a boom in 2007–2008 followed by a serious slump during the 2009 global crisis and a revival in 2010. Today we’re all happy to see that the market has grown and that new demand has been generated. This augurs well for steel production and sales in coming years. More demand for steel also means more demand for raw-materials and energy.

Jerzy Bojanowicz

The Polish steel market

In 2010 Poland produced 8.0 million tonnes of crude steel. Although this was 12.1% more

than in 2009, it took up only 61.5% of the overall production capacity. Poland’s share in the

EU’s steel production came to 5%, unchanged from 2009. Polish steel industry produced 6.9

million tonnes of hot-rolled products (2.35 million tonnes of flat products including 1.6 mil-

lion tonnes of sheet steel strips, 4.54 million tonnes of long products including 1.9 million

tonnes of steel rods), 10.9% up on 2009. Also up was the production of all sorts of cold-pro-

cessed products (sheet steel and strips 48.8% - 851,000 tonnes, galvanized sheet steel and

strips 15% - 455,000 tonnes, and organic-coated sheet steel and strips 50% - 235,000 tonnes).

Steel piping production rose 7.2% to 839,000 tonnes and cold-forged closed section produc-

tion 4.3% to 455,000 tonnes. Domestic steel consumption rose 20% and steel imports 22%.

72 :: polish market :: 7-8 /2011


Robert wojdyna CEO at Konsorcjum Stali SA and Polish Union of Steel Distributors

The Polish steel distribution market is dominated by small firms with annual sales at around 10-150 thousand tonnes. Independ-ent distributors still hold a strong position, although distribu-tion by producers is becoming increasingly widespread. There is also a mixed model with firms run by producers and inde-pendent distributors.

At the same time more and more distributors invest in steel processing to meet customer demand. Most make flat products and sections and construction reinforcements, others specialize in painting, grinding, etc. This model has a very promising fu-ture in Poland. In coming years the market will be ruled by big distributors and distribution networks, so smaller firms must seek local openings and target specific customer groups. This is why also global firms can function this way.

At some time ArcelorMittal Distribution Solutions will make itself noticeable in Poland. Everything will depend on relations between producers and independent distributors, especially if independent distributors will be equal partners on a still-devel-oping market.

Konsorcjum Stali adopted a distribution model based on pro-cessed products. This is why the company created a servic-ing centre and began work on a large cold-rolled strip servic-ing centre.

andrzej Ciepiela head of the Polish Union of Steel Distributors (PUDS)

In 2010 sales of flat-rolled products rose 24% against 2009, long product sales 5% and construction steel sales 6%. Section sales rose 4%, hot-rolled sheet steel sales 21% and ribbed bar sales 25%. Steel service centres raised their production by 25%, and rein-forcement producers by 15%. PUDS members operate 70 longi-tudinal and transverse cutting lines with a joint annual capac-ity of 3,7 million tonnes. Last year saw the startup of 25 new lines with an annual capacity of 1.1 million tonnes. PUDS brings together 16 construction reinforcement producers with a joint 74% share of the domestic market. 23 plants are outside the EU.

Jürgen Nusser President of the European Association of Steel Service Centers (EASSC), Vice-president of Eurometal

In 2010 steel distribution in the EU fell 64% from 2009 to 132 million tonnes (159 million tons in 2009). Of this 85 million tonnes were supplied by EU companies including 56 million tonnes by EASSC members (102 million tonnes in 2009). The EU’s steel production covered 87% of the total demand and 47% of end-user demand.

Only a few European steel distributors operate on a global scale, around 20 are major European players. The top five are ArcelorMittal, TK Materials, Kloeckner & Co., Salzgitter Mannes-mann and Tata Steel Distribution, which jointly control 32% of the market. Their position remained unchanged over 2006–2010.

Robert agh CEO at Ferona Polska SA talked about the Czech steel market

In 2009 pig iron, crude steel, sheet steel and piping production fell markedly against 2007. In the case of crude steel the drop reached 35% but production picked up again in 2010 and is ex-pected to reach the level of 6 years ago by 2013. Sheet steel production fell 17% but is expected to top the 2007 level by 8% in two years.

In 2010 the steel branch booked CZK 727 million in pre-tax profit against 24.6 billion in 2007. However, in 2009 the branch booked a loss to the tune of CZK 3.7 billion. This year we ex-pect KCZ 4 billion in profits, in 2013 the figure should come to CZK10 billion.

7-8/2011 :: polish market :: 73

Opinion

The case of Polbank

Heralds of changeThe Greek Eurobank EFG, owner of Polbank, which is a Polish branch of the Greek credit institution, has decid-ed to sell it. Polbank is one of the twen-ty branches of this credit institution in Poland, and definitely the biggest.

The branches in question have al-ready reached about a 5% share in the Polish credit market and about a 3% share in the domestic deposit market. Moreover, the activities of the branch-es of credit institutions are steadily developing, which, considering the cross-border aspect of their opera-tion, increases the influence of exter-nal factors on the domestic banking market. If there were no problems with the Greek economy, the determination to strive for changing the legal basis of Polbank’s activities would be much lower, as would be the efforts to cov-er it by the Polish supervision and de-posit guarantee system. Transforming Polbank into a bank fully under Polish regulations may be considered anoth-er example of the impact of the glob-al economic crisis on the structure of the Polish banking sector. Earlier ex-amples of this included the change of ownership in BZ WBK and the merg-ing of GBW with MR Bank.

Planned acquisitionsRaiffeisen Bank intends to buy 70% of shares in Polbank. The outcome of this merger will be one of the top ten banks operating in Poland. It is ex-pected to be 6th in the ranking based on assets size. The bank will have a widespread, well-placed, and recog-nised network of branch offices. It is also important that, after merging, the banks will create an extensive port-folio of products and services. Raif-feisen Bank is specialised in corpo-rate clients (companies) and private banking, while Polbank has catered for retail (mass) clients.

This is a case of two important players on the Polish banking market becoming one, featuring well-recog-nised brands, logos, and images. This

Prof. Małgorzata Zaleska

will probably lead to marketing cam-paigns connected to the merger and its effects, which will be as interest-ing as the economic and legal changes.

The need to change the lawTo carry out the merger of Raiffeisen Bank and Polbank, banking law has to be changed to allow the transform-ing of a credit institution branch into a bank. Such a transformation should not only be possible, but is absolute-ly necessary when a credit institution branch achieves a significant share of the domestic banking sector, say 2%. This would enable local institutions to supervise the branch and guarantee deposits, rather than the authorities of the country of origin, as is the case now. As in the case in point, Polbank has been supervised by Greece, and its deposits have been guaranteed by the Greek system, which has greatly limited the influence of Polish author-ities. This means that changes to Polish banking law should go a step further, i.e. an obligation should be introduced for significant branches of credit insti-tutions to be transformed into banks. At the same time, it must be noted that this issue requires a change in EU reg-ulations, to start with.

legal requirements and the trans-formation processAn amendment to the Act on Bank-ing Law provides that a credit insti-tution acting as a branch may open a bank in Poland in the form of a joint-stock company, by contributing all the capital components of the branch. In practice, this means a change in the legal form involving the formal liqui-dation of the credit institution branch and the establishment of a new bank, while transferring the entire infra-structure, liabilities (deposits) and re-ceivables (credits). The permission to establish a bank is to be preceded by an obligatory inspection by the Polish Financial Supervision Authority. The permission would be denied if creating a domestic bank could cause serious

loss to the national economy or to the important interests of the country. In this way, national interests are right-ly emphasised in the regulations con-cerning such decisions.

A bank created by transforming a branch is to be obliged to maintain the basic safety measure - the solvency ra-tio - at the level of at least 12% for the first 18 months of activities, which is higher than for the banks already pre-sent on the market (at least 8%), but lower than newly-established banks (a minimum of 15%).

a favourable assessmentIt follows from the above that in cre-ating Polish banking law, past legis-lators showed too little imagination to anticipate the case of Polbank, and this comes as no surprise, as it is not an easy one. In any case, it is a good devel-opment that Polbank will stop being a branch of a Greek credit institution in Poland. Problems experienced by a large credit institution branch are eas-ily communicable and may be caught by healthy domestic banks, while the Polish authorities have little power to react to such situations. An important bank established on the basis of Pol-bank will in turn come under Polish protective regulations, banking mar-ket supervision, and the deposit guar-antee system, which will be benefi-cial both to clients and banking sector safety networks. ::

The author is a Member of the Board of the National Bank of Poland, a professor at the Department of Banking of the Warsaw School of Economics, and a Member of the Presidium of the Committee on Financial Science of the Polish Academy of Sciences.

74 :: polish market :: 7-8 /2011

Transformation and Privatization

Haste is only good for catching fleas

You are the seventh president of the PHF; in other words this makes one president per year plus. And it looks like you will shut it down.(Laugh). Well, yes, selling Polfa means the

end of PHF. I started its privatization and I will close it. And perhaps with a good result.

Yet the process is taking quite a long time – since 2003.Not really. Before 2008 there was no pri-

vatization. There was an attempt to build a national pharmaceutical group. The strategy failed, therefore it was changed. I have been working on the sale of Polfa for three years. Is this long? Haste is only good for catch-ing fleas. It is not a big deal to sell something quickly for little money.

You sold Polfa Pabianice in a year and a half. Experts admit that this should be called a success. The Treasury has profit-ed and so did the company.This is true. The proceeds to the Treasury

for its 85% stake amounted to PLN300 mil-lion. This is a good price. Pabianice also has a new owner. As provided in the contract, Ad-amed bought 95% of the employees’ shares at the same price as received by the Treas-ury. That rarely happens. The employees did really well in this. Some families earned as much as PLN80,000. It also kept all employ-ees, even though no contracts required it. And what is important for the region and its de-velopment – Adamed has practically moved

“The Treasury had to wait for the sale of Polfa Warszawa SA, but as a result of which the value of the offer has been raised,” Artur Woźniak, the president of Polski Holding Farmaceutyczny SA (PHF) tells Jan Wilk.

its entire business from Pieńków to Pabi-anice. Although employment has declined slightly due to the computerization of the company, this did not affect top-class pro-fessionals. And in a longer perspective, new jobs will be created.

Would you like to repeat the success of Pabianice with Polfa Warszawa?In this case we are talking about a com-

pletely different amount of money.

The pressure on investors running for Pol-fa Warszawa to increase the value of their offers was huge. But should price be the sole criterion?Price is not the only criterion, but – I ad-

mit – the decisive one. The pharmaceutical sector – as one of the few – records high prof-its every year. No one has yet lost money on this business. Besides, it is not the last take-over for Polfa Warszawa. We are observing a consolidation trend on the global markets. In a few years, the new owner will certainly re-ceive a fair profit by further restructuring the company and taking advantage of the syner-gy effect. And the potential of Polfa Warszawa may be judged by its results.

It has to be admitted that owing to you and the president of Polfa, Krzysztof Berndt, the company has been achieving very good financial results in the last years.We do not let the grass grow under our

feet. Polfa Warszawa is among the leading pharmaceutical manufacturers in Poland. In 2010, it maintained the 4th position on the do-mestic market in terms of the number of sold packages of drugs, while the value of the sold drugs improved by two places in the ranking reaching the 17th place (IMS data). The very good position of Polfa Warszawa in the IMS ranking was influenced by the results gener-ated by the company in 2010 when sales grew by 11.3% on 2009. This year the company in-tends to increase it by a further 6.1%. When we look at the current results of the company,

achieving such ambitious results seems com-pletely realistic.

It is also worth noting the growing sales of Polfa Warszawa on foreign markets. The com-pany achieved this growth through an exten-sive distribution network in countries such as China, Vietnam and post-Soviet countries.

Things look a lot worse for Polfa Tarchomin.Its results are weaker, but the production of

pharmaceuticals is profitable. Polfa Tarchomin is one of the largest manufacturers of generic drugs in Poland. It is the leader in anti-infec-tion drugs production. We have also achieved a high market position in the group of insu-lins, psychotropic drugs and dermatological products. Polfa has 75 hectares of land and that is a burden. An investor from the phar-maceutical sector does not want to play devel-oper. The large labour force protected by wel-fare package until 2012 is also discouraging.

Perhaps it would be better to sell the land and the business separately? You are al-ready separating eight hectares of land for the construction of a shopping mall,to the great joy of Białołęka inhabitants.This is a very attractive plot situated with-

in Modlińska, Płochocińska and Ekspresowa streets. It is located some 500 metres from the Modlińska/North Bridge Route communica-tion node. In the near future the North Bridge Route will connect.Białołęka with the left bank of the Vistula River. These investments will make Polfa’s property gain value. There-fore the company, not waiting for the comple-tion of the privatization, is looking for buy-ers for some of its most attractive land. And we hope to get a good price per square metre.

Does the 2012 deadline for the sale of Pol-fa Tarchomin still seem realistic?I will surprise you. We will sign the agree-

ment later this year.

Do you still have an ace up your sleeve?I will pull it out when the time is right. ::

76 :: polish market :: 7-8/2011

PlN727 million from the state budget to support hi-tech investments

The Council of Ministers has adopted the “Programme for the Sup-port of Investments of Importance to the Polish Economy 2011-2020.” The Polish Information and Foreign Investment Agency (PAIiIZ) is the only operator of the programme to accept grant ap-plications. The main objective of the programme is to increase the innovation and competitiveness of the Polish economy through supporting foreign direct investments in hi-tech sectors, as they contribute the most to developing the economy and giving it a competitive edge. The programme will focus on increasing the share of innovative investments and creating new jobs with high productivity.

Support from the programme will be available only to entrepre-neurs who are planning 1) investments in the priority sectors – au-tomotive, electronics, aviation, biotechnology, modern services and R&D; 2) new production investments in other sectors, with min-imum eligible costs of PLN1 billion and creating at least 500 new jobs (so-called “major investments” or “major projects”). Within the framework of the programme, support will be given for initial investment meeting the two criteria of incurring investment costs and creating new jobs.

It is estimated that as a result of the implementation of the invest-ments supported by the programme over 32,000 new jobs will be created, while subcontractors will create about 8,000 more. In the years 2011-2020 PLN727 million will be allocated to the programme from the state budget. The funds granted will be divided in the fol-lowing proportion – 56% for creating new jobs and 44% for invest-ment costs.

New investors in the łódź SEz

Two more companies – PRT Radomsko and Interprint Polska – have obtained permits to conduct their activities in the Łódź Special Eco-nomic Zone. PRT Radomsko Sp. z o. o. wants to build a PET recycling plant in the Radomsko Subzone. As a result of using a special tech-nological process, the plant will produce a high-quality product - r-PET, i.e. a fully-fledged material for the thermoplastic manufacturing of new bottles. The investment costs of PRT Radomsko are estimat-ed at PLN36 million. The company plans to employ at least 30 peo-ple. PRT Radomsko belongs to the ALPLA group, a European leader in the production of PET packaging.

Interprint Polska Sp. z o. o. intends to expand its production facili-ty and launch a new innovative production line for varnishing dec-orative paper, mainly for the purposes of the furniture industry. The project will cost PLN25 million; at least 10 new employees will be recruited. The company has also committed itself to keeping the current level of employment at 131 jobs. It is already the third per-mit for activities in the Łódź SEZ for Interprint. The overall outlays of the company for both previous permits in the Ozorków Subzone amounted to PLN129 million.

Poles are happy

Poles are the most satisfied with life of all European nations, a report by the European Bank for Reconstruction and Development says.

EBRD has published the results of the study “Life in transition. Af-ter the crisis.” The authors carried out surveys in 39,000 households in 29 countries in Central and Eastern Europe and in 5 countries of Western Europe. Respondents answered questions about their lev-el of satisfaction with life, the market economy and democracy. The aim of the report was to study how the crisis affected the mood of European citizens. In Poland more than one third of respondents had felt the crisis. Poles are among the nations who are most sat-isfied with life. Over half of respondents were optimistic about the future of their children. Positive public mood rose by 5 percentage points in relation to the previous study of 2006. The report was pub-lished on 29 June, 2011.

3M Poland opens two new factories

At the end of June two Polish 3M factories, manufacturing products for the space, aviation, and automotive industries, officially opened in Wrocław. The new factories will employ more than 100 people. The opening of the new factories constitutes another step in the strate-gy of building a European Production Centre. The company, which is celebrating the 20th anniversary of its entering the Polish mar-ket, currently has 8 factories, 6 of which are situated in Wrocław.

“Until now we have invested about USD350 million in Poland, but we have no intention of slowing down, as only this year we are going to invest another USD83 million here. Our ambition is for Poland to become a key country for 3M, being the origin of most of its products exported to Central and Eastern Europe,” added John Bowers, Direc-tor of Production and Logistics at 3M, the CEE and MEA regions. ::

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So close, yet so far

ModernizationEastern Partnership (EaP) is a pro-gramme of economic and political ap-proximation of the countries of the eastern bloc with the European Un-ion. It is also a support programme for the comprehensively understood mod-ernization of these countries. It is not just about economic modernization, or modernization of legal institutions and the political system. What is needed is the modernization of the observance of

Łukasz Adamski, an analyst at the Polish Institute of International Affairs (PISM) talks about the observance of human rights in Belarus, Ukraine and other countries of the Eastern Partnership, and about how to support the processes of democratization in the countries to the east of the European Union.

human rights, and in this respect we have been observing a regress in the countries of Eastern Partnership. Even Ukraine, which used to be the “top stu-dent”, fell in the Freedom House rank-ing to the category of half-free coun-tries. In the same category are Moldova, Georgia and Armenia. While Azerbai-jan and, even to a greater extent, Bela-rus are deprived of freedom.

Another important issue is the lev-el of law abiding, measured by the

indicators of corruption. In the EU, bribery is a kind of “payment” to the officials for taking the risk to break the law in the interest of the one who gives the bribe. In EaP countries, a bribe is paid to the officials to under-take their official duties. The level of corruption is enormous. With the ex-ception of Georgia, where according to research by Transparency Inter-national, it is at a level close to Italy’s. The level of perception of corruption in Georgia is smaller than in Bulgar-ia and Romania belonging to the EU. Yet in other EaP countries corrup-tion is very severe. It manifests itself in almost every aspect of life and af-fects not only the morale of the soci-eties, but also the investment climate.

So close, yet so farIn the cultural aspect, the reconstruc-tion of ties between the region and Central and Western Europe is need-ed. In the case of Southern Cauca-sus countries, which were first called Europe in the declaration of Eastern


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Partnership two years ago, it is an at-tempt to establish theses ties. This raises the question whether the soci-eties of Eastern Europe want European integration. General data as to the de-gree of support for European integra-tion are very reassuring. In Armenia 81% of the population wants EU mem-bership, 11% are against; in Georgia – 79% is in favour, 2% is against; in Mol-dova – 61% in favour, 18% against; in Ukraine – 53% in favour, 25% against. However, if the respondents are asked to choose between integration with the EU, or an alliance with Russia or other post-Soviet countries, or the so called third way the results are quite differ-ent. Then, integration with the EU is supported by 38% of the population in Georgia, 33% in Moldova and 14-20% in Ukraine.

The societies of these countries of-ten do not feel part of Europe. They also visit EU countries very rarely. Crimea can be regarded as a model region which is culturally very distant from the EU, although geographically it is quite close. Only a few percent of young people from Crimea have ever been in EU countries and 17% have ever talked with any EU citizen. 90% of young people in Crimea do not know any other language than Russian, and in some cases, other than Ukrainian.

BelarusAt the moment the situation in Belarus is extremely worrying. This is a coun-try that in the recent months through the cumulated changes in the eco-nomic policy and the lack of structur-al reforms has fallen into a huge cri-sis. Belarusian rouble was devaluated by over 60% as compared to the end of last year, and the government of Be-larus is introducing various adminis-trative restrictions on exports. In ad-dition, there has been a drastic decline in terms of the degree of respect of hu-man rights and civil liberties. The per-centage of political prisoners in Belarus is in double digit figures. Among them until recently was the chairman of the Supreme Council of the Union of Poles in Belarus – Andrzej Poczobut.

It is difficult to predict how the sit-uation in Belarus will develop. It cer-tainly requires careful tracking by the Polish presidency, especially since Po-land is perceived in the European Un-ion as a specialist on Eastern policy.

Therefore, if any significant changes occur, Poland will be expected to pro-pose an EU response.

There are two approaches on how to democratize Belarus – either through dialogue with the regime or through support for civil society and sanc-tions against the regime. These are ex-treme approaches, while in practice it is about balancing these components. In my opinion, a dialogue with the re-gime in the current situation makes no sense. If we were to study the situation in Belarus after 1994, when Alexander Lukashenka became President, the state is becoming increasingly repres-sive. As regards the second method, Poland intensively supports civil soci-ety in Belarus. Examples could be the Konstanty Kalinowski Scholar ship, owing to which hundreds of young people from Belarus can study in Po-land, and the Belsat TV sponsored by the Polish Ministry of Foreign Affairs. Thanks to Belsat Belarusians have ac-cess to free information and works of Belarussian literature.

UkraineIn Ukraine in the last year and a half the talks on the creation of an overall deep-ened free trade zone with the EU have gained momentum. It is an institution,

which may in a real way enforce the harmonization of Ukrainian law and economy with EU countries. Signing this document will be a very impor-tant impetus pushing Ukraine towards closer cooperation with the EU. Per-haps that is why in the recent weeks the Ukrainian authorities have been under enormous pressure from Russia not to sign the agreement establishing the free trade zone. The information we have indicates that the completion of the negotiations is close. It is possi-ble that during the Polish presidency it will be possible to announce, if not the signing, then at least initialling of the agreements.

On the other hand, we are dealing with tendencies to monopolize pow-er, to limit the already very little in-dependent judiciary and harassment of opposition by the selective appli-cation of law in Ukraine. In addition, Ukraine will hold parliamentary elec-tions next year and there is a danger that they will not be considered as ful-filling democratic standards.

Moldova, Georgia, armenia, azerbaijanIn Moldova, on the one hand there is a government considered to be pro-European, but on the other hand the government of Vlad Filat, in spite of a very successful propaganda, accord-ing to Moldovan experts, did not take real action to modernize Moldova and bring it closer to the EU.

Georgia is to a certain extent a lead-er when it comes to law abiding and fighting corruption, but the concern is that President Mikheil Saakashvi-li is likely to change the constitution and serve as Prime Minister after his second term as President.

In Azerbaijan, the situation has not changed for a long time. It is not a dem-ocratic country, although the degree of repression is now lower than in Belarus.

In Armenia, a significant mobi-lization of civil society and attempts to liberalize the political system have been observed in the recent months.

It is difficult to predict how the situation in Belarus will develop. It certainly requires careful tracking by the Polish presidency, especially since Poland is perceived in the European Union as a specialist on Eastern policy. Therefore, if any significant changes occur, Poland will be expected to propose an EU response.

Based on a speech delivered by łukasz adamski at the meeting organized by PISM “Evolution of the External Dimension of the Presidency – the Case of Eastern Partnership”.

Łukasz Adamski, an analyst at the Polish Institute of International Affairs (PISM)

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The Southern and Eastern dimensions of the European Neighbourhood Policy are balanced

Polish priorities in the field of the European Neighbourhood Policy, es-pecially its Southern dimension, are formulated quite generally in the pro-gramme of the Polish presidency: “Pol-ish presidency will seek cooperation based on partnership, focused on sup-porting democratic transformation, and the construction of modern state struc-tures in relation to Southern Neighbour-hood.” However, in the context of East-ern Partnership quite precise objectives and areas, in which concrete results are expected, are mentioned: “The role of the Polish presidency will be taking care that Europe does not lose sight of its Eastern neighbours. Polish presi-dency wants the process of signing as-sociation agreements and creating free trade zones to progress within the EaP.” This refers to the completion or signif-icant progress in the negotiations with Ukraine and Moldova. The second im-portant area are the negotiations on lib-eralising the visa regime. Here too, we expect that in the second half of 2011 there will be significant progress. The programme of the Polish presidency mentions also Belarus. It is said that the aim of EU is to encourage that country to cooperate with the West. The condi-tion however is that Belarus respects democracy and human rights.

The expectations towards Poland in relation to EaP are considerable, how-ever we should not lose sight of the

“Eastern Partnership (EaP) was supposed to be a priority of the Polish presidency. Yet, as the international situation has changed the priority, now is the European Neighbourhood Policy (ENP). The fact that the programme of the Polish presidency includes significant references to the Southern dimension of this policy should be considered a good sign and an attempt to move away from thinking about ENP in terms of rivalry between its Southern and Eastern dimensions,” says Beata Wojna, PhD, the head of the Research and Analyses Department at the Polish Institute of International Affairs (PISM).

situation in the Southern Neighbour-hood.

Poland has largely demonstrated its commitment to the matter of the South by putting forward the concept of Euro-pean Endowment for Democracy. This would be a foundation functioning as a trust fund or “chip-ins” of countries and institutions. The funds would be earmarked first of all for non-govern-mental organisations in the countries where there are authoritarian regimes. This is a mechanism surpassing the in-stitutional framework of the European Union. Its aim is to collect new funds, but also to make the way of granting them to NGOs more flexible, as they are frequently not included in the offi-cial path of earmarking assistance, of-ten because of the existence of author-itarian regimes. If not for the situation in North Africa, this proposal would be ignored, but now it has been incorporat-ed into the Review of ENP. It is equally important for the Eastern Partnership. Another new financial instrument in-troduced by European institutions due to the crisis in North Africa is the Civ-il Society Facility – a new line of fund-ing managed by the European Commis-sion granted also primarily to NGOs in the region.

It should be emphasised that we should not evaluate negatively the im-pact of the South on the East, nor ana-lyze the development of ENP in terms of

rivalry between these two dimensions. If we look at ENP in a historic perspec-tive, we see that both dimensions have had a rather positive than negative in-fluence on each other. When the Un-ion for the Mediterranean was found-ed in 2008, it created the conditions for the acceptance of the notion of Eastern Partnership by EU member states. In turn, what has happened after the adop-tion of EaP in 2009 served as a model for the new policy concept for the South. It can be inferred then, that what is cur-rently happening in the South will also serve the East in the longer term.

The meanings of civil society and de-mocratisation are stressed in the current Review of the European Neighbourhood Policy. The so-called deep democracy is mentioned. And it is what is really need-ed in the East – that the policy towards Eastern neighbours is based on caring for democratization of the region, more than about stability there.

The role of Poland in the processes of supporting democracy in the Eastern Partnership countries should be sim-ilar to the role of other EU countries. Member states pursuing their develop-ment policies in line with the objectives of EaP can contribute to the promo-tion of democracy. The Polish Ministry of Foreign Affairs has launched a spe-cial programme of financing projects in EaP countries. In addition, an inter-esting initiative within the framework of the Visegrad Group has been initiat-ed recently. The V4 countries, including Poland, have agreed to establish a spe-cial fund within the existing Visegrad Fund allocated to the realization of pro-jects in countries belonging to the East-ern Partnership. ::

Based on the speech delivered by Beata Wojna, PhD at the meeting organized by PISM “Evolution of the External Dimension of the Presidency – the Case of Eastern Partnership”.

Eastern Partnership is a long-term strat-egy for developing relations with 6 countries – Armenia, Azerbaijan, Georgia, Moldova, Belarus and Ukraine. Its pri-mary purpose is po-litical and economic rapprochement of these countries with the EU. EaP outlines a comprehensive model of relations between the EU and each of these coun-tries. Each recipient of the partnership can count on politi-cal association and economic integra-tion with the EU on condition that it embraces demo-cratic standards and introduces a market economy based on transparent criteria and standards.

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20 years of good neighbourhood on the way to EU

What in your opinion are the priorities in the development of Polish-Ukrainian re-lations at the current stage?On 2 December 1991 Poland was the first

country in the world to recognise Ukraine’s independence, the 20th anniversary of which we are celebrating this year. Diplomatic rela-tions between the two States were established as early as on 4 January 1992. This marked the beginning of the dynamic, gradual de-velopment of Polish-Ukrainian cooperation, fuelled by the joint national interests of the neighbours in many areas, as well as profound historical and cultural ties. Warsaw’s role as an active and reliable partner of Ukraine on

the international scene, and its ally in Europe, was ultimately shaped by Poland’s accession to NATO and the European Union.

On the eve of the 20th anniversary of es-tablishing diplomatic relations, both coun-tries, acting through joint agreement and trust, have achieved a high level of politi-cal and economic cooperation, which reg-ularly brings good results both for Ukraine and Poland.

Today large joint projects are in progress, and a new quality of strategic partnerships is being created on the basis of a mutually-ben-eficial constructive and pragmatic approach, in keeping with the positive traditions and heritage of Polish-Ukrainian relations. These projects will be supported by a Road Map of Polish-Ukrainian cooperation approved for the years 2011–2012. This document assumes interaction in the process of Ukraine’s Euro-pean integration, and cooperation in the en-ergy sector, including cooperation in the field of energy security, and strengthening the hu-manitarian aspect of Polish-Ukrainian coop-eration. We are facing the challenge of pre-paring our countries for the UEFA Euro 2012 football tournament. I am convinced that Ukraine and Poland will see through this ambitious project in the best possible way.

It is my conviction that there is no alter-native to the strategic partnership between Ukraine and Poland. Our countries and na-tions are developing good neighbourly rela-tions in harmony and respect, and building a common European home together.

What are Ukraine’s expectations towards the Polish Presidency of the European Un-ion?Firstly, it should be observed that Poland

is a Member State of the EU and NATO that is developing very dynamically, and has eve-ry chance to become one of the main centres of influence in Central and Eastern Europe. Among all European countries it is Poland that has the most pro-Ukrainian position.

On 1 July Poland took over the Presiden-cy of the EU, and both sides are well aware of the opportunities arising from this fact.

We, along with our Polish partners, ex-pect that this year will bring some tangible outcomes of our cooperation in the field of

Ukraine’s European integration. Ukraine is determined to complete its negotiations on signing the Association Agreement and cre-ating a free trade area between Ukraine and the EU by the end of 2011.

Signing the Association Agreement will have a historic significance for Ukraine and will create the foundation for further Euro-pean integration. I am convinced that this event will also be of great importance to Po-land. Signing this agreement will be our joint victory, a practical proof of the effectiveness of Poland’s foreign policy towards the East, and thereby a justification of the ambitions of our Polish friends to create a joint EU pol-icy with its Eastern partners.

It should be stressed that the markets will be opened on the principle of reciprocity. In relation to this, the EU will open new oppor-tunities for itself on the market of one of the largest countries on the European continent, whose potential is growing with each year.

What’s more, as we know, Ukraine has recently entered the European Energy Com-munity Treaty, which opens new avenues for cooperation between our country and the EU in the energy sector.

As usual, we are counting on our Polish partners to support us in the implementa-tion of the action plan for the liberalisation of the visa system from the EU, which will en-able us to take another step towards achiev-ing our strategic goal – completely lifting the visa system for Ukrainian citizens travelling to the EU, in the nearest future.

We value the efforts of our Polish partners which are aimed at tightening the coopera-tion between Ukraine and the EU within the framework of the “Eastern Partnership” in-itiative. We are ready to take full advantage of the potential and opportunities offered by this initiative in all areas that suit our ambi-tious strategic goal – full membership of the European Union. I am confident that it is now time to consolidate the efforts of both sides in order to achieve as good a practical result as possible. ::

Ambassador Extraordinary and Plenipotentiary of Ukraine to the Republic of Poland Markiyan Malskiy

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Poland-Ukraine

BIzOver the last few years Ukrainian companies have made numerous mul-ti-million investments in Poland. It is Ukrainian entrepreneurs that own the FSO plant in Warsaw (although it is dealing with production issues); another large Ukrainian investment is the Częstochowa Steelworks pur-chased in 2006; and the Gdańsk Ship-yard was bought shortly after (both investments are in effective operation today). They were joined by a new co-investor – a Russian company – mak-ing it a multilateral investment. Since 2008, Centrostal Bydgoszcz, which sells metallurgical products, has also been owned by a Ukrainian company.

“Cooperation between Poland and Ukraine is today at its peak when compared to the previous years. Even in the times of the economic crisis the investment activity of both countries did not decline, and today the value of Ukrainian investments in Poland exceeds USD1 billion,” says Taras Tokarski, PhD, the Commercial Counsellor of the Embassy of Ukraine in Poland.

Sandra Wierzbicka

Polish investments in Ukraine are smaller in value, but more numer-ous. 1,200 Polish enterprises operate on the Ukrainian market today. As of 1 January 2011 the value of Polish in-vestments in Ukraine amounted to USD937 million. Even in the times of the global crisis in 2008 and 2009 the number of investments did not fall, even though Ukraine bore the brunt of the outflow of foreign investments from Poland. This confirms that the Ukrainian market is attractive, and that present-day investors are putting their faith in this market, even though it is not an easy one. The chief difficulty is intense competition among both lo-cal and Western-European producers.

The Ukrainian market remains a high-risk market, yet for experienced inves-tors higher risk means higher profits.

Last year Polish direct investments in Ukraine reached USD70 million. In the first quarter of this year in just one of the twenty-three Ukrainian prov-inces Polish entrepreneurs invested USD160 million. It is possible, then, that in 2011 the total value of Polish investments in Ukraine will exceed USD1 billion.

Exports/importsTrade between Ukraine and Poland is currently at a high level. It has not reached the 2007 figures yet, when both countries recorded record trade

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turnover- USD9 billion. During the economic crisis the turnover fell al-most threefold, although already since 2009 another increase has been ob-served. Last year the turnover reached USD4.7 billion (including ca. USD1.8 billion – Ukrainian exports). Over the last 10 years Ukraine has had a nega-tive trade balance with Poland. There are expectations that in the coming years the balance in trade between the two countries will be even. Since the beginning of this year the level of Ukrainian exports to Poland has in-creased more than twofold, and Pol-ish exports to Ukraine have grown by over 20%.

The stock exchangeCooperation in financial investments is developing very well. Since May of this year the Warsaw Stock Exchange has featured the WIG-Ukraine stock in-dex. At present, there are 5 Ukrainian companies on the WSE Main List and 2 on the alternative market. The ma-jority of those companies come from the agricultural sector. In each case on the day of the IPO the price per share rose by ca. 20%, and, for one company, even by 35%. Thanks to the Warsaw Stock Exchange, Ukraine re-ceived ca. USD400 million. About 10 new Ukrainian companies are plan-ning on entering the WSE by the end of this year. For several years the WSE branch in Ukraine has been working effectively and today Ukrainian com-panies hold first place among all for-eign companies listed on the WSE.

Problems and solutionsCurrently the greatest problem in eco-nomic cooperation is the state of our shared border. The number of border checkpoints between Ukraine and Po-land is three times less than the num-ber of border checkpoints that Poland used to have with Germany (before Poland’s accession to the EU). In or-der to solve this problem, 4 new bor-der checkpoints are under construc-tion. The process is being made faster by the joint organisation of the EURO 2012 European Football Championship. Until the kick-off the existing check-points will be fully redeveloped, pas-senger traffic will be separated from freight, and the number of lanes will be increased. Today the border is a bottleneck, and an obstacle to high-er turnover and transit possibilities.

Talks with the European Commis-sion are under way, with the aim of re-suming common customs clearance, which existed before Poland’s acces-sion to the Schengen Area. This would allow a twofold decrease in waiting times at the border and reduce the formalities.

Production certification is yet an-other barrier. Poland and Ukraine cur-rently have no agreements signed rec-ognising examination by certification units.

Ukrainian products to be exported to Poland must have a European cer-tificate, and the same is true for Polish products going to Ukraine. Obtaining a certificate in Poland is sometimes more difficult than in other EU coun-tries. There are cases when third coun-tries profit from certification. One such case is the import of pellets to Poland. It mostly goes through Bal-tic companies, as certification there is easier than in Poland.

Apart from common problems, both countries have issues of their own. Ukraine is going through a rad-ical tax system reform. Since 1 Janu-ary a new Internal Revenue Code has been in force, introducing dramatic changes to the Ukrainian tax system. The number of taxes decreased from twenty eight to fourteen. From 1 Jan-uary 2011 to 2014 a gradual reduction in income tax is planned, and it is al-ready under way in Ukraine. In 2010 it was 25% and this year it is 23%. It is to be reduced by 2% each year until it reaches 16% in 2014. It is also then that VAT will be lowered from 20% to 17%.

Besides this, it is important that automatic VAT returns were intro-duced. Big companies conducting their activities in Ukraine complained that the VAT return is a very slow proce-dure and it is associated with onerous inspections on the part of internal rev-enue authorities. A system of automat-ic VAT returns has been introduced, but a very limited number of Ukraini-an companies are using it today. It re-quires meeting certain conditions.

Aside from reducing the number and amount of taxes, Ukraine has also introduced other incentives for entre-preneurs. Clean energy device produc-ers are exempt from income tax for a period of 10 years. Newly-built hotels (from 3- to 5-star), biogas producers, and companies from the light indus-try sector are subject to similar rules.

A tax relief programme is also being implemented in the Crimea. There, income tax in some cases amounts to 0%. What’s more, a new Act on cus-toms is being prepared in Ukraine.

On the international sceneUkraine’s European aspirations, which are supported by Poland, constitute a vital element in the cooperation of the two countries. Currently, not just Po-land, but also other EU countries, are important trade partners for Ukraine (about 30% of the entire trade). The bond between Ukraine and the East is still strong, however, with Rus-sia remaining a similarly important trading partner (over 20% of trade). Ukraine is striving to become part of the free trade area with the EU. At present, after overcoming a stand-still, the talks are already advanced, with both sides ready to reach a com-promise. For Ukraine, entering the free trade area with the EU is not a goal for its own sake. The goal is to increase the country’s export capa-bilities to the EU. Points of conflict concerned the inclusion of Ukraine’s agricultural products into the agree-ment (Ukraine’s position), or not (the EU’s position). The consensus reached allows 20% of Ukrainian agricultural produce to be exported to the EU. The European Commission also agreed to lift the quota imposed on Ukrainian sweets, which constitute a very im-portant export product for Ukraine.

As for Ukraine, it agreed not to use regional names in the future. After its accession to the free trade area, many factories producing alcohol will face closure, and many others will be re-branded – this will apply to the pro-duction of brandy, sparkling wine, and some other types of wine.

Ukraine is a member of the Com-monwealth of Independent States (CIS). It has bilateral agreements with CIS countries. It also holds member-ship in international and regional or-ganisations such as the UN, IMF, WB, IFC, FAO UNICTAD, UNIDO, GUAM, and BSEC. In 2008 Ukraine acceded to the WTO. ::

Compiled on the basis of Taras Tokarski’s speech delivered during a meeting at the headquarters of the Poland-East Association for Cooperation.

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India: a welcome warm as the weather

“In the 2040s at the latest India will be-come the main economic power in the world, and it will remain for good,” in-sisted Sznajder. Why will India surpass China? Most of all, for demographic reasons. Chinese society will get older because of the policy followed through the years, which will certainly affect the country’s economy. Commercial relations with India could be a means for Poland to achieve diversification of the structure of its commercial activ-ity. Even in the last few years India’s economic growth has sustained a lev-el of 8-9% annually. From 2006 to 2010

According to Ryszard Sznajder, President of the Polish-Indian Chamber of Commerce, it is India, not China that is bound to become the world’s biggest economic power. Experts and entrepreneurs from both countries seeking partnership have come to Warsaw to attend the Polish-Indian Economic Forum.

Sandra Wierzbicka

India advanced from 15th to 12th posi-tion on the list of the biggest importers in the world, and the country’s share in global imports rose from 1.4% in 2006 to slightly over 2% in 2010. Apart from the fact that India is a reliable econom-ic partner, it has historical econom-ic relations with Poland. In India Pol-ish people are looked upon favourably. However, “our sales today are pathet-ic – they constitute only 0.2% of the whole turnover of India, which, given that India is the second most populat-ed country in the world, seems inex-plicable,” said Sznajder. Nevertheless, even this unsatisfactory turnover lets us boast about mutual investments. The biggest Indian project in Poland is the greenfield investment of the Uflex company in Września.

Antoni Miklaszewski, former councillor at the Polish embassy in New Delhi, believes that exports to India cannot be the main form of maintaining commercial relations with that country. This is mainly be-cause in India one can produce eve-rything at a lower cost. Moreover, “according to the Indian Ministry of Commerce and Industry, 49.5% of In-dia’s imports is fuel (predominantly oil), gold, and diamonds. Those are products, which Poland cannot ex-port,” stressed Miklaszewski. Fur-ther positions on the list of products that are imported to India are occu-pied by goods from the engineering industry – mechanical and electri-cal, organic chemicals, iron and steel. Owing to this, Poland has found its place among the countries trading with India.

“According to various Indian sources, over the period of 1.5 years (04.2009-12.2010) fuels took the first place in imports from Poland. The next positions are taken by mechanical de-vices, iron, steel, organic chemicals, electrical machines, vehicles and goods for individual projects implementa-tions. According to Polish Ministry of the Economy, coke is the number 1 product exported to India (Poland oc-cupies 2nd place among the suppli-ers of coke products to India, almost 15% of the market), rolled goods (14th place), vehicle parts (0.5%, 23rd posi-tion), scrap metal, rubber, lathes, car parts and fireproof goods. In many of these sectors, Poland’s main compet-itor is China. According to the Indian Ministry of Commerce and Trade, in first place as far as imports from Po-land is concerned is coke, then copper. Poland has also a strong position when it comes to rolled steel. This European country is the key supplier of graphite to India and one of the two major pro-viders of caprolactam, also produced in India with the use of Polish technolo-gy, as well as refined copper - 2nd place on the suppliers’ list, carbon disulfide – 2nd place, wafers – 1st place and cos-metic products – 5th place,” reported Miklaszewski. He concluded, however, that for Poles India is mainly a business partner, not a sales market.

Olgierd Świerzewski, an associate in Łukowicz, Świerzewski & Partners, Attorneys at Law who cooperate with the Indian Singhania and Co, explained how an entrepreneur should behave in the maze of Indian tax and legal reali-ty. The main forms of business activity

Ryszard Sznajder President of the Board of the Polish--Indian Chamber of Commerce

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“You will find our welcome is as warm as our weather; it is easy to do business in In-dia - we believe in ethics, in keeping our commitments and we believe in developing personal relationships,” said Indian Ambassador to Poland Deepak Vohra, for whom the presence at the event was his last business engagement in Poland.

foreign Direct Investments permitted in IndiaTelecommunications

:: With no capital limit for production activity:: Up to 74% foreign capital share in the business assets are pos-

sible in the sector of stationary and mobile telecommunication (over 49% requires additional permission)

Oil sector

:: After acquiring a concession, investments are allowed of up to 100% on small, restricted areas of exploitation

:: In refinery operation, and oil and gas products distribution for-eign investments are allowed of up to 51%

:: Marketing and trading requires involvement of 26% of Indian funds for at least 5 years

:: Foreign investments are allowed a 26% share in public sector en-tities

Real Estate

Foreign investment in this sector is not allowed, with the exception of the integrated growth of cities and districts, after its acceptance by the government, for example: :: the construction of houses and flats:: the construction of commercial and living centres, among them

offices and business centres:: the development of cities:: urban and regional infrastructure, roads and bridgesHard and brown coal

:: In general, foreign investments are possible of up to 50% of shares:: Foreign investments are possible of up to 100% in terms of man-

aging coal industry plants without the right to miningRoads, motorways, ports and harbours

:: Such investments are allowed of up to 100% by automatic per-mission

Trade

:: Foreign direct investments are allowed of up to 100% by auto-matic permission for trading companies conducting the follow-ing activities:

Export

:: Wholesale trade:: Import of goods or services, provided that at least 75% is sup-

plied to order and sold between companies within the same group and not to third parties

Press

:: Not allowedEnergy

:: FDI of up to 100% in the field of projects concerning manufactur-ing, distribution and the transmission of electrical energy oth-er than nuclear power plants

Medicines and pharmaceuticals

:: FDI allowed up of to 100% in the field of medicines manufactur-ing, unless the activity requires a compulsory licence or DNA recombination technology. Such projects require permission of the administration

Hotel industry and tourism

:: FDI allowed of up to 100%Mining

:: For diamond and precious stones exploration and extraction, foreign investments are allowed of up to 74% by automatic per-mission

Mail services

:: Allowed up to 100% in the scope of mail servicesPollution prevention and control

:: Up to 100% for the manufacturing of pollution control equipment and counselling on the integration of pollution control systems.

Source: Łukowicz, Świerzewski & Partners

of foreign investors in India are branch offices, often referred to as connecting offices, project offices, agency offices, joint venture companies or daughter enterprises. According to Świerzewski, the most profitable legal model of a company is the joint venture. “It is a commendable formula because India is for most entrepreneurs primarily a difficult market, on which one should know how to behave. Having a part-ner, often a minor one, in a mutual en-terprise enables one to avoid making a series of mistakes, facilitates operating a business and establishing trade con-tracts. A common approach is the com-mercial one, which involves finding a partner, then signing a letter of intent and, after an initial period, setting up a partnership,” stressed Świerzewski.

An interesting solution is a so-called project office. It is connected with the realisation of a specific pro-ject in India, after getting an order or after winning a government or pri-vate-sector contract. The project office oversees the implementation of such a scheme only. What is important is that this form of business activity requires a specific form of funding – it comes ei-ther from the external resources of the mother company, from an international institution, or a commissioning Indian company, which has received a credit from an Indian bank or a government institution to finalise such a project. The Reserve Bank of India - the central

bank of India, gives out agreements for the transfer of funds, after the imple-mentation of a given project.

When planning to operate in India, one should take into consideration not only the legal form, but also the anal-ysis of the legal regulations in a giv-en sector. Sometimes the nuances can hide obstacles, especially connected with the mining, pharmaceutical and communication industries. The main barriers include taxes, customs as and the question of the fields of activity of particular officials.

“The Indian government stipulat-ed 37 top priority sectors, in which for-eign investors can relatively easily ac-quire permission to operate. However, there is still a hindrance in the clause that there should be 74% of foreign cap-ital, while home equity should consti-tute the remaining 26%. This is not al-ways the case. Companies with 100% foreign capital can also operate in In-dia, but this requires special permis-sions,” said Świerzewski.

It is interesting that in Indian busi-ness reality formally 40% of invest-ments come from Mauritius. It even happens that Indian companies rein-vest in India through companies locat-ed in Mauritius. It is connected with the double taxation agreement, which states that if a company pays taxes from profits in Mauritius, it is free from pay-ing it again in India. In Mauritius the tax rate equals 0%! ::

86 :: polish market :: 7-8/2011

EventsEastern Cooperation

Poland and Thailand: friendship and cooperationThailand has once again opened its doors wide to Polish business. The 3rd Made in Thailand Exhibition took place between 2 and 5 June 2011 in the Palace of Culture and Science in Warsaw under the name “Business and investments with Thailand.” The general organiser of the Made in Thailand Exhibition 2011 was the Thai Trade Centre Warsaw - Office of Commercial Affairs at the Royal Thai Embassy.

Maciej Proliński

The Made in Thailand Exhibition is an important event aimed at building commercial relations and exchanging cultural experience between Poland and Thailand.

The exhibition schedule was inten-sive. Once again the organisers man-aged to turn the event, the main goal of which was to support and promote trade between Poland and Thailand, into something more than a mere exhi-bition. The first two days of the fair were focussed mainly on business meetings between Thai exhibitors and Polish entrepreneurs. Polish businesspeople could see exotic products and services in the categories of fashion, food, jew-ellery, utility and decorative products,

health and beauty, and tourism. 4 and 5 June were open to everyone. Visitors could taste Thai food, watch Thai haute-cuisine shows, admire the masters of Thai martial arts, experience a Thai massage, and obtain tourist in-formation. The opening ceremony was inaugurated by His Excellency the Am-bassador of the Kingdom of Thailand to Poland, Arkasid Amatayakul, and the Minister-Counsellor of Commer-cial Affairs of the Thai Embassy in Po-land, Sathaworn Subsoontorn. “It is one of the most important projects aimed at presenting to Poles new opportuni-ties in the field of commercial coopera-tion. We wish to make our commercial partnership stronger for the benefit of

consumers, and to look for new oppor-tunities for common undertakings. I believe that the Made in Thailand Ex-hibition will contribute to strength-ening relations between our countries and nations alike,” declared Ambassa-dor Arkasid Amatayakul.

The greatest attraction of the Made in Thailand Exhibition 2011 was undoubt-edly the Thai classical dance group, which had visited Poland only once before. It was a one-of-a-kind perfor-mance, and also one of the very few oc-casions to watch a public appearance of the group, which usually performs only before the King of Thailand – Bhumibol Aduladey, the richest monarch in the world. The group intends to preserve the national heritage of Thai stage art and promote Thai culture all over the world. The Polish audience watched a unique masked dance, called Khorn in Thai, and also Lakorn – dance theatre. We saw old Thai folk and ritual danc-es, traditional court rituals, and scenes from mythology and courtly life.

The Warsaw meetings with Thailand also featured the seminar “Thailand – a country of unlimited possibilities,” ad-dressed mainly to Polish entrepreneurs and businesspeople, but also to people who wish to invest in the Thai market, purchase real estate there, or just get to know the specificity of that market and Thailand’s economic conditions. The seminar was led by experienced specialists in the fields of commerce and marketing. Participants received a lot of good advice, which will cer-tainly be helpful in concluding agree-ments and transactions, and developing business in Thailand. Thai film screen-ings have also become part of the tra-dition of the Made in Thailand Exhibi-tion. This year we were also able to see excellent, prize-winning motion pic-tures, including “The Legend of Suri-yothai”, directed by Chatrichalem Yu-kol – a remake by Francis Ford Coppola of the most expensive Thai super-pro-duction from 2001, telling the story of the famous 16th-century Thai Queen Suriyothai. ::

7-8 /2011 :: polish market :: 87

Małopolska

Małopolska a region brimming with temptationsThe coat of arms of the region – a white eagle wearing a crown against a red background, refers on purpose to the Old-Polish coat of arms of the Kraków province. Many people say-ing Małopolska have Kraków in mind, but this is a mistake. The government of the province has set a very impor-tant goal for itself – the development of the region through the development of tourism and creating an image of Małopolska as one of the most attrac-tive destinations in Poland.

It is extremely difficult to name a single place worth visiting. This would certainly have to be the remains of the defensive walls in Tarnów, but also the 14th-century Castle in Nowy Wiśnicz. For those who like chills and thrills the town of Dębno recommends visiting the Castle where a knights’ tournament for the “Golden Braid of Tarłówna” is held in September. Tarłówna was a beautiful golden-haired daughter of the aristocratic Tarło family. She fell in love with a courtier and vowed fidel-ity to him. She denied to marry a no-bleman and her father had her walled up in a turret. Since then, every now and then the spirit of Tarłówna – the White Lady – appears. This is not the only castle in the region with such rich history. The Tropsztyn Castle is located in Wytrzyszczka near Czchów. Its his-tory is connected with the treasure of the Incas from Peru. A descendant of the owners of the castle went to Peru, where he fell in love and married an Indian. The whole family fled with the treasure of the Incas to Europe want-ing to protect themselves from the in-vasion of the Spaniards. The treasure was hidden, but it is apparently cursed. The curse falls on everyone who tries to find it. In 1946, a descendant of the family discovered an Inca letter bind-ing the treasure with the castle in Trop-sztyn. That was when the castle was taken over by him and the search for the treasure began. Unfortunately, af-ter less than 6 years the quest was dis-continued due to the tragic death of the descendant of this family... Tourists

Małopolskie province or Małopolska, with the capital city Kraków, is a region of Poland overlooked by highlands and mountains. This beautiful region is located in the Vistula River basin, with Warta and Dunajec rivers also crossing through it. The name Małopolska is connected with the history of the region. Currently, it consists of 22 counties and 182 communes.

Ewelina Janczylik

should also not forget about the ruins of the Castle in Rożnów, Góra Marci-na (Mount Martin) and castle ruins in Tarnów, and the Castle in Czchów pop-ularly called the Tower.

The Ethnographic Museum in Tarnów, housed in a 13th-century mansion, is worth recommending. The exhibit concerns the Romani cul-ture and history. Each year the Muse-um organizes many events, of which the most famous one is the Roma Car-avan Memorial.

Everyone should visit the Aus-chwitz Nazi concentration camp built in 1940 in the town of Oświęcim. This place of tragic events is listed as a UN-ESCO heritage site. About 3 kilome-tres from Auschwitz, there is another camp Auschwitz II – Birkenau, estab-lished in 1941. Currently it is a muse-um site. The visitor is pierced by silence and the story told remains in memory for a very long time. A guide tells vis-itors about the history of Auschwitz and Auschwitz II – Birkenau during a

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88 :: polish market :: 7-8 /2011

Małopolska

one and a half or three and a half hours tour. Visiting the gas chamber, the so called Death Block and the Execution Wall makes “tourists,” not only from Poland, but also from abroad, under-stand what war is and how atrocious its effects are. These museums, because they are so real, so authentic, leave a trace in our memory.

Another worth-recommend-ing UNESCO site is the salt mine in Wieliczka. Tourists can visit the mine down to 135 metres below the level of the ground. Almost a 20 kilometre stretch of the footpath joining 20 his-toric chambers and the Kraków Salt-works Museum is visited, therefore the guided tour takes about 3 hours. Another 4 hours can be devoted to explore the mine off-route. This is a great alternative for all thrill-hungry adventurers.

In addition to learning history and sightseeing castles, it is also possible to spend time actively – performing sports. In winter, Małopolska invites all skiers. The Lubianka ski resort and ski lifts in Jastrzębia, Laskowa-Ka-mienna, and Wola Nieszkowska wait for tourists. Zakopane, Kasprowy Wierch and one of the most difficult downhill routes – the Nosal Slope do not need to be recommended. Białka Tatrzańska is an excellent alternative for all families who enjoy active holidays. The fans of water sports will have fun in Gródek on Rożnowskie Lake, where they can perform water sports, fish, walk and ride a bicycle. Almost the entire shore-line of the lake is covered with beach-es where all bums can relax. And for fans of extreme water sports rafting on Dunajec River is a must-do. They can also try Free Jumping, or jumping into nets stretched at an appropriate height above ground, without a rub-ber rope. Małopolska, especially the area of Kraków, Zakopane and Podhale can be enjoyed from the bird’s perspec-tive. Good fun guaranteed.

Probably everyone has heard about the famous raftsmen from Pieniny Mountains called Flisacy. Their sto-ries will satisfy those rafting on the Dunajec Gorge. Dunajec River rafting is an interesting way of exploring the Pieniny National Park. Rafting tours have been organized since 1832. Pien-iny Mountains have also something in store for skiers. There are several

downhill and cross-country routes on Palenica.

Małopolska, and especially its leading city Kraków, boast sever-al cultural events. Every year thou-sands of fans flock to the Coke Life Music Festival, Polish Music Festi-val, jazz meetings and PAKA cabaret review. Zakopane invites visitors to the International Festival of Moun-tain Folklore in August, while Bukow-ina Tatrzańska to Sabala’s Storytelling

and Highlanders’ Carnival. Nowy Sącz offers the Mountain Children Day. And Tarnów is worth visiting for the festi-val of theatre comedy TALIA.

As you can see Małopolska lures tourists with numerous attractions. Fans of history can learn a lot from visiting the historical sites. Fans of ex-treme sports will also find something for themselves. Summer and winter, everyone will find here something of interest to themselves. ::

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90 :: polish market :: 7-8 /2011

Małopolska

Ranking of companies in Małopolskie province

Company name Head of company Based in Ranking of companies in Małopolskie

province

Net profit for 2010 (in PLN thousands)

Gross profit for 2010 (in PLN thousands)

Operating income for 2010 (in PLN

thousands)

Employment in 2010

1 SYNTHOS SA Tomasz Kalwat Oświęcim 3860697 476856 586564 565656 na

2 GRUPA CAN- PACK Wiesław Smulski Kraków 3589735 310654 398871 451518 3542

3 BANK BPH SA Richard Gaskin Kraków 3194646 -122123 -132007 na na

4 MASPEX WADOWICE SA GK

Krzysztof Pawiński Wadowice 2518350 na 85386 na 4920

5 ZAKŁADY AZOTOWE W TARNOWIE - MOŚCICACH SA

Jerzy Marciniak Tarnów 1901784 400758 417007 422206 6141

6 STALPRODUKT SA Piotr Janeczek Bochnia 1732272 145627 182222 177767 2858

7 ALMA MARKET SA Jerzy Mazgaj Kraków 1245066 11747 12815 26502 2727

8 GRUPA KĘTY SA Dariusz Mańko Kęty 1210519 89708 112279 117961 na

9 FAKRO Ryszard Florek Nowy Sącz 1080000 na na na 3300

10 COMARCH SA Janusz Filipiak Kraków 761361 43717 24979 24819 3462

11 ALUMETAL SA Krzysztof Błasiak Kęty 652581 44125 49297 na 377

12 ADVADIS SA Adam Brodowski Kraków 568733 -48794 -46882 -44468 na

13 ABM SOLID SA Marek Pawlik Tarnów 469650 6258 7760 14097 815

14 ZUE SA Wiesław Nowak Kraków 392353 17168 21149 25616 721

15 KRAKCHEMIA SA Jerzy Mazgaj Kraków 390441 5118 6484 7383 na

16 WAWEL SA Dariusz Orłowski Kraków 377637 47739 59153 56963 700

17 VISTULA GROUP SA Grzegorz Pilch Kraków 353921 1663 1558 23265 2300

18 INSTAL KRAKÓW SA Piotr Juszczyk Kraków 286171 17353 21586 20534 na

19 ARMATURA KRAKÓW SA Konrad Hernik Kraków 284679 14121 15350 18536 na

20 BIURO INFORMATYCZNO-WDROŻENIOWE KONCEPT SP. Z O.O.

Andrzej Wójtowicz Skawina 257468 1659 2062 2145 58

21 INTEGER.PL SA Rafał Brzoska Kraków 202379 16519 20280 23493 802

22 FERRO SA Aneta Raczek Skawina 165575 10208 12444 13035 116

23 ES-SYSTEM SA Bogusław Pilszczek Kraków 162303 10984 13911 13108 na

24 FH JAGO SA Sylwester Wojtaczka

Krzeszowice 162261 -37391 -40194 -32861 608

25 WOJAS SA Tadeusz Wiesław Wojas

Nowy Targ 129050 4648 5925 6069 1061

26 KRAKOWSKI BANK SPÓŁDZIELCZY

Zbigniew Bodzioch Kraków 126252 11802 8647 na 609

27 S4E SA Janusz Makowski Kraków 110263 1935 2438 2410 26

28 NOVITUS SA Bogusław Łatka Nowy Sącz 109782 11276 14140 13963 550

29 CHEMOSERVIS-DWORY SA Wojciech Mazur Oświęcim 100248 682 643 428 826

30 BUDOSTAL-5 SA Marek Leśniak Kraków 91124 2435 3152 6276 6276

31 AMPLI SA Waldemar Madura Tarnów 88307 955 1172 1554 na

32 VARIANT SA Wiesław Cholewa Kraków 70580 1581 1636 2931 na

33 MO-BRUK SA Józef Tadeusz Mokrzycki

Niecew near Nowy Sącz

47349 6863 8019 8446 na

34 KORPORACJA GOSPODARCZA EFEKT SA

Bogumił Adamek Kraków 44261 -1527 -1083 3811 231

35 KCI SA Kazimierz Mochol Kraków 41156 -9601 -4574 1130 107

7-8 /2011 :: polish market :: 91

Małopolska/Events

Company name Head of company Based in Ranking of companies in Małopolskie

province

Net profit for 2010 (in PLN thousands)

Gross profit for 2010 (in PLN thousands)

Operating income for 2010 (in PLN

thousands)

Employment in 2010

36 MIRACULUM SA Monika Nowakowska

Kraków 36650 4636 2953 na 74

37 BANK SPÓŁDZIELCZY w LIMANOWEJ

Adam Dudek Limanowa 28358 3398 2682 na 167

38 UNIMA 2000 SYSTEMY TELEINFORMATYCZNE SA

Krzysztof Kniszner Kraków 19869 193 479 -60 60

39 DREWEX SA Andrzej Krakówka Kraków 19483 -3508 -3508 -2983 173

40 QUANTUM SOFTWARE SA Tomasz Hatala Kraków 18885 -1132 -1070 -1356 116

41 KRATY MOSTOSTAL KRAKÓW SP. Z O.O.

Tadeusz Demendecki

Kraków 18847 1083 1340 1224 35

42 BANK SPÓŁDZIELCZY w SKAWINIE

Kazimiera Stochel Skawina 10144 1439 1095 na 74

43 BANK SPÓŁDZIELCZY w GŁOGOWIE MAŁOPOLSKIM

Stanisław Pado Głogów Małopolski

8303 1983 1632 na 55

44 DOMZDROWIA.PL SA Jacek Denkowski Zielonki near Kraków

7254 -227 -230 -184 na

45 BANK SPÓŁDZIELCZY w DĄBROWIE TARNOWSKIEJ

Salomea Kozioł Dąbrowa Tarnowska

6073 1797 1446 na 31

46 AUXILIUM SA Zofia Podhorecka Kraków 5830 1106 1408 941 29

47 SONETA SP. Z O.O. Robert Czuła Kraków 5000 na na na 32

48 PÓŁNOC NIERUCHOMOŚCI Piotr Sumara Kraków 4813 517 553 433 10

49 EUROFAKTOR SA Artur Rawski Kraków 4661 -18416 -17805 -10920 19

50 POLSKIE JADŁO SA Jan Kościuszko Kraków 4244 -2246 -1373 -133 na

Source: companies

On the occasion of the 20th anni-versary of the European Leasing Fund (EFL), a new strategy will be put into effect in hopes to double the compa-ny’s net profit in the years 2011–2015.

EFL was established in 1991. It was one of the first leasing companies in Poland. EFL introduced a then-inno-vative solution, where one party (in this case EFL) transferred to anoth-er party the right to use a particular product on instalment basis.

The European Leasing Fund deals primarily with the leasing of passen-ger and delivery vehicles, as well as of machines, equipment, IT hardware and property.

Currently, the Group includes the European Leasing Fund, Carefleet, EFL Finance, EFL Service, and the newly-created factoring company, Crédit Ag-ricole Commercial Finance Polska S.A.

EFL celebrated its anniversary by launching new strategies to the mar-ket. In the years 2011–2015, the net profit of the fund is planned to double, owing to new products and changes in their distribution. The new policy is intended to enhance the efficien-cy of distribution and the company’s expansion through such addition-al tools as the Internet and specif-ic programmes facilitating coopera-tion with suppliers. The new strategy also involves introducing innovative

solutions in this area and extending the package with a factoring agree-ment.

EFL estimates that the new strat-egy will result in a 19% increase in sales, thus raising net income by 13% within 5 years. The company roughly estimates that in the years 2011–2015 its net profit will amount to approx. PLN396 million, where 306 million will come from the base business, and approx. 90 million from the introduc-tion of innovative products. ::

20 years of Efl

92 :: polish market :: 7-8/2011

Opinion

in many businesses, all changes are driven by external factors – they are forced and result from, for exam-ple, the necessity to keep up with the competition, meet the growing cus-tomer’s expectations, or improve poor financial results. Frequently, this is the only solution known to manag-ers. This is a good strategy as long as the market is stable. It is worthwhile to consider alternative possibilities. Changes do not have to just be re-actions to a changing environment, they can be the result of a master plan. The strategy of pacing changes is pre-cisely based on planning and imple-menting them in accordance with an earlier established calendar. A new product is not launched because the competition is planning something new, but because the strategy of the firm is based on introducing an in-novation every 3 months. This ap-proach makes it possible to become a market leader – others will start to follow us and not us them. A strategy of pacing brings a certain rhythm to the workplace, to which the manager has to adjust the speed and intensity of actions. The imposition of a tem-po also causes employees to be more effective, because they know what to expect and when, which allows them to concentrate and focus on the reali-sation of successive tasks. Even if the pace is fast, thanks to the predicta-bility of actions, it is easier for em-ployees to keep up with it.

In order to assure success for the firm, a manager should ensure not only a timely realisation of tasks, but

also a quick and smooth transition between one activity and another. Change management is a weak point in many businesses – this concerns mo-ments when the enterprise completes one marketing campaign and embarks on another, goes from designing one product to another or enters new mar-kets. Each of these changes should occur in accordance to a formalised management procedure. It should be the simplest and shortest one possi-ble. A good manager is the one who treats every change as an opportuni-ty to consider new solutions, goals and changes on a larger scale.

A strategy of pacing provides the firm with a certain rhythm and it is impor-tant that it is suited to the rhythm of the market. Seasons of the year, dif-ferent client expenditures, supplier cycles – although these factors appear to be obvious, their strategic potential is frequently ignored. The synchro-nisation of the firms’ rhythm with that of the market does not always re-quire a speeding up of actions; in cer-tain cases, their slowdown can prove to be necessary and more effective. There is no point in introducing a new product every month if there is no de-mand for it.

The rhythm of changes in different markets is not identical – the develop-ment and life cycles of different prod-ucts differ and the general rhythm of managing the firm should be adjust-ed to them. In fast-paced segments of fast-paced the market, short planning and analysis cycles work best, while they will be longer in less dynami-cally changing sectors.

Another issue that the manager must keep in mind while introduc-ing a strategy of pacing is a realistic

assessment of the firm’s capabilities. In order to function effectively, one should answer the question whether the pace of launching new products is achievable.

A strategy of pacing is successfully used by businesses operating in fast- paced markets. A firm that only re-acts to events in fast-paced conditions may not keep up with implementing changes – its actions can be chaot-ic, another event will take place, re-quiring a reaction, before the firm can complete a prior change. A manager never really has a chance to finish a given task. However if a firm func-tions in accordance with a foreseea-ble, imposed tempo, a manager will be able to work out every phase. The manager will also be less distract-ed by frequently false signals flow-ing from the market. Functioning in accordance with an imposed tempo allows the manager to let go of fear of changes, which become a norm. And if the market forces a change – a manager experienced in managing change will handle it faster and more effectively. A strategy of pacing also makes it possible to become a lead-er in the market, a tempo imposed on one’s own firm can turn out to be the one which the competition will be forced to follow as well. ::

In order to remain on the market, both small and large firms have to change, introduce new products, strategies and marketing campaigns. The difference is that changes in enterprises can occur as a result of external factors or due to a schedule the firm sets out for itself.

Katarzyna Niezgoda

The author is president of Deni Cler Group S.A.

A recipe for leaders

a strategy of pacing provides the firm with a certain rhythm and it is important that it is suited to the rhythm of the market.

7-8/2011 :: polish market :: 93

Opinion

Will the euro zone survive?

The problems of the euro zone seem to have no end. Can the euro zone break up as a consequence of the recent developments? Of course it might, be-cause anything is possible. But if it did, it would be a colossal discredit to vir-tually the entire political class of to-day’s Europe. This perhaps would even be the biggest disgrace of rulers in the history of the Old Continent.

The last 65 years were one of the longest periods of peace in European history. It was also an unprecedent-ed long period of cooperation between individual countries. Centuries-old animosities faded, countries, which had led disputes from generation to generation are jointly making deci-sions about their future. Of course, not everything is as it should be. De-spite that, the idea of a united Europe, an area without wars, is carried out. Is it worth to risk and go back in the pro-cess of integration?

The crisis of 2008 revealed the prob-lems of European countries. Not only European, in fact. Years of living on credit, beyond means, spending not-owned money, had to end as it did. I disagree with the thesis that the cur-rent problems of Europe are the contin-uation of the crisis whose peak was ob-served after the collapse of the Lehman Brothers. A continuation in the sense of a second wave. Of course, that crisis brought us closer to the present one. If it was not for the billions of dollars and euros lent to bailout banks and stim-ulate economies, we would not be ob-serving the current problems. In addi-tion, the recession which was also an outcome of the financial crisis, has also worsened the situation. On the oth-er hand, if the public debts of Greece, Italy and Portugal were smaller, their growth seen in the recent years, would not have led to such problems. Actual-ly, the same can be said about the larg-est EU member states. Germany, France and the United Kingdom, and first of all Italy, also did not save before 2008. The words of David Cameron, the Prime Minister of Great Britain, who launched a series of reforms comparable in the

Marek Zuber

post-war history of the Isles only to the changes introduced by Margaret Thatcher, are symptomatic. In terms of reducing social spending, he goes even further. Cameron said that since the Iron Lady left the government, UK has witnessed the deterioration of pub-lic finances. And it is hard not to agree with this thesis. If the largest Europe-an economies had low levels of public debts in 2008, the necessity to spend even several billion euros to tackle the crisis, would not have been a problem. Even if these funds would have had to be borrowed.

Europe needs to recover. And it seems to be shaking it off, as almost everyone got down to work. It is not just about the Euro Plus package or the announcement of further reforms in the euro zone. It is about ration-alization of public expenditure pro-grammes. Not everyone is sufficiently ambitious, but it seems that the situa-tion will force even the less ambitious to act more ambitiously. I am thinking above all about Italy. From this point of view it is good that these problems occurred right now. And that the fi-nancial crisis happened in 2008. If it hit us a few years later, it might ac-tually endanger the duration of the current system. Probably, Europe-an societies accustomed to extrava-gance would talk their politicians into greater nonchalance in spending pub-lic funds. At present, there is a chance to contain the situation.

I am not saying that all the coun-tries which currently make the euro zone will stay in it. Because not all de-serve to. Perhaps Greece will have to be thrown out of it, maybe someone else as well. We do not know whether the already mentioned Greeks will adjust to the new recommendations, wheth-er they will want to subdue to the re-gime of saving. If someone wants to be in the lead, they have to work for it. In order for the euro zone to survive and bear significance in the contemporary world, some effort is needed. Unwill-ingness to undertake it should disquali-fy. Besides, Greece should not have been

admitted to the euro zone. This was a mistake resulting from non-economic factors. It was thought to be not proper for the cradle of European civilization to remain behind. Today, Europe is pay-ing for this kind of thinking.

Perhaps Greece will remain in the euro zone, but its debt will have to be restructured. That is the deadlines for returning the borrowed money will have to be pushed forward. De facto, this would be the collapse of the state. Perhaps. Ultimately, this is not a disas-ter provided that a formula for reduc-ing the effects of this bankruptcy for other countries is invented. This re-fers primarily to preventing a signifi-cant increase of the costs of financing debt. Because if it did come to this, we would witness the snowball effect. And then even Italy, whose collapse is in the current situation a purely theoretical consideration, could face bankruptcy.

I disagree with those who speak about fundamental errors in managing the current crisis. Of course, mistakes are being made, like with not accelerat-ing reforms in the euro zone. The argu-ment that Greece should have been al-lowed to go bankrupt right away, a year and a half ago, does not appeal to me at all. This would be a shock comparable to the fall of Lehman Brothers. And we do remember that the collapse of this bank froze the market of inter-bank lending, which blocked the functioning of the banking system. Now it would come to blocking the system of budg-et deficits and public debts. The conse-quences could be tragic. Two years ago no one even took into account the fall of a country belonging to the euro zone. Today this option is possible. Possible in the sense of being mentally accept-ed by investors, economists and poli-ticians. Of course, there would be per-turbations, but on a smaller scale.

So, will the euro zone survive? I hope it will, because it is an impor-tant element of European integration. And this process is worth a lot. Even the big money that is being spent and still will have to be spent on saving it. But the euro zone has to change. It has to be more monolithic. The countries forming it must comply with the con-ditions of its functioning. For example, an effective system preventing exces-sive indebting of member states must be created. And indeed, perhaps, some-one will have to be discarded from the euro zone. For the sake of Europe. ::

The author is a financial market analyst

94 :: polish market :: 7-8 /2011

law & Taxes

Scrambling with procurement law

Paradoxically, the legislature decided to exclude from public pro-curement law a regulation that prob-ably would help to solve many current conflicts. Public Procurement Law pro-hibits changes to the provisions of the agreement in relation to the contents of the offer, under which the contrac-tor was chosen, unless the contrac-tor predicted possibility of any such change in the contract notice or in the terms of the contract and the condi-tions of such a change. Usually one of the tender documents are the future agreement’s general conditions or pat-tern. A contractor submitting an offer, is forced to accept the draft agreement, which, in principle, at a later stage is non-negotiable.

Through the “actual” inadmissi-bility of changing the contract and the liquidation based on the principle of “rebus sic stantibus” during pro-curement, a bigger problem occurs as a smaller one tries to be resolved. In order not to leave room for abuse, the circumstances to change the le-gal relationship would be controlled by groups of experts, which applies to the contract. This turned out to be a much more effective solution than leaving the issue to the courts, which in principle cannot demonstrate their speed and expertise within the con-struction and investment industry.

Executing the procurement is a dynamic and complex process. Of-ten even the contracting authority is not able to foresee all circumstances which may affect this process. How-ever the specificity of long-term con-tracts is that they can adapt to chang-ing conditions. The stipulation for the introduction of more flexible regu-lations, finds its justification in the

Over the last few weeks we can see the severity of disputes relating to the implementation of the largest investments in Poland. All these projects are based on the mode of procurement. Comprehensive agreement to regulate the relationship between the purchaser and the contractor in the current business reality seems impossible.

Leszek Kot “Barylski, Olszewski, Brzozowski” Attorneys at law

light of numerous cases of termina-tion of contracts by contracting au-thorities and the creation by the Na-tional Board of Appeals (KIO), a sort of “precedent” by agreeing to award a “free hand” to complete the imple-mentation of the stadium in Wroclaw.

This mode is the exception to the rules governing public procurement, both under domestic law, as well as European law. According to the ju-risprudence of both the Supreme Court and the Supreme Adminis-trative Court, the provisions per-mitting derogations from a funda-mental mode of procurement must always be strictly construed, and the list of conditions which allow the in-dividual modes is to remain closed. In accordance with Article 67 Para-graph 1 item 3 of the Public Procure-ment Law, it is possible to award a free-hand mode, when all of the following circumstances are present: a unique case, the reasons for this specific case do not lie on the side of the customer, this situation could not have been fore-seen by the Purchaser, it is required to immediately comply with the order, it is not allowed to keep the time limits set for other modes of procurement.

Between all the above mentioned premises a relationship of cause should exist – an effective and temporary re-lationship.

Returning to the example of Wroclaw, it should be emphasized that during the KIO resolution dated 6 August 2010(File KIO / KD 58/10),the Board admitted that it will be possible to as-sign a “free-hand” for the completion of the stadium in Wroclaw, because::: immediate execution of the

contract was required and the

Purchaser had shown that the minimum duration of the invest-ment was barely 17 months

:: It was not possible to keep the time limits set for other modes of pro-curement. The Board had adopt-ed the proven planned dates of the contract, so the Employer had no opportunity for a proceeding in any other manner.

:: the organization of EURO 2012 tournament is a unique situa-tion. “ Due to the special nature of the investment and the impor-tance of maintaining the deadline of 30 June 2011 (completion date imposed by UEFA’s stadium), the Board considered that the situa-tion in which it was deciding to award a „free-hand” was excep-tional.

:: the Employer repeatedly under-took attempts to motivate the con-tractor (demanded the submission of a recovery plan, etc.). The Em-ployer proved using evidence that, firstly, the reasons for the termi-nation of the contract did not lie on his side, and secondly, that this situation could not have been fore-seen by the Employer.

In addition, KIO argued that the termination of any agreement with the existing contractor is absolutely unique and unpredictable. Nobody with the intention of signing a con-tract in good faith does not imply that they will have to withdraw from the contract. Taken into account such a possibility in the contract, however, does not mean that its occurrence is expected.

Resolution presented by KIO, even with a different position and oppo-sition from the President of UZP, is a clear signal to legislators. We should consider the possibility of introduc-ing legislation that allows changes to some terms of the contract after its conclusion under the influence of circumstances to which the parties previously could not have foreseen, including the possibility of award-ing a “free-hand” with the existence of such circumstances. ::

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96 :: polish market :: 7-8/2011

law & Taxes

Pursuing a career in a regulated profession in PolandForeigners who wish to practice a regulated profession in Poland, both on their own account and through a company, will be able to do so only after going through a special procedure, aimed at ascertaining whether they possess appropriate professional qualifications that are in accordance with the norms of Polish law.

Maja Sujkowska

These restrictions concern both foreigners as well as Poles who have been educated abroad in professions which are regulated in Poland. These professions include, among others: at-torney, legal advisor, stock broker, ge-odesist, architect, building engineer, chartered auditor, pharmacist, physi-cian, dentist, veterinary surgeon, nurse, midwife, laboratory diagnostician, psy-chologist, teacher, fireman and others.

Persons staying in Poland and in-tending to personally work in a profes-sion or run a business that is not consid-ered a regulated one may do so without the necessity of undergoing the proce-dure verifying their qualifications. In this case, a decision from an employ-er or going through the standard pro-cedure of registering a business in an appropriate form is all that’s needed.

The legal basis for carrying out the said procedure of approving quali-fications is Directive 205/36/EC and the Act of 18 March 2008 on the rules of recognising qualifications gained in EU Member States and other Acts that concern mainly medical, legal and tech-nical professions. Because the indicated laws encompass several hundred differ-ent professions and types of business activities, listing all of them is aimless (an exact list is included in the appen-dix to the said directive).

The legal procedure of recognising professional qualifications applies to: :: citizens of EU member states,:: citizens of member states of the

European Free Trade Agreement (EFTA) – parties to the European Economic Area (Liechtenstein, Ice-land, Norway)

During a proceeding to recognise professional qualifications, the organ supervising a given profession or a cer-tain type of business activity checks whether the applicant possesses an ap-propriate level of education and qual-ifications meriting the right to prac-tice a given profession in the country in which it has been earned.

In a situation where the appropri-ate organ determines considerable gaps in education or training, or determines that the period of education or training completed in the applicant’s country is shorter by at least a year than the peri-od required in the accepting country, or there is a difference in the scope of professional responsibilities in a given profession between the country from which the person arrives and the ac-cepting country, it can determine that remedial measures are necessary.

The appropriate body will decide about the necessity of applying reme-dial measures only after analysing the documents certifying professional ex-perience of the applicant and conclud-ing that the occurring differences have not been remediated. Remedial meas-ures may include an ability test or an adaptation internship (lasting 3 years).

As a rule, the choice between an ability test and an adaptation intern-ship is up to the applicant, unless the regulated profession requires an ex-act knowledge of national law and its fundamental and lasting characteris-tic is giving legal advice and assistance.

The appropriate institution in Po-land in matters concerning accred-iting foreign diplomas and scholarly degrees is the Department of Interna-tional Affairs and Recognition of Di-plomas of the Ministry of Science and Higher Education.

It is worthwhile to mention at the end that there is a small group of pro-fessions or public positions whose per-formance, in accordance with the legal framework of the Republic of Poland, is predicated on both the possession of appropriate professional qualifications and experience, as well as a Polish citi-zenship. These professions include judge or Member of Parliament. ::

:: citizens of the Swiss Confederation:: members of their families:: citizens of third party countries pos-

sessing a permit for a long-term Eu-ropean Communities residency, as per the act of 14 June 2003 on for-eigners (Dz. U. [Journal of Laws] 2006, No 234, item 1694, with amend.)

Regulated professions are pro-fessions that require meeting certain requirements described in separate regulations of each EU member state concerning access to the given profes-sion. The deciding body for the major-ity of regulated professions in Poland are professional self-governing bod-ies, which condition the ability to legal-ly carry out a profession on the basis of the entry to the list of people entitled to do so. If a given regulated profession or type of regulated business activity is not covered by special self-governing bod-ies then the decision rests directly with a unit of government administration.

Regulated business activity is an ac-tivity whose performance in a given member state is dependent on the pos-session of certain qualifications. The term qualifications is understood as knowledge and abilities of a general, trade or professional character. The con-firmation of appropriate qualifications is usually automatic, provided that the migrant possesses appropriate profes-sional experience gained in time from carrying out activities that characterise a given business activity or experience coupled with completing appropriate training in carrying out the same busi-ness activity in a member state, from which he or she comes from.

The document confirming the pos-session of appropriate professional ex-perience by a foreigner is a certificate issued by an appropriate body in the country in which the activity was pre-viously carried out. If the foreigner does not meet the necessary criteria to au-tomatically qualify to carry out a reg-ulated business activity on the basis of professional experience, the recogni-tion can be granted in accordance with an appropriate procedure.

Chairperson General Partner’s Board at European Center for Legal Consultations

abonamenty

2011/2012p a c k a g e s

premiery / premieresPersona IX/2011Dziadek do orzechów i Król Myszy / The Nutcracker and the Mouse King XI/2011Halka XII/2011Senso II/2012Latający Holender / Der Fliegende Holländer III/2012Opowieści biblijne / The Biblical Parables IV/2012Medeamaterial IV/2012Słowik / Le Rossignol V/2012

Oresteia X/2011Jakob Lenz III/2012Medeamaterial* IV,V/2012Zagłada Domu Usherów / The Fall of the House of Usher VI/2012

terytoria / territories

opera 1Turandot X,XI/2011Halka* XII/2011, I/2012Wesele Figara / Le Nozze di Figaro I/2012Madame Butterfly II/2012Latający Holender* / Der Fliegende Holländer* III,IV/2012Nabucco I,IV/2012Słowik* / Le Rossignol* V,VI/2012Traviata VI/2012

WIELKA KLASYKA / The Great Classics

opera 2Łucja z Lammermooru / Lucia di Lammermoor X/2011Turandot X,XI/2011Don Giovanni XII/2011Halka* XII/2011, I/2012Senso* II,III/2012Latający Holender* / Der Fliegende Holländer* III,IV/2012Pasażerka / The Passenger V/2012Dama Pikowa / The Queen of Spades VI/2012


balet 1Romeo i Julia / Romeo and Juliet X/2011Dziadek do orzechów i Król Myszy* / The Nutcracker and the Mouse King* XI,XII/2011Bajadera / La Bayadère II/2012Święto wiosny / Le Sacre du Printemps II,III/2012Tristan III,IV/2012Opowieści biblijne* / The Biblical Parables* IV,V/2012Kopciuszek / Cinderella V,VI/2012


balet 2Persona* IX,X 2011; VI/2012 I przejdą deszcze… / And the Rain will Pass... IX,X/2011; I,II/2012Romeo i Julia / Romeo and Juliet X/2011Święto wiosny / Le Sacre du Printemps II,III/2012Tristan III,IV/2012Opowieści biblijne* / The Biblical Parables* IV,V/2012Kopciuszek / Cinderella V,VI/2012

TYLKO U NAS / Only at Teatr Wielki

Dziadek do orzechów i Król Myszy* / The Nutcracker and the Mouse King* XI,XII/2011Słowik* / Le Rossignol* V,VI/2012Kopciuszek / Cinderella V,VI/2012udział w cyklu edukacyjnym Poranki muzyczne **/ participation in educational cycle Music Mornings**

wielki dla małych / The Great for the Youngs

Instrumenty Dęte Blaszane / Brass wind instruments X/2011 | III/2012Zaczarowany świat złotej blachy / The magical world of the golden brass XI/2011 | I, V/2012Zabawa i dialog instrumentów dętych drewnianych / Fun and dialogue among the woodwind instruments I, II/2012Duet flet i harfa i kwartet smyczkowy / The flute and harp duo and the string quartet X/2011 | IV/2012Magiczny świat instrumentów perkusyjnych / The magical world of percussion instruments XI/2011 | I,III/2012Śpiew / Singing XII/2011 | IV,V/2012

poranki muzyczne** / Music Mornings**wielki dla małych

mój abonament*/ My season tickets*Siedem dowolnych tytułów spektakli operowych i / lub baletowychAny seven opera and / or ballet performances

III dni sztuki tańca / 3rd Days of DanceMazowsze: Święto tańców polskich / Polish Dance Feast Holland Dance / Jiří Kylián: Last Touch FirstTanztheater Wuppertal / Pina Bausch: Café Müller, Das FrühlingsopferTanztheater Wuppertal / Pina Bausch: VollmondPolski Balet Narodowy / Krzysztof Pastor: I przejdą deszcze.../ Polish National Ballet / Krzysztof Pastor: And the Rain Will Pass...Polski Balet Narodowy / Robert Bondara: Persona*/ Polish National Ballet / Robert Bondara: Persona*Reika Company: Tradycyjne tańce japońskie / Japanese Traditional DanceCompagnie Accrorap / Kader Attou: Symfonia pieśni żałosnych / Symphony of Sorrowful Songs

IX/2011

* nie dotyczy spektakli premierowych / excluding premiere performances** dotyczy dzieci w wieku 5-10 lat, cykl składa się z 6 tematów muzycznych / for children aged 5-10 cycle is composed of 6 musical topics

sprzedaż do 31/10/2011 teatrwielki.pl +48 22 69 20 208

98 :: polish market :: 7-8 /2011

Cultural Monitor

In the European league of opera masters

The Opera Europa Association In-ternational Conference will take place between 13 and 15 October. “It will be a highly symbolic event, displaying the pace at which The Wielki Theatre – National Opera, over the last three seasons, has managed to come a long way from a largely unrecognised op-era stage to an important player in the European league of opera masters,” said Waldemar Dąbrowski.

Starting from the 2011/2012 sea-son, the Musical Director of the War-saw opera is Carlo Montanaro, who made his debut in the National Op-era as a conductor in “Turandot”, di-rected by Mariusz Treliński. He is a recognised Italian conductor who graduated from the Luigi Cherubini Conservatory in Florence. Since 2001 he has conducted operas and concerts on numerous well-known stages – Te-atro dell’Opera in Rome, Teatro Mas-simo in Palermo, and Deutsche Oper in Berlin.

“The final line-up for our new sea-son would not be possible without en-hancing this co-production network with prestigious foreign institutions – Bregenzer Festspiele and operas from Bologna, Copenhagen, Paler-mo and Saint Petersburg,” stressed Dąbrowski.

The new season at the Wielki Theatre - National Opera in Warsaw promises to be impressive and intriguing. Famous European performances which have garnered critical acclaim and applause at festivals are to come to Warsaw. No shortage of co-productions with the world’s most important operatic stages can also be expected. Waldemar Dąbrowski, General Director of the Opera, has also announced that several significant moments in the programme for the 2011/2012 season will relate to the Polish Presidency of the Council of the EU. A special event will be the conference of Opera Europa, an organisation that, despite its name, brings together as many as 117 theatres from all over the world. This organisation selected Warsaw during the Polish Presidency as a place to reflect on the state of contemporary opera theatres.

Maciej Proliński

This season, audiences will be able to see two 19th-century masterpieces – Stanisław Moniuszko’s “Halka” di-rected by Natalia Korczakowska, and Richard Wagner’s “The Flying Dutch-man” directed by Mariusz Treliński. “The premiere of ‘Halka’ should also

be sensational on a purely musical note, as this aspect will be managed by Marc Minkowski. We believe that this maestro conductor, a French-man of Polish origin, renowned for his phenomenally original inter-pretations of 18th and 19th century music, will extract a universal di-mension from this score,” promised Dąbrowski.

Russian music will have a partic-ularly strong representation on the Warsaw stage this year. There will be the ballet première of Tchaikovsky’s “Nutcracker,” which is beloved by au-diences, with choreography by Wayne Eagling and Toer van Schayk, and a new performance of Igor Stravin-sky’s “Nightingale” directed by Al-exander Petrov. According to Walde-mar Dąbrowski, the strongest pillar of this bridge connecting Poland with the East may be Andrei Konchalovs-ky’s production of Sergei Prokofiev’s “War and Peace.” This outstanding historical work of 20th-century opera will be led by Valery Gergiev, who will be in charge of his own company from the Mariinsky Theatre, Saint Peters-burg. It will be a giant performance with nearly 500 people on stage!

The visit of another foreign com-pany is also going to be a massive event. The Pina Bausch Dance Thea-tre is coming to the National Opera in September! The 2011/2012 season will also feature a continuation of the se-ries of master’s vocal recitals, which, besides Edita Gruberova and Renée Fleming, will include an appearance by the charismatic Pole Ewa Podleś.

As part of the experimental se-ries “Terytoria” (“Territories”) we will see “Medeamaterial” and “Sen-so.” The former, with music by Pascal Dusapin, a prominent French opera composer, will feature the comeback of the talented young Polish director Barbara Wysocka, while “Senso,” by the Italian composer Marc Tutino, in-spired by Luchino Visconti’s famous film, will be directed by Hugo De Ana from Argentina. ::

12-28/09/2011

12/09/2011, 19:00 MAZOWSZEZESPÓŁ LUDOWY PIEŚNI I TAŃCA FOLK SONG AND DANCE ESAMBLE

13/09/2011, 19:00 LAST TOUCH FIRSTHOLLAND DANCE

CHOREOGRAFIA CHOREOGRAPHY: JIŘÍ KYLIÁN, MICHAEL SCHUMACHER, SABINE KUPFERBERG

16, 17/09/2011, 19:00 CAFÉ MÜLLER / DAS FRÜHLINGSOPFERTANZTHEATER WUPPERTALCHOREOGRAFIA CHOREOGRAPHY: PINA BAUSCH

18, 20/09/2011, 19:30 PERSONAPOLSKI BALET NARODOWY POLISH NATIONAL BALLETCHOREOGRAFIA CHOREOGRAPHY: ROBERT BONDARA

21, 22/09/2011, 19:00 VOLLMONDTANZTHEATER WUPPERTALCHOREOGRAFIA CHOREOGRAPHY: PINA BAUSCH

24,28/09/2011, 19:00; 25/09/2011, 18:00 I PRZEJDą DESZCZE...POLSKI BALET NARODOWY POLISH NATIONAL BALLET CHOREOGRAFIA CHOREOGRAPHY: KRZYSZTOF PASTOR | MUZYKA MUSIC: HENRYK MIKOŁAJ GÓRECKI

25/09/2011, 19:30 REIKA BODY EXPRESSIONJAPOŃSKI ZESPÓŁ REIKA REIKA JAPANESE COMPANY CHOREOGRAFIA CHOREOGRAPHY: REIKA

27/09/2011, 19:00 SYMFONIA PIEŚNI żAŁOSNYCHLA COMPAGNIE ACCRORAP CHOREOGRAFIA CHOREOGRAPHY: KARDER ATTOU | MUZYKA MUSIC: HENRYK MIKOŁAJ GÓRECKI

3rd Days of DanceIII Dni Sztuki Tańca

Par tner Patroni medialni:

100 :: polish market :: 7-8 /2011

Cultural Monitor

Culture is everywhere!

The Polish Guitar Academy is an international cultural and educa-tional project continuing the sum-mer master course in the classical gui-tar in Szczawno Zdrój (17 editions) and Żerków (in 2008). It is also a new, highly-interesting festival covering the entire region of the Wielkopolskie Province, with the aim of creating an environment for popularising the best guitar art in this part of Europe. The Academy is organised by the Bona Fide Association of Wielkopolska and Ponte Art Production. The general director of the event is Przemysław Kieliszewski,

Guitar music performed by the greatest virtuosos will once again fill open-air stages, castles, and churches in Poznań, Gniezno, Jarocin, and in many other cities and towns of Wielkopolska. The 4th Polish Guitar Academy, which is scheduled to take place between 12 and 28 August 2011, is the only guitar festival of this rank in Europe. It is an event that creates an extraordinary, creative atmosphere for meetings – between residents, tourists, and music lovers alike.

Maciej Proliński

a manager of many cultural projects in Poland and abroad, while the artistic director is one of the most prominent young Polish musicians, dubbed by the media “the Monet of the guitar” – Łukasz Kuropaczewski.

“The Academy is an initiative that consolidates and reinforces the Polish school of the classical guitar on the ba-sis of international, cultural, and aca-demic cooperation. Residents and visi-tors of the most beautiful places in this region are invited to come into contact with great guitar art. It is a unique oc-casion to meet international virtuosos

and teachers of the classical guitar, as well as students and pupils from all over Europe and the USA in the attrac-tive space of Wielkopolska,” stresses Przemysław Kieliszewski.

“Culture is everywhere” is the motto of this year’s festival, which, apart from presenting the most tal-ented classical guitarists in the world, also stimulates the creation of new musical works. This year the festi-val will be inaugurated by the world première of a piece for guitar and chamber orchestra by the renowned Polish composer Krzysztof Meyer. The performers will include Łukasz Kuropaczewski and the “Amadeus” Chamber Orchestra under the direc-tion of Agnieszka Duczmal. The fes-tival will have master recitals, cham-ber concerts, workshops, concerts for families with children, and open-air performances. This year the pro-gramme has been extended to present various shades of guitar music – from classical, flamenco and acoustic guitar to jazz and rock and roll. “Our Acad-emy will be featuring several dozen artists from all over the world, in-cluding completely new faces. I’ve in-vited some of the best classical gui-tarists in Europe,” declares Łukasz Kuropaczewski. “Thomas Müller-Per-ing is one of the most excellent fig-ures on the German guitar scene. An Italian, Carlo Marchione, who is ex-tremely well-versed in early music, is a never-ending fascination. Alex-ander Swete from Austria, who of-ten cooperates with the Vienna Phil-harmonic, was a revelation to me... and the Russian flamenco musician Grisha Goriachev is a genius if ever there was one!” adds Kuropaczewski, winner of the Polish Market Honor-ary Pearl in the Culture category. The ranks of stars will be joined by the ex-cellent classical cellist Andrzej Bau-er, a representative of Polish rock and roll, Kuba Badach with the Poluzjanci band, and Martyna Jakubowicz. The festival’s highlight will be the gui-tar happening in front of Poznań City Hall, during which several hundred guitar enthusiasts will play together. They will be led by “the first guitar of Polish jazz,” Jarosław Śmietana, who, on the same day, along with the ener-getic British vocalist Z-Star, will play the finale concert -“A Tribute to Jim-my Hendrix.” ::

Carlos Pinana

102 :: polish market :: 7–8/2011

Cultural Monitor

a festival of leisurely art!

from 30 July to 7 august kazimierz and Janowiec upon Vistula River will host the 5th film and art festival “Two Riversides.” “As previously, we have an original programme, reflecting our belief that living with art and culture is what makes us who we are. Year after year, the previous editions of the festival have proved that Two Riversides is attended by audiences who share an interest in the world and in people, audiences who like to be surprised. We aren’t a big festival when it comes to the number of screenings, but we guarantee the sat-isfaction of being close to art and its creators, leisure-ly conversations and meetings,” said Grażyna Torbic-ka, the event’s artistic director. This year, under the section “Viaggio in Italia” we will see films by Rober-to Rosselini, the father of neorealism, which are rarely

shown in Poland. The influential director Liliana Cava-ni, who takes up controversial matters with great artis-tic results, will be another of the festival’s featured ar-tistes. Polish inspirations of post-war Italian movement will be found in the presentation of Andrzej Kondratiuk’s works, who was the master of Polish comedy, and the only Polish neorealist. There will be prominent guests. “And God Created the Actor” will this year feature Zbig-niew Zamachowski, an accomplished actor with many unforgettable creations in Polish and foreign films, for many years one of the leading theatre actors. Anoth-er great attraction of the festival will be the presence of Grzegorz Królikiewicz, rarely seen in public, avant-garde, and rebellious film director, an expert and theo-retician of the cinema. The yearly Cinema Lesson meet-ing will be accompanied by screenings of Królikiewicz’s films, which will be introduced by the author. : :

East of Stratford

The 15th Gdańsk Shakespeare fes-tival is scheduled to take place be-tween 30 July and 7 august, and will be organised by the Theatrum Ge-danense foundation. The festival dates back to 1993 when the first Gdańsk Shakespeare Days were or-ganized. Since then the Foundation has been bringing the most inter-esting adaptations of Shakespeare’s plays, both from Poland and abroad, to this coastal city. Since 2000 the foreign performances presented at the festival have received official recommendations from the Interna-tional Association of Theatre Critics. This year’s major event will be the new adaptation of “The Tempest,” by the internationally-celebrated Lith-uanian Oskaras Korsunovas. After a two-year break the festival will again feature Russian productions of “King Lear” and “Hamlet” direct-ed by Nikolai Kolada and also the original Finnish small audience per-formance “Anatomia Lear,” inspired by “King Lear,” in which the figure of Lear is a puppet. We will also see the Polish-British production of “Mac-beth” by Teatr Pieśń Kozła (Song of the Goat Theatre). It is an attempt to discover the musicality present in Shakespeare’s poetry and explore the roots of tragedy. ::

Compiled by Maciek Proliński

Tribute to komeda2011 brings a great opportunity to remember one of the “icons of Polish jazz” – krzysztof “komeda” Trzciński (1931–1969) – the prematurely-departed self-taught pianist and genius composer, who was ENT specialist by profession. from 7 July to 11 august, in the wytwórnia Club in łódź, the Summer Jazz academy will take place under the title “a Tribute to komeda.” The sched-ule includes workshops and lectures with renowned figures from the world of jazz, screenings of films featuring komeda’s music, exhibitions of jazz-re-lated photographs by Marek karewicz, and concerts by the most prominent Polish jazz and classical musicians. Outstanding individuals – Janusz Olejni-czak, Tomasz Stańko, and leszek Możdżer - will present their interpretations of komeda’s works. The academy will end with a picnic for children, organised by the wytwórnia Club and Pinokio Theatre. ::

Chopin on a small scale

From 5 to 13 August Duszniki Zdrój will host the 66th International Chopin Festival. The nine days of the festi-val will as usual be filled with concerts, recitals, and master’s courses. “Our festival stands out mainly because it’s the oldest piano, not just Chopin, festival in the world,” stressed the event’s artistic director, the outstanding pianist Piotr Paleczny. “A great advantage of the Duszniki festival is its small scale. We’ve got no modern, brand-new concert hall. But there’s something that’s always cherished and held in the highest regard among our guests, a stage on which once, in 1826, Fryderyk Chopin performed himself,” he added. The invited artists include the best pianists and winners of the International Fryderyk Chopin Piano Competition. We will listen to such accomplished pianists as Yulianna Avdeeva, Ingolf Wunder, and Lukas Geniusas, to name but a few. ::

7–8/2011 :: polish market :: 103

Cultural Monitor

The high-art wratislavia Cantans

2-18 September will be the time of the 46th International Wratislavia Cantans Festival, featuring oratorio-cantata, symphonic, and cham-ber music concerts, opera and ballet performances, instrumental re-citals, church music concerts of various denominations, and presen-tations of visual artworks of all ages, styles, and cultures. All this in the most beautiful venues in and around Wrocław.

This year’s programme is built around three diverse subjects. The first of them, entitled “Saints and Sinners” will take the audience to the Middle Ages. As one of the assumptions of this section of the festival is to present history, the Schola of the Węgajty Theatre will recreate the Medieval liturgical drama Ludus Danielis. The musical traditions of bygone courts will be brought to life by the Orlando Consort. The second, more extensive, section of the festival will address the sub-ject illustrated by the quotation from a medieval Gregorian hymn, “Media vita in morte sumus” (“In the midst of life we are in death”). It will begin with Krzysztof Penderecki’s Symphony No. 8, “Songs of Transience.” The last weekend of the festival will be dedicated to “Biblical figures.” The great musical events will be crowned by Felix Mendelssohn-Bartholdy’s masterpiece – Elijah. During this concert,

the joint forces of the recognised soloists, Gabriela Consort & Play-ers and the Choir of the Wrocław Philharmonic, will be conducted by the festival’s artistic director until 2012, Paul McCreesh. Starting from the 48th festival, the artistic director will be Giovanni Antonini – a prominent Italian conductor and co-founder of the Baroque group Il Giardino Armonico. ::

The true, alternative Off

The 5th OFF Festival, which is the es-sential Polish alternative festival (cre-ated by Artur Rojek, leader of Myslo-vitz, a Polish rock group) will be held between 5 and 7 August, for the sec-ond time in Katowice, in Dolina Trzech Stawów, one of the most attractive cor-ners of the city, located close by the Mu-chowiec airport.

The greatest star of the event will be the vocalist of Sex Pistols, John Lyd-on, to perform with Public Image Limit-ed. Guests will also include avant-garde rock legends such as Primal Scream, Gang of Four, and Low. Among Polish artists there will be Lech Janerka, the giant of the alternative scene, creator of the legendary Klaus Mitffoch, which, six years ago, released the extremely well-received album “Plagiaty.” There are rumours that he is going to present pieces to be featured on his forthcom-ing album! ::

for Chopin and around Chopin

Between 16 August and 1 September the 7th International Music Festival Cho-pin and His Europe – “From Mahler to Liszt and Noskowski” is to take place in Warsaw. The festival has been organized since 2005 when it immediate-ly won the hearts of audiences and critics alike, and has become an event of high artistic rank. Its main aim is to show Chopin’s work as closely con-nected to the music of other 19th-century and later composers. The con-certs feature European compositions from the 18th century to contempo-rary times. Organised by the Fryderyk Chopin Institute, the festival attracts many wonderful artists to Warsaw. This year the line-up will include Yulianna Avdeeva, winner of the latest Chopin Competition, Mikhail Pletnev, one of the best Russian conductors, and Ste-phen Hough, a world-famous pianist. Among the Polish musicians there will be Janusz Olejni-czak, a prominent pianist, and the internationally-renowned Sinfonia Varsovia orchestra. ::

Until 15 August the Orangery in the Wilanów Pal-ace Museum presents the second edition of the “Latent Capital” cycle, created by the Museum

along with the Profile Foundation. This time, un-der the name “Witkacy and Others” we can ad-mire an interesting and extensive collection of Stanisław Ignacy Witkiewicz’s (Witkacy’s) pho-tographs, and the works of other photographers from the 19th and 20th centuries made available by Stefan Okołowicz and Ewa Franczak.

Most of the exhibition is dedicated to Witkacy, who was one of the most eminent 20th-century Polish artists, a novelist, playwright, philosopher and art theoretician, painter, photographer, draughtsman, and portraitist. Witkacy has been the fascination of culture researchers, who admire him for his lit-erary works and paintings, and recently also his aspect of a “demonic photographer.” The exhibi-tion also presents drawings, paintings, and curi-osities that Witkacy collected. ::

Witkacy and Others

władysław Jan Grabski; Stanisław Ignacy witkiewicz, “Improvised Scenes with Janina Turowska,” Düsseldorf Monster

Schola Theatre of the wegajty

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Cultural Monitor

Something to be proud of

“The orchestra is proof that we Poles are not some martyrs to the world’s defects. This idea, with its tangible, easily-measurable effects, is what we should be proud of. And that is how patriotism should be understood,” says Jurek Owsiak, President of the Board of the Great Orchestra of the Christmas Charity Foundation (WOŚP).

The European Year of Volunteering is under way. How good, from your standpoint, is Polish civil activity?When we started the Orchestra,

which was almost 20 years ago, it was impossible to speak about any previ-ous experience. Such ideas as “volun-teering” or “civil society” were only just entering the Polish consciousness. I believe that voluntary service should be complementary to the state, some-thing extra to it, and, in a sense, even against it. From my standpoint it’s not bad, as we’re doing it great! There’s no doubt that the Orchestra has contrib-uted to creating a certain standard in social activity, and this standard is still current. We’ve become a model to follow, not just in Poland. Many of our very diverse guests from all over the world are very often amazed at the results and the ways in which we achieve them. They even ask us how it has been possible in just 20 years? They think that the Orchestra must be a continuation of something that has decades of history. To look more broadly, time after time someone pre-sents study results showing that Poles are quite passive in various civil activ-ities. I disagree with those studies, and I think that the questions may have been put wrongly. If you ask a young person “are you a volunteer?” not eve-rybody will associate this with their own activities, say, in the Orchestra. And we show that we know what it’s all about and we ask a completely new question – what kind of voluntary ser-vice would we like to join? And which would we pick from the great number of NGOs out there? To sum up, in my opinion voluntary service in Poland is very healthy. People are aware that it’s needed and important, they are open. Also, there’s no serious, world-recognised NGO without an agenda in Poland. What is wrong is that the formal knowledge of most of our citi-zens is still insufficient. Polish schools are still almost silent when it comes to teaching about NGOs and civil activity.

We Poles complain that we don’t have a single great brand to boast about before the world. But we

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Cultural Monitor

often forget that we’ve always had an enormous human, creative cap-ital. Sometimes, when wonderful-ly united, this capital shines. The Great Finales of the Orchestra are such times...Yes, the Orchestra is already a rec-

ognised brand. If we put it all into per-spective, I think we can see that we ourselves are not doing much to sup-port Polish brands, help them grow. Too rarely do we go back to the bene-fits of the 20-year-long inter-war pe-riod in Poland. The work ethos, many pro-country actions, building... after all PKP, Poczta Polska were once syn-onyms of quality... As a country, we have industries in which we are high-ly-specialised experts. Our construc-tion products are an example of such a good Polish brand. There are also many producers of so-called “niche” products, where we are considered the best in the world. Like computer-game development, for example, but I’ll give you a different one. I’m read-ing a popular Polish newspaper, and I see a title “Flood in Poland.” The flood, of course, affects all – the rich and the poor. Everyone. But the photograph there shows a cottage somewhere in remote Siberia... and the caption is not “See! A curiosity from Poland,” but “Flood in Poland.” We are sometimes looking for holes in the pavement, but we don’t realise that the pavement is 10 km long and actually leads some-where. We should have some distance. And we should stop showing ourselves in a bad light.

We are hardly experts in public re-lations... and yet WOŚP keeps en-joying the highest public confi-dence in Poland. And this can’t be achieved by the best PR activities...For me, personally, the most im-

portant thing here is to have educat-ed and competent people, who clearly understand the mission of the insti-tution. Management should also be transparent. Everyone, from the Pres-ident of the Board to the young person standing on the street with a money box, should be aware of striving for one and the same goal. The institu-tion should state its goals and strat-egy for achieving them very clearly. The role of such foundations as ours is after all the same everywhere. It is complementing the actions of the

State, in places where even the rich-est states won’t take action, or they will, but it will be five times more ex-pensive. On one day, the Great Finale is a party, but 365 days of the year it is work and business. The business of our heart happens every day. Business ideology doesn’t change. Lose noth-ing. Gain. Do. Negotiate as best you can. It’s worth speaking about. For 19 years we’ve been doing many things with great consistency. And nobody told us what this business is about. That’s the greatest success. The orches-tra is proof that we Poles are not some martyrs to the world’s defects... This idea, with its tangible, easily-meas-urable effects, is what we should be proud of. And that is how patriotism should be understood. We’re aware that we enjoy great public support. From the very beginnings of our ex-istence we have been saying that even though we are a foundation, a totally crazy and spontaneous effort, our ac-tivity is also a well-managed business. We’ve received lots of awards – the Or-der of Polonia Restituta, the Medal of Tadeusz Kotarbiński, and also “Pol-ish Market’s” Honorary Pearl. Every such award is a joy, but it doesn’t lull us into a sense of security. We are dis-obedient and we like new challenges.

The WOŚP Foundation participates in a series of actions that support Polish medicine... This is – as you say – not just a “party,” but some-thing that stays with us... Let’s talk about some of these actions...We’ve bought over 20,000 state-

of-the-art medical devices for the USD110 million we’ve collected. From the smallest, such as modern pulse oximeters and vascuports, to com-plex mobile radiography units, ul-trasound and MRI scanners. This is a result of taking care of every penny, and the good interest rates negotiat-ed for our money, which lies in a bank for a year. WOŚP is also implementing serious medical programmes for the youngest patients – the Public Hear-ing Screening Programme, the Retin-opathy of Prematurity Programme, the Infant Flow Programme, the Pro-gramme for Treating Children with Personal Insulin Pumps, and the Ed-ucational Programme “We Rescue and Teach How to Rescue.” The foundation does not provide individual help, and

the Foundation’s Board chooses a goal for each year and for its Great Finale, after consultations with experts. We don’t give any money to any health-care institutions - we only hand over equipment as a gift from the Foun-dation. The equipment is bought in a tendering process, which is organised twice a year – in spring and autumn.

Business – Polish companies and companies present on our market – is more and more actively partic-ipating in the Orchestra’s actions. What’s your view on this?We should say thank you to all

businesspeople who participate in the Orchestra. I see nothing wrong in the fact that various companies support the Orchestra. If I spoke to the av-erage reader of “Polish Market” and asked him or her to list 10 companies that take part in the WOŚP Great Fina-le they would name maybe five... Why am I saying this? Because the Orches-tra has never had a purely commercial basis. That is to say, if somebody told

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The Orchestra is responsible for a lot of joyful sounds - that’s our philosophy. Doing good through happiness, love, and fun. we’ve also created perhaps the most beautiful festival in the world.

Jerzy Owsiak

106 :: polish market :: 7-8 /2011

Cultural Monitor

us “We’ll support you, but we want an enormous advertising vehicle that will tell people a lot about us,” it sim-ply won’t work. This requires very fo-cussed advertising campaigns. The fact that I mention 30 names of com-panies during that one day is only a way of saying thank you to the em-ployees of these companies. It’s not that if I express my gratitude to some bank, the next day a certain number of people will take all their savings to that same bank.

For years you had programmes on Trójka Radio (Channel 3), then on television, in TVP2. Do you regret that you don’t have them anymore?Now I only have my own media

channel, which is Owsiak.net.pl. My own portal, which I believe has been doing better than expected. The first portal where you can find my every-day blog, music, and films. It’s a por-tal of good news. Something that re-ally appeals to me. On television you always have this “sword” of viewer-ship hanging over you. But we have to remember that every business has this aspect of “I spend money on this; I don’t earn.” On public television there are signs that something that got lost there for years is slowly starting to reappear. Besides, public TV must be mission-oriented, and it must have a broader perspective, which is very much against the overriding need to earn easy money. Sometimes the costs of running certain initiatives of this type are considerable. So, “to have” is indeed important, but the main con-dition is “to be,” and addressing the question “what content does it have?” Quite recently I told a well-known automotive company producing off-road vehicles, “come to our Wood-stock Festival and show them!” And they say “those are kids on holiday. They won’t buy our cars – neither to-day nor next year.” Right, but you’ll be amazed when in five years these people – these extremely sensitive and crea-tive young people - will be in charge of big companies, purchasing these same cars.

Over the 19 years of its existence, the Orchestra has created its very own, unpretentious musical at-mosphere. The musical way of say-ing “thank you” to young Polish people involved in the Finale is the

organising by the Foundation of the biggest open-air festival in Europe – the Woodstock Festival Poland... This year it will take place for the 17th time. Who will entertain us this year?The Orchestra is responsible for a

lot of joyful sounds – that’s our phi-losophy. Doing good through happi-ness, love, and fun. We’ve also creat-ed perhaps the most beautiful festival in the world. Let’s not be too shy to say it! We have shown the world that Poland likes great gigs with high ar-tistic merit. For the people who go there, Woodstock is an incredible ex-perience. You see, it’s a little like in family businesses, like in Lego. Peo-ple feel they are part of the event. An actual town is created there – with its streets, ATMs, post offices, hospitals, police, prison, courts. There’s a field hospital, a campsite with food and a playground. The festival is organised in Kostrzyn nad Odrą, next to the for-mer German border, near Branden-burg – a place which holds little charm for Germans themselves... And sud-denly those Germans come to a great gig in Poland, and see something well organised, where the culture of the event exceeds their expectations... something that’s totally “Made in Po-land.” The festival is free to all, but its rules are very strict. First of all – don’t you even try going there with drugs on you. Don’t spoil the fun! We’ve got one thousand people in our peace patrol. And they aren’t security that frowns at your every move, they’re there to help wherever it’s possible. The 17th Woodstock Festival will take place

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between 4 and 6 August. Its foreign stars will be Skindred, Dog Eat Dog and the Prodigy. This year, to cele-brate the 30th Anniversary of one of the most important Polish rock bands – Republika – and 10 years after the death of its memorable leader, Grze-gorz Ciechowski, we’ll have a special concert with the most emblematic songs of the band. Members of Repub-lika will be accompanied on stage by such artists as Kasia Kowalska, Ania Dąbrowska, and Jacek Bończyk. An-other interesting event will be the “Projekt Grechuta” concert dedicat-ed to one of the greatest Polish sing-ers-songwriters of the 20th Century – Marek Grechuta – interpreted anew by the young Polish rock band Plateau. Once again we’ll have the Academy of the Most Beautiful Arts – a place for important meetings and conversa-tions, at which Lech Wałęsa, Tadeusz Mazwiecki, and Leszek Balcero wicz have spoken of Poland. This year’s guests will be the President of the Na-tional Bank of Poland Marek Belka, the mountaineers Kinga Baranow-ska and Marek Pustelnik, the actors Andrzej Grabowski and Jan Nowicki and the Director of the Warsaw Up-rising Museum Jan Ołdakowski. It’s always a place for words of wisdom and people who listen to each other attentively...

Interview by Maciej Proliński

I think we can see that we ourselves are not doing much to support Polish brands, help them grow. Too rarely do we go back to the benefits of the 20-year-long inter-war period in Poland.

Krzysztof Materna, Marek Kondrat, Jerzy Owsiak, Jerzy Buzek

7-8 /2011 :: polish market :: 107

Events

Meeting of the friends of the Polish Success academy

All supporters and friends of the Academy of Pol-ish Business and the Polish Business Club met on 5 May 2011. The basic role of the Academy has, for more than 10 years, been distinguishing people and businesses successful in the field of economy, science and sports. The Academy, following the decision of the Chapter, honoured a total of over 350 companies, granting them gold, silver and bronze medals.

The ceremony was honoured by the presence of Professor Henryk Skarżyński - the Chairman of the Polish Success Academy Chapter. He underlined that the Academy supports young talents and their devel-opment as well as respects the achievements of seniors.

The event was also attended by: Professor Michał Kleiber, the President of the Polish Academy of Sciences

(PAN), Adam Szejnfeld, Member of Parliament, Profes-sor Longin Pastusiak, Prof. Janusz Dyduch, Vice-pres-ident of the Polish Federation of Engineering Associa-tions (NOT), Ryszard Konwerski, the President of the Polish Business Club Association and Judge Anna Ma-ria Wesołowska.

The reason for this meeting was the establishment of the Polish Success Academy Club, headed by Am-bassador Witold Rybczyński, PhD. During the event the Certificates of Financial Credibility were award-ed, for the first time in cooperation with the Econom-ic Information Bureau InfoMonitor S.A. (BIG InfoMon-itor). The certificates were handed by the President of BIG Mariusz Hildebrand and the President of the Pol-ish Business Club Association, Ryszard Konwerski. ::

Editor Małgorzata Kamyk, President of TU InterRisk VIG

Jan Bogutyn, PhD, and Prof. Ignacy Gogolewski

Judge Anna Maria Wesołowska and Prof. Michał Kleiber

– President of the Polish Academy of Sciences (PAN)

President of Multico SA Zbigniew Jakubas and Director Iwona Jacaszek – Coca Cola HBC Polska

In the foreground: Prof. Michał Kleiber – President of PAN, Prof. Henryk Skarżyński – Chairman of the Chapter of the Polish Success Academy Medal and Prof. Grzegorz Opolski

President of TU InterRisk VIG Jan Bogutyn, PhD with Member of Parliament Adam Szejnfeld – Chairman of the “Friendly State” Committee

108 :: polish market :: 7-8 /2011

EventsEvents

Cross-border opportunities of SMEs“Going beyond the domestic market: how to increase the likelihood of success on the international stage. Cross-border business opportunities for Polish SMEs in the next 3 years” was the topic of a panel discussion, which took place in early June at the Warsaw School of Economics (SGH) in Warsaw. The discussion was moderated by Rita Schultz, the Editor-in-Chief of “Polish Market” and the panellists were: Jacek Murawski, Venture Partner/Internet Venture Fund Manager (MCI Group), SGH graduate, Krzysztof Li-biszewski, partner at Wardyński & Wspólnicy, Antonella Negri-Clementi, President of Global Strategy, graduate of Bocconi University, and Anna Polak-Kocińska represent-ing the Polish Information and Foreign Investment Agen-cy (PAIiIZ). During the meeting a discussion took place regarding the risks and opportunities associated with the internationalization of business. The panellists discussed the instruments limiting risk and increasing the likelihood of success from the legal standpoint and businesswise. ::

Jacek Murawski (MCI Group)

Photos: Maciej Górski/SGH

Anna Polak-Kocińska (PAIiIZ)

Krzysztof Libiszowski (Wardyński&Wspólnicy), Antonella Negri-Clementi (Global Strategy), Rita Schultz (Polish Market)

Antonella Negri-Clementi

(Global Strategy)

The Polish Night “luxury and Beauty” was organised in Cannes dur-ing the famous film festival. The event was attended by the greatest Polish and international celebrities, and hosted by Mariusz Puj szo and kurka wodna Productions.

Who of us does not know the famous Film Festival in Cannes? This year also Poland marked its presence by organizing the “Luxury and Beauty” Polish Night in Cannes. Mariusz Pujszo’s gala attract-ed many celebrities to the Carlton Hotel. The highlights of the even-ing were the fashion shows of famous Polish designers Sylwia Ro-maniuk and Teresa Rosati.

The Polish stage stars Paula Marciniak, Sabina Golanowska and Agnieszka Włodarczyk performed for the guests in Cannes. The host made sure that everyone felt the friendly atmosphere of the party. Those who arrived were enchanted not only with the fashion show and performances, but also by the original bar-tending show deliv-ered by Eugeniusz Dytko and Jacek Makowski. The party ended at 5 in the morning and each of its participants returned home with a smile on their face. ::

weronika RosatiMariusz Pujszo

and francois Chopiner

fabian Prevot and Paweł Deląg

Mariusz Pujszo, Grzegorz Hajdarowicz

Events

110 :: polish market :: 7-8/2011

Luxury and beauty

relacja z uroczystości na: www.bcc.org.pl

15 czerwca 2011 roku odbyła się

uroczystość wręczenia diamentów do złotej statuetki lidera polskiego biznesu

dziękujemy partnerom uroczystości, a wszystkim laureatom serdecznie gratulujemy.

wyłączny partner telewizyjny program 1 tvp

anwil s.a.cereal partners poland toruń-pacific sp. z o.o.

control process s.a.cykoria s.a.ferro s.a.

główny instytut górnictwaireneusz sobkowiak zakłady mięsne sobkowiak

kreisel technika budowlana sp. z o.o.kruszgeo wielkopolskie kopalnie spółka z o.o.

p.p.u.h. kombinat budowlany spółka z o.o.podkarpacki bank spółdzielczy

przedsiębiorstwo multi spółka z o.o.przedsiębiorstwo wielobranżowe uni-tech j. sarnecki

sandvik mining and construction sp. z o.o.sawex sp. z o.o.

strabag sp. z o.o.technokabel s.a.

tfp spółka z o.o. dziećmierowo

112 :: polish market :: 7–8/2011

Events

A show promoting the Deni Cler autumn-winter collection took place in the old vodka factory Konesser in early July. The collection, as indicated by its title “Con la passione,” was created out of passion and great love of Italian designers for fashion. The show was attended by ce-lebrities, including Beata Ścibakówna and Monika Richardson. The world of fash-ion and stars awaited this event holding their breaths.

The stylist of the show was Tomasz Jacyków, a friend of the brand. The col-ours for autumn are beige combined with black and brown, pink and black or warm grey and navy blue. Every woman should be able to find something to suit her taste in the collection – a classical little black dress, tight trousers, high boots and gold jewellery, which completes the outfit. Designers of the Deni Cler brand sug-gest also beautiful furs and Montgom-ery coats. This season’s novelties are rain boots and Italian umbrellas. All clothes are made from fine fabrics such as flan-nel, knitted fabrics and lightweight wool blends. ::

Deni Cler Milan Show Autumn-Winter 2011/2012

Economic Monitor

7–8 /2011 :: Polish Market :: I

key economic trends

Poland’s real GDP growth accelerated in 2011Q1 thanks to a rise in receipts from in-direct taxes. Gross value added (GVA) grew at a slower pace than in the previous quarter – 2.5% year on year against 3.6% in 2010Q4.

According to preliminary estimates by the Central Statistical Office (GUS), in 2011Q1 seasonally adjusted GDP - in constant prices and with 2000 as the reference year - grew in real terms by 1.0% quarter on quarter and 4.3% year on year. Source: www.stat.gov.pl

Economic growth accelerated from 3.9% year on year in 2010Q4. Looking from the expend-iture side, gross capital formation made a positive contribution to economic growth – it increased by 12.2% in year-on-year terms. Growth in gross fixed capital formation is increasingly fast – in 2011Q1 it rose by 6.8% year on year compared to 1.7% in the previ-ous quarter. Exports growth decreased from 7.3% to 5.8% but growth in imports was also much slower than at the end of last year –

6.2% against 11.3% in 2010Q4. In 2011Q1 to-tal consumption grew at a slower pace than a quarter earlier – 3.2% year on year against 3.7% - as public consumption decelerated to 2.1% from 4.9% while growth in individual consumption stabilised at 3.5% year on year. Despite a major increase in capital formation, domestic demand grew at a slower pace than in 2010Q4–4.4% year on year against 5.3%.

Seasonally adjusted Gross Value Added (GVA) rose in 2011Q1 by 2.5% year on year against 3.6% in 2010Q4. Importantly, the rate of growth slowed in the industrial, construc-tion and service sectors. Growth in construc-tion was the fastest – 5.5% against 7.8% in the previous quarter. In industry, GVA increased by 4.9% compared to 6.5% in 2010Q4. GVA growth in the service sector was the lowest, with market services increasing by 2.1% and non-market services by a mere 0.3%. Among market services, GVA growth in transport, warehousing and communications sector was faster than in the previous quarter – 6% in 2011Q1 against 5% in 2010Q4.

The BIEC Leading Index (WWK), which in-dicates future economic trends, fell in 2011M5

by 0.5 points. May was a second month in suc-cession seeing a deterioration in the index. It reached its most recent peak in November last year. In 2011 economic growth is unlikely to accelerate and exceed last year’s level. What is more, it may slow to below this level. Con-sumer demand, which was the driving force behind the economy last year, is expected to weaken. There are no clear prospects for a re-vival in investment. Inventories have already been rebuilt and there is no need to increase them further while the weakening exports growth will have a negative impact on final GDP. The economy lacks a strong engine for further growth.Source: www.biec.org

Preliminary data on the global economic sit-uation point to relatively moderate growth trends. In 2011Q1 the European Union econ-omy slightly accelerated while a slowdown was noted in the United States, G7 countries and OECD countries. According to the Mon-etary Policy Council, the slowdown was only temporary. In most developed countries, eco-nomic growth is still hampered by high un-employment and on-going adjustments in household, corporate and institutional bal-ance sheets. In response to mounting infla-tionary pressure, the largest emerging econ-omies and some developed economies are tightening their monetary policies.Source: www.nbp.pl

Industry

In 2011M4 the pace of growth in seasonally ad-justed industrial output accelerated. However, in 2011 growth in industrial output will prob-ably be slower than last year, although there are no signs indicating that it may slump. The number of new orders deceased but was still much higher than in 2009. Growth in labour productivity is increasingly slow as employ-ment is on the rise.

In 2011M4 industrial output rose by 6.6% year on year. The increase was slower compared to

May 2011

Economic Monitor

fig. 1. Seasonally adjusted GDP growth in Poland, Qt/Qt-4

1.5% 1.4% 1.0% 2.9% 3.1% 3.7%

Gross Domestic Product

-15

-10

-5

0

5

10

15

2009Q1 2009Q2 2009Q3 2009Q4 2010Q1 2010Q2 2010Q3 2010Q4 2011Q1

Total consumption Gross capital formation

Source: Central Statistical O�ce (GUS)

4.3%4.6% 3.9%

Economic Monitor

II :: Polish Market :: 7–8/2011

industrial sector, including the production of furniture (up by 26.5%), metals (up by 16.9%, including metal structural components – up by 24.7%), motor vehicles, trailers and semi-trailers (up by 16.2%), “other non-metallic mineral products” (up by 15.0%, including products made of cement, lime and plaster – up by 24.4%), rubber and plastic products (up by 11.5%, with the output of rubber products – up by 11.5%), metals (up by 8.8%, with the output of noble metals and other non-ferrous metals – up by 33.3%). The output of food-stuffs, which accounts for over 15% of the total industrial output, was by 10.2% high-er than a year earlier. The output of electrical appliances went down by 11.9% year on year, the output of computers, electronic products and optical products decreased by 5.0% - after a large increase a year earlier – and the out-put of machines and equipment fell by 6.0%.Source: Informacja o sytuacji społeczno-gospodarczej kraju. Kwiecień 2011; www.stat.gov.pl

The business climate indicator in manufac-turing did not change much from the previous month. No significant changes were recorded in the individual components of the indica-tor describing changes expected in the situa-tion of the sector in the next months. Projec-tions for the next months were still optimistic.

The seasonally adjusted general business cli-mate indicator in manufacturing stayed in 2011M5 close to the previous month’s level. It amounted to 2 points. The current situa-tion was again assessed negatively. However, the advantage of pessimistic views over op-timistic ones decreased slightly - from -3.4 points to -2.8 points. The assessment of the economic situation of the sector in the next

the 7% recorded a month earlier. The season-ally adjusted output increased by 8.7% year on year compared to a rise of 5.2% in 2011M3. Output increased by 1.4% month on month (seasonally adjusted data). Although season-ally adjusted data show that output growth is accelerating, the rate of growth – though still high and with no prospect of a sharp drop in the near future - is lower than last year. In-dustrial output will continue to increase in successive months of 2011 but at a slower pace than in 2010. In 2011M4 output growth accel-erated to 9.5% year on year in manufacturing and 4.9% in mining and quarrying. It slowed to 1.9% year on year in the supply of elec-tricity, gas, heat and hot water and to 3.2% in water supply, sewage and waste manage-ment and land reclamation.

In cumulative terms, in 2011M1-4 the rate of change in industrial output in year-on-year terms diminished compared to the rate of change for 2011M1-3 and amounted to 8.1%. The slowdown in industrial output growth in cumulative terms has been seen since the be-ginning of the year. The pace of growth de-creased in this period in all segments of the sector. In the supply of electricity, gas, heat and hot water, output growth was negative, indicating a slight drop in the production of these businesses in 2011M1-4 compared to a year earlier.

In 2011M1-4 labour productivity in the industrial sector measured by sales per em-ployee was by 5.2% higher than in 2010M1-4. Source: Informacja o sytuacji społeczno-gospodarczej kraju. Kwiecień 2011; www.stat.gov.pl

The pace of growth in labour productivity is slowing consistently. In 2011M1-3 produc-

tivity was higher by 6.1% compared to a year earlier while in 2010 productivity growth had exceeded 10%. However, this growth was coupled with significant productivity ad-justments and a fall in employment, which is now on the increase.

In 2010M3-2011M4 growth in the number of new orders in the industrial sector slowed sharply. In year-on-year terms, the number of orders dropped by 0.3% compared to a rise of 6.7% in March and a rise of almost twice as much in February. The drop in foreign orders – by 3.9% year on year - was sharper than in domestic ones. Compared to 2011M3, the de-crease in all orders – both domestic and for-eign ones – reached 13.9%. Despite that, the number of new orders stays at a much high-er level than in 2009, which means that the situation in the industrial sector is not like-ly to deteriorate soon.

Among commodity groups in key industri-al sectors, in 2011M4 growth in the production of investment goods continued to accelerate. The seasonally adjusted output of investment goods rose by 16.5% year on year. The increase in the output of intermediate goods was also high -15.5% year on year. It followed a slow-down in output growth in January, Febru-ary and March. The output of energy-relat-ed goods grew at a much slower pace of 2.3% year on year. Consumer prices grew at a much slower pace than prices of investment goods. However, in 2011M4 the output of non-dura-ble consumer goods increased by 4.7% year on year after a drop in 2011M3. The increase in April was at a level similar to that in Feb-ruary. The output of durable consumer goods fell by 4.7% compared to April 2010.

In 2011M4 output increased in year-on-year terms in 25, out of 34, segments of the

fig. 2. Change in seasonally adjusted GDP, Qt/Qt-4, in selected countries

Source: OECD

Gre

ece

2.1

%

2.6

%

2.7

%

3.0

%

3.6

%

4.0

%

4.3

%

4.8

%

6.5

%

7.9

%

2.5

%

2.3

%

2.9

%

4.4

%

9.6

%

4.0

%

5.7

%

6.5

%

2.0

%

2.5

%

2.5

%

2.5

%

2.6

%

3.7

%

0.8

%

1.0

%

1.3

%

1.8

%

2.2

%

0.1

%

-0.7

%

1.0

%

8.0%

-8.0%

4.0%

10.0%

6.0%

-2.0%

-4.0%

-6.0%

2.0%

0.0%

-4.8

%

Spai

n

Ital

y

Den

mar

k

Uni

ted

Kin

gdom

Hun

gary

Fran

ce

Czec

h R

epub

lic

Net

herl

ands

Bel

gium

Slov

akia

Aus

tria

Pol

and

Ger

man

y

Swed

en

Esto

nia

Nor

way

Swit

zerl

and

Uni

ted

Stat

es

Cana

da

Mex

ico

Chile

Japa

n

Aus

tral

ia

Sout

h K

orea

Isra

el

Indo

nesi

a

G7

Euro

pean

Uni

on

Euro

Are

a

OEC

D

NA

FTA

Sout

h A

fric

a

2010Q4 2011Q1

Economic Monitor

7–8 /2011 :: Polish Market :: III

three months was optimistic, although the indicator dropped slightly from 8.1 points in April to 7.3 points in May. As regards the current situation, the assessment of order books deteriorated again. The indicator had been decreasing consistently since mid-2010. In 2011M4 it was close to 0 points, the level which indicates that the percentage of neg-ative views is equal to the percentage of pos-itive ones. The assessment of financial liabil-ities also deteriorated compared to previous months and was close to the assessment made in 2009M12. Meanwhile, the assessment of production improved. Despite a slight change in the indicator describing changes in the sit-uation of the sector in the next months, no major changes were noted in its individu-al components. The assessments of expected changes in production and order books were still optimistic. There was weak optimism in projections for financial liabilities and pessi-mism in employment projections.

Construction and investment

In 2011M4 construction and assembly output grew at a slightly slower pace than a month earlier but the growth was still high. The con-struction of civil engineering facilities, es-pecially motorways and other roads, is now the main force driving construction growth. Residential building is also recovering after a period of decline.

In 2011M4 construction and assembly out-put rose by 15.6% year on year, slowing from 24.2% a month earlier. The temporary slow-down came as no surprise following a period of rapid growth. Seasonally adjusted data are a better indicator of the situation in construc-tion as its growth depends to a large extent on changing weather conditions. In 2011M4 the seasonally adjusted increase in construction and assembly output was 14.9% year on year. The figure was close to the increases record-ed in the previous two months. In cumula-tive terms, in 2011M1-4, the non-seasonal-ly adjusted output rose by 17% year on year against 18.8% in 2011M1-3. Of the three seg-ments of the construction industry, output increased the fastest in the construction of civil engineering facilities – by 31.4%. What is more, the growth of this segment was accel-erating. The output of specialised construc-tion work grew at a slightly slower pace than

a month earlier (up by 25.8%). In 2011M4 the output of businesses dealing with the con-struction of buildings dropped quite signif-icantly. Consequently, in cumulative terms, their output increased in 2011M1-4 by 4.5% year on year, or more than two times less than in 2011M1-3.

In 2011Q1 construction and assembly out-put rose in all types of construction. The out-put of civil engineering facilities was up by 26.1% year on year while the output of build-ings was up by 12.9%, with the output of res-idential buildings being higher by 4.6% year on year, after a long period of decline. A drop was only noted in the output of single-family homes – by 1.8% year on year – however, the drop was smaller than in previous months. The highest increase – by 18% - was in the output of multiple occupancy homes. The out-

fig. 3. Change in industrial input, Mt/Mt-12

8.5 9.0 8.19.29.4 9.4 10.1 10.110.4 10.4 10.7 9.6 9.7 9.8

in cumulative terms in non-cumulative terms

10.3

16%

14%

12%

10%

8%

6%

4%

2%

0%


10.6

2010M1

2010M2

2010M3

2010M4

2010M5

2010M6

2010M7

2010M8

2010M9

2010M10

2010M11

2010M12

2011M1

2011M2

2011M4

2011M3

fig. 4. Change in output in selected manufacturing sectors, 2011M1-4, Mt/Mt-12


27.8 24.7 23.8 21.018.5 16.9 16.5

15.0 14.1 13.5

8.2 8.0 7.55.8

4.6

2.8

-4.8-5.9

-17.9

-0.5 -1.2 -1.2

met

als

othe

r no

n-m

etal

licm

iner

al p

rodu

cts

furn

itur

e

met

al p

rodu

cts

rubb

er a

nd p

last

ic p

rodu

cts

mot

or v

ehic

les,

tra

ilers

and

sem

itra

ilers

othe

r tr

ansp

ort e

quip

men

t

leat

her

and

rela

ted

prod

ucts

text

iles

prin

ting

and

rep

rodu

ctio

n of

rec

orde

d m

edia

woo

d, c

ork,

str

aw a

ndw

icke

r pr

oduc

ts

pape

r an

d pa

per

prod

ucts

chem

ical

s an

d ch

emic

al p

rodu

cts

wea

ring

app

arel

elec

tric

al e

quip

men

t

food

pro

duct

s

com

pute

rs, e

lect

roni

can

d op

tica

l pro

duct

s

beve

rage

s

coke

and

refi

ned

petr

oleu

m p

rodu

cts

phar

mac

euti

cal p

rodu

cts

mac

hine

ry a

nd e

quip

men

t

toba

cco

prod

ucts

put of non-residential buildings was higher by 17% than a year earlier, with the output of transport and communications buildings going up by 46%, industrial and distribu-tion buildings up by 28.8% and office build-ings up by 25.7%.

The output of civil engineering facilities accounts now for the largest share of the total construction and assembly output. The out-put of airport roads grew the fastest (up by 167.6% year on year). Spending on the con-struction of motorways, expressways, streets and other roads, which accounts for the larg-est share of all expenditure on the construc-tion of civil engineering facilities, grew by 42% year on year.

In 2011M1-3 companies employing more than 49 people spent PLN15.2 billion on new fixed assets, or by 2.6% more than a year earlier.

Economic Monitor

IV :: Polish Market :: 7–8/2011

Spending on buildings and structures dropped by 9.4%. Consequently, its share in total outlays on fixed assets decreased to 35.1%. Spending on machines, technical equipment, tools and means of transport rose by 10.8%. As a result, its share rose to 63.2%. Increases in spend-ing on fixed assets were recorded in transport and warehousing, construction, manufactur-ing and the supply of electricity, gas, heat and hot water. Drops in spending were recorded in water supply, sewage and waste management, land reclamation, trade, repair of motor vehi-cles, and real estate services. Source: Informacja o sytuacji społeczno-gospodarczej kraju. Kwiecień 2011; www.stat.gov.pl

The general business sentiment in the con-struction sector improved but was still not viewed as positive. However, projections for coming months were optimistic, though less so than in the previous months.

In 2011M5 the seasonally adjusted business climate indicator in construction improved slightly and amounted to -2.1 points. It re-mained in the range of pessimistic assess-ments. The assessment of construction and assembly output deteriorated compared to April but the indicator did not show a clear downward trend. The assessment of domes-tic order books improved slightly. The finan-cial situation of the surveyed businesses did

not change from the previous month. Projec-tions for changes in order books, the compa-nies’ financial situation and employment had been deteriorating slightly for three months. However, this seems to reflect only tempo-rary pessimism and uncertainty whether the growth trend in sales would persist.

Trade

In 2011M4 retail sales in constant prices grew much faster than in the previous months. The increase was noted in almost all product types. Wholesale sales in current prices are also growing rapidly, although the pace of growth has slowed a little in recent months.

In 2011M4 retail sales in constant prices in-creased by 13.6% year on year compared to 5.1% year on year in the previous month. In cumulative terms, in 2011M1-4, sales grew by 8.0% year on year against 6% in 2011M1-3. Wholesale sales in current prices rose in 2011M4 by 17.7% year on year against 18% in the previous month. Growth in whole-sale sales had been slowing for three months.

In 2011M1-4 the highest growth in sales in constant prices was recorded by retail-ers dealing with “other sales in non-spe-cialised stores” (up by 30.7% year on year). The above-average increase in sales in these stores in April additionally strengthened the upward trend which had already been noted for some time. In April sales of tex-tiles, clothing and footwear also increased sharply. As a result, in cumulative terms, in 2011M1-4 these sales rose by 21.8% year on year. Retail sales of pharmaceuticals, cos-metics and orthopaedic equipment, motor vehicles, motorcycles and parts, and “oth-er” products rose in this period by more than 10% in year-on-year terms. Sales of fuels, furniture, radio and television equipment, and household appliances grew at a slower pace. Sales of newspapers, books and “oth-er sales in specialised stores” increased in 2011M4 in year-on-year terms after more than 12 months of decline. In 2011M1-4 a drop was only recorded in sales of food, beverag-es and tobacco products. However, the drop was smaller than in 2011M1-3.

Wholesale sales in current prices rose in 2010M4-2011M4 in most of the nine seg-ments of the wholesale market, except for two of them. The highest increase – of as

fig. 5. Business climate indicators in the industrial sector

order books (projection)general business climate output

25

20

15

10

5

0

-5


2010M1

2010M2

2010M3

2010M4

2010M5

2010M6

2010M7

2010M8

2010M9

2010M10

2010M11

2010M12

2011M1

2011M2

2011M3

2011M5

2011M4

fig. 6. Change in contruction output, Mt/Mt-12


25%

20%

15%

10%

5%

0%

-5%

-10%

-15%

-20%

-25%

-30%


-15

.3%

-20

.9%

-15

.2%

-11

.5%

-8.7

%

-6.1

%

-5.7

%

-3.4

%

-1.5

%

0.2

% 2.3

%

3.5

%

11.2

%

17.6

%

17.0

%

18

.8%

2010M1

2010M2

2010M3

2010M4

2010M5

2010M6

2010M7

2010M8

2010M9

2010M10

2010M11

2010M12

2011M1

2011M2

2011M4

2011M3

Economic Monitor

7–8 /2011 :: Polish Market :: V


othe

r re

tail

sale

s in

non

-spe

cial

ised

sto

res

30.7

phar

mac

euti

cals

,co

smet

ics,

orth

opae

dic

equi

pmen

t

21.8

text

iles,

clo

thin

g, f

ootw

ear

17.9

mot

or v

ehic

les,

mot

orcy

cles

and

par

ts

12.7

othe

r

10.6

furn

itur

e, r

adio

and

TV

equi

pmen

t, ho

useh

old

appl

ianc

es

solid

, liq

uid

and

gase

ous

fuel

s

7.2 2.16.3

new

spap

ers,

boo

ksan

d ot

her

sale

sin

spe

cial

ised

sto

res -2.3

food

, bev

erag

es,

toba

cco

prod

ucts

much as 72.5% - was in the sales of IT and communication tools, machines and equip-ment. But compared to the previous two months, the increase was slightly small-er. Growth in the wholesale sales of tobac-co products was faster than a month earlier – the sales rose by 40.1% year on year. Sales of semi-products, non-agricultural waste, scrap metal and beverages grew at a rate of over 20%. Beverage sales had been on the upward trend for quite a long time, however with significant fluctuations from month to month. Growth in the sales of semi-prod-ucts and waste had been slowing for two months after a sharp increase at the begin-ning of the year. Sales of radio and television equipment, household appliances and oth-er household articles dropped by 3.1% year on year; sales from non-specialised stores went down by 10.9%.

The assessment of the business climate in the trade and repair of motor vehicles had re-mained unchanged for three months – the climate is assessed as neither good nor bad. Projections for the next months are pessi-mistic.

In 2011M5 the seasonally adjusted business climate indicator amounted to -0.3 points and did not change much compared to the pre-vious month. As in industry and construc-tion, the assessment of the current situation in the sector improved in May while projec-tions for coming months deteriorated. The indicator of the current situation amounted to 3.6 points against 0.1 points in April. The assessment of financial liabilities of the sur-veyed businesses was still very pessimistic. But the assessment of sales had been improv-ing consistently and was positive in May for the first time since the end of 2008, though the level of optimism was very low. The indi-cator of the situation of the sector as expect-ed in coming months amounted to -4.7 points against -1.5 points a month earlier. It reached the lowest value in more than a year. Manag-ers had pessimistic views of financial liabil-ities, demand and employment. The assess-ment of sales was much better.

Consumer sentiment

According to research conducted by the Cen-tral Statistical Office (GUS) and Ipsos, con-

fig. 7. Business climate indicators in the construction sector

fig. 9. Change in retail sales of selected products in 2011M1–4, Mt/Mt-12

fig. 8. Change in retail sales, Mt/Mt-12


12%

10%

8%

6%

4%

2%

0%

-2%

-4%


-1.1

3.1 2.1 6.1 8.06.0

-1.6

0.3

-0.5 -0.1

0.7 0.2 0.81.5 1.9 2.2

2010M1

2010M2

2010M3

2010M4

2010M5

2010M6

2010M7

2010M8

2010M9

2010M10

2010M11

2010M12

2011M1

2011M2

2011M4

2011M3

domestic orders (projection)general business climate output

20

10

0

-10

-20

-30


2010M1

2010M2

2010M3

2010M4

2010M5

2010M6

2010M7

2010M8

2010M9

2010M10

2010M11

2010M12

2011M1

2011M2

2011M3

2011M5

2011M4

Economic Monitor

VI :: Polish Market :: 7–8/2011

sumer sentiment was improving in 2011M4-2011M5. But the two consumer sentiment indices are at low levels, indicating that con-sumers are pessimistic. The BIEC Economic Welfare Indicator, which is calculated on the basis of “hard” data, including data on un-employment and prices, is now at a relative-ly high level. But it fell in April and May. This may mean that Poles have no good reason to complain but the changes taking place in the economy are somewhat disquieting to them.

The Current Consumer Confidence Index (BWUK), which describes current trends in individual consumption, improved in 2011M5 by 0.4 pct. points compared to the previous month and reached -26.4 pct. points. How-ever, the index was by 14.1 pct. points lower than in May last year. Source: Koniunktura konsumencka. Maj 2011; www.stat.gov.pl

Among individual components of the confi-dence index, there was a slight improvement in the assessment of the financial situation of households. Also, pessimism in the assess-ment of the general economic situation in the next 12 months weakened a little compared to the previous survey. However, it remained the most pessimistic component of the con-sumer confidence index. Consumers’ views of their potential to buy were also negative.

The Leading Consumer Confidence In-dex (WWUK), which describes trends in in-dividual consumption expected in the next months, improved by 2.1 pct. points com-pared to the previous month and amounted to -27.7 pct. points. The reading was lower than a year earlier by 9.7 pct. points.

Source: Koniunktura konsumencka. Maj 2011; www.stat.gov.pl

One component of the index deteriorated compared to 2011M4 and the remaining three improved. The strongest improvement was in the assessment of the unemployment sit-uation. Consumers still expected that un-employment would increase, however not as much as they had thought in the first four months of the year. The assessment of house-holds’ savings deteriorated.

According to the latest Ipsos survey, con-sumer confidence strengthened again in May. It was a second month seeing an improve-ment in confidence after a sharp deterio-ration in March. The Ipsos Consumer Con-fidence Index rose by 4 points compared to April to 83.5 points. Nevertheless, it was still below the level before the March decline, but the difference to its highest reading record-ed this year was only 3 points. Source: www.ipsos.pl

The BIEC Economic Welfare Indicator, which reflects the economic condition of the popu-lation, fell in 2011M5 by 0.3 points. May was a second month in a row to see a deteriora-tion in the indicator. The weakened growth in employment compared to previous months was the main factor contributing to the drop in the indicator. Wages were on the increase but the fast rise in prices eroded their buy-ing power. Consequently, households felt the increase in inflation more than the in-crease in wages because the first affected all consumers while the latter concerned only some of them.Source: www.biec.org

labour market

April was another month in succession to see no major change in the seasonally adjust-ed unemployment rate in Poland. The num-ber of newly registered unemployed dropped quite significantly but the number of unem-ployed taken off the official register at em-ployment agencies also declined. The num-ber of the long-term unemployed rose again.

In 2011M4 the seasonally adjusted harmonised unemployment rate (HUR) for Poland did not change from the previous month and amount-ed to 9.3%. However, its estimate was revised down compared to a month earlier (9.8%). As a result, the unemployment rate was down by 0.2 pct. points from the level recorded in 2010M12. In the same period the average un-employment rate in the EU dropped by 0.1 pct. points to 9.4% at the end of 2011M4. The eu-ro-zone unemployment rate showed a simi-lar trend and amounted to 9.9%. Among the EU countries for which data for 2011M4 were available, the greatest positive changes to the seasonally adjusted unemployment rate were noted in April in Sweden and Denmark, where it dropped by 0.3 pct. points. The highest in-crease in the unemployment rate – by 0.3 pct. points – was in Cyprus.

Despite an economic revival, unemploy-ment in the European Union is not falling sharply. One of the reasons is work-time and wage adjustments made in the time of crisis. The adjustments curbed the rise in unemploy-ment at that time and resulted in some over-employment. Now, these factors see adjust-ments, resulting in a smaller increase in new jobs and a higher increase in labour efficiency. Additionally, the labour market is influenced by the expiry of protection packages for em-ployers and employees, which eases the im-pact of positive cyclical impulses. It should be noted that in recent years the labour mar-ket has reacted to changes in economic con-ditions with a time lag. As entrepreneurs are still not convinced that business conditions are going to improve for good, as reflected in business sentiment surveys, they are very cautious about hiring new workers. Mount-ing long-term unemployment is another prob-lem of the European labour market. It results not only in a slower increase in employment and a slower drop in unemployment but also more difficulty for businesses in finding well-qualified workers. The highest long-term un-fig. 10. Business climate indicators in the trade and repair of motor vehicles

demand (projection)general business climate sales

10

5

0

-5

-10

-15


2010M1

2010M2

2010M3

2010M4

2010M5

2010M6

2010M7

2010M8

2010M9

2010M10

2010M11

2010M12

2011M1

2011M2

2011M3

2011M5

2011M4

Economic Monitor

7–8 /2011 :: Polish Market :: VII

employment rate, ranging from 5.7% to 9.2%, is in the Baltic countries, Ireland, Spain and Slovakia. A relatively low rate of up to 2.8% is in the Scandinavian countries, Holland, Lux-embourg, Austria, Romania and the United Kingdom. The adjustment of the unemployed people’s skills to the changed needs of busi-nesses will determine the scale and durabil-ity of the drop in EU unemployment in com-ing months. It will also influence the pace of cyclical revival.

In Poland, the registered unemployment rate amounted in 2011M4 to 12.6% and was by 0.5 pct. points lower than in 2011M3 but by 0.2 pct. points higher than a year earlier. The seasonally adjusted unemployment rate stayed at the previous month’s level. It had remained almost unchanged since the be-ginning of the year, with no clear upward or downward trend noticeable.

In 2011M4 the number of unemployed reg-istered with employment agencies amount-ed to 2,043,500 and was by 3.5% higher than a year earlier. April was a second month in a row to see acceleration in the number of un-employed in year-on-year terms. In March the year-on-year increase amounted to 2.8%. Around 169,600 newly unemployed people were registered with employment agencies in 2011M4, which represented a drop of 16.5% compared to a year earlier. The drop was much larger than in the previous month. The num-ber of newly registered unemployed dropped for a second month in succession after a long-er period when it stayed at more or less the same level. However, the number of unem-ployed who were taken off the official reg-ister also decreased sharply year on year – it was down by 15.1% against 12.1% in 2010M3-2011M3. Around 121,600 people, or 6.1% less than a year earlier, were taken off the regis-ter because they had found jobs. April was the first month to see a year-on-year drop in the number of unemployed taken off the register for this reason. However, the number of such people was still high.

At the end of April women accounted for 51.9% of the unemployed compared to 49.5% a year earlier. Compared to April 2010, the share of unemployed not eligible for unem-ployment benefits and unemployed gradu-ates increased respectively by 3.3 pct. points to 83.8% and by 2.8 pct. points to 6.1%. The percentage of unemployed people who had been in employment before becoming unem-ployed dropped by 0.7 pct. points to 79.9%,

with people dismissed for reasons on the em-ployer’s side accounting for 3.8% of all such unemployed against 4.5% in April last year. Among the unemployed being in a special situation on the labour market, the share of long-term unemployed rose the most year on year - by 6.3 pct. points to 48.0%. The long-term unemployed were the largest group among the unemployed registered with em-ployment agencies. The share of unemployed without job qualifications also increased (up by 3.1 pct. points to 30.3%) as did the per-centage of unemployed aged over 50 (up by 0.6 pct. points to 21.6%), the percentage of unemployed parents with at least one child aged under 18 (up by 0.6 pct. points to 8.2%), the percentage of unemployed aged 25 or un-der (up by 0.3 pct. points to 21.4%), the per-centage of unemployed university gradu-ates aged under 27 (up by 0.2 pct. points to 1.7%) and the percentage of disabled unem-

ployed people (up by 0.1 pct. points to 5.1%). The number of unemployed in all the catego-ries mentioned above rose in year-on-year terms, with the highest increase recorded in the number of university graduates aged un-der 27 (up by 24.1%), long-term unemployed (up by 19.1%), people without qualifications (by 15.4%) and parents with at least one child aged under 18 (11.7%). Source: Informacja o sytuacji społeczno-gospodarczej kraju. Kwiecień 2011; www.stat.gov.pl

According to the preliminary findings of the quarterly labour force survey (BAEL), in 2011Q1 the number of economically active people amounted to 17,646,000 and was by 1.3% higher than a year earlier. In contrast to 2010Q1, the number of economically active people increased thanks to a higher number of people in employment (a rise of 1.9%), with

fig. 11. Harmonised Unemplyment Rate in selected countries in 2011M4, seasonally adjusted

Source: Eurostat

Spai

n

Irel

and

Slov

akia

Hun

gary

Port

ugal

Bulg

aria

Fran

ce

Pola

nd

Slov

enia

Ital

y

Finl

and

Belg

ium

Cypr

us

Swed

en

Den

mar

k

Mal

ta

Czec

h Re

publ

ic

Ger

man

y

Luxe

mbo

urg

Net

herl

ands

Euro

pean

Uni

on

Aus

tria

Uni

ted

Stat

es

Croa

tia

Euro

Are

a

20.7

%

14.7

%

13.9

%

11.6

%

12.6

%

11.4

%

9.4%

9.3%

8.2%

8.1%

8.0%

7.7%

7.6%

7.4%

7.2%

6.2%

6.8%

6.1%

4.5%

4.2%

9.4%

9.9%

4.2%

9.0%

13.9

%

fig. 12. Registered unemployment rate, %

13.5

13.0

12.5

12.0

11.5

11.0

10.5

Source: Central Statistical Oce (GUS)non-seasonally adjusted seasonally adjusted Source: Central Statistical Oce (GUS)

2009M9

2009M10

2009M11

2009M12

2010M1

2010M2

2010M3

2010M4

2010M5

2010M6

2010M7

2010M8

2010M9

2010M10

2010M11

2011M4

2011M3

2011M1

2011M2

2011M12

Economic Monitor

VIII :: Polish Market :: 7–8/2011

a simultaneous drop in the number of unem-ployed (down by 3.7%). The economic activ-ity rate amounted to 55.6% and was higher by 0.4 pct. points year on year and lower by 0.2 pct. points quarter on quarter. Source: Informacja o sytuacji społeczno-gospodarczej kraju. Kwiecień 2011; www.stat.gov.pl

The BIEC Future Unemployment Rate Index (WRP), which provides data on expected changes in unemployment, dropped in May. This may be the first sign of a reversal in the upward trend noted since November last year and a moderate improvement on the labour market. As a result of the drop, the reading of the index returned to the level recorded in November last year. Source: www.biec.org

In April growth in real wages was higher than in the previous two months. However, aver-age employment in the corporate sector is growing at a slightly slower pace.

In 2011M4 year-on-year growth in average employment in the corporate sector slowed for a second month in succession. The num-ber of people employed in this sector was 5,514,000 and was higher by 3.9% than a year earlier compared to a rise of 4.1% in 2011M3. After seasonal adjustments, employment in the sector was higher by 0.2% than in 2011M3, which represented a rise in the number of em-ployed by around 9,000.

In April 78,400 job offers were submitted to employment agencies – 5.7% less than a month earlier and 27.9% less than a year ear-lier. Offers from the public sector account-ed for 27.8% of all offers against 26.6% in March and 34.6% in April last year. Their number was slightly smaller than a month

earlier and much smaller than a year earlier – respectively by 1.6% and 41.9%. In the pri-vate sector, trends in the number of job of-fers were similar, with a drop of 7.2% month on month and of 20.4% year on year. At the end of April job offers not taken up for long-er than one month accounted for 26.0% of all offers against 19.8% a month earlier and 24.1% a year earlier. At the end of April the number of group lay-offs planned was slight-ly higher than in March and lower than in April last year, with 385 workplaces declar-ing they planned to make 36,200 workers re-dundant, including 25,800 persons employed in the public sector. At the end of March 355 workplaces planned to lay off 35,900 work-ers, including 25,100 in the public sector while at the end of April last year the re-spective figures were as follows: 325 work-places, 40,800 workers, including 24,600 in the public sector.Source: Informacja o sytuacji społeczno-gospodarczej kraju. Kwiecień 2011; www.stat.gov.pl

In 2011M5 the number of job offers posted on the Internet increased again. The pace of growth in these offers remained stable. De-mand for new workers is still on the rise. Consequently, demand factors still have a favourable impact on the labour market. At present, the fastest increase is in job offers for seasonal workers, mainly in construc-tion, in the tourist sector and in sales. From May to November this will be contributing to a seasonal drop in the unemployment rate. The number of offers for engineers, manag-ers and students also rose. Demand for geolo-gists increased significantly percentagewise. There were less offers for analysts, people seeking jobs with real estate agencies and IT specialists (after a several months’ increase).

The drops in offers did not change the gen-eral upward trend in the number of job of-fers in the national economy. They seem to have largely resulted from a temporary sat-uration of the market.

In 2011M4 average nominal wage in the corporate sector amounted to PLN3,597.84 and was higher by 5.9% year on year against 4% in the previous month. It was the high-est increase since the beginning of the year. After seasonal adjustments, nominal wages did not change much compared to the previ-ous month. Real wages rose in April by 1.5% year on year. Their growth accelerated com-pared to the previous two months.

Prices

In 2011M4 inflation rose again both in Po-land and in the European Union. In Poland inflation was 4.5%, according to the Central Statistical Office (GUS). It was still driven by prices of energy, food and beverages. Core in-flation, excluding food and energy, was much lower – 2.1%.

In 2011M4 the harmonised index of consum-er prices (HICP) for Poland increased again. It reached 4.1% against 4% in March, and was higher than the EU average, which – ac-cording to preliminary estimates - amount-ed to 2.8%. The European Commission pro-jects that in 2011M4 the EU’s HICP dropped to 2.7%.

Inflationary processes have intensified in the EU for a year now but there are marked differences in the level of inflation among individual member countries. One of the reasons are their different adjustments to the rise in petroleum prices on global mar-kets. However, in recent months these dif-

2010M3 2010M6 2010M9 2010M12 2011M3 2011M4

Average employment in the corporate sector, in thousands 5 294 5 336 5 364 5 379 5 509 5 514

Change in average employment, year on year, % -0.6% 1.1% 1.9% 2.4% 4.1% 3.9%

Average nominal monthly wage in the corporate sector, in PLN 3 493.42 3 403.65 3 403.68 3 847.91 3 633.54 3 597.84

Change in real wages, year on year, % 2.1% 1.3% 1.3% 2.3% -0.1% 1.5%

Registered unemployment rate 13.0% 11.7% 11.5% 12.3% 13.1% 12.6%

Change in the number of job offers submitted to employment agencies, y-o-y, % 25.2% 15.1% 12.6% 8.2% -29.4% -27.9%

Employment rate according to LFS (BAEL) * 49.4% 50.4% 51.1% 50.6% 50% -

Unemployment rate according to LFS (BAEL) * 10.6% 9.5% 9.1% 9.3% 10% -

Economic activity rate according to LFS (BAEL) 55.2% 55.7% 56.2% 55.8% 55.6% -

* Quarterly data Source: GUS and authors’ calculations

Table 1. Selected labour market data

Economic Monitor

7–8 /2011 :: Polish Market :: IX

ferences have been diminishing. In April the highest increase in inflation was in Lithua-nia (by 0.7 pct. points). It was slightly small-er in Austria, Sweden, Romania and Germa-ny (0.4 pct. points). Major drops in inflation were recorded in Bulgaria (by 1.3 pct. points) and Greece (0.6 pct. points). In the remain-ing EU countries changes in consumer pric-es were smaller.

According to the methodology applied by GUS, CPI inflation in Poland amounted in 2011M4 to 4.5% against 4.3% in the previous month. Transport prices and prices of food and non-alcoholic beverages grew the fast-est – by 7.6% and 7.2% respectively. Addi-tionally, growth in these prices accelerated compared to March. Prices of clothing and footwear, and prices of communications de-creased year on year by respectively 1.1% and 0.8%. Year-on-year growth in prices of alco-holic beverages and tobacco products, and in prices of household articles and services was slower than in March.

The inflationary expectations of private in-dividuals increased in 2011M5. The inflation

rate expected in the next 12 months was 4.3% versus 4% a month earlier. In May the per-centage of people expecting that price growth would accelerate fell from 31.1% to 20.5%. At the same time, the percentage of those who expected that price growth would slow in the next 12 months rose from 13.1% to 18.8%. The percentage of respondents who expected that prices would be growing at the same pace was similar to that in April 2011 – it amounted to 47.4%. The share of those who were undecided rose quite significantly from 6.4% to 9.7%. A slight percentage of those surveyed said that prices would remain unchanged (3%) or would be lower (0.6%).

The BIEC Future Inflation Index, which provides data on consumer goods and ser-vice prices several months in advance, fell in 2011M5 by 0.7 pct. points. It was its sec-ond major drop in six months, which creates a chance for a slightly slower growth in pric-es in the second half of the year. However, it should be noted that there is still a great un-certainty both in the economy itself and in its environment. An unstable situation on glob-

al markets for raw materials, mounting de-mands for wage rises and uncertainty as to this year’s harvests are the greatest risk fac-tors for future inflation. Source: www.biec.org

In 2011M3 producer prices in industry grew at the fastest rate since the beginning of the year. Growth in construction and assembly prices was still very slow but its pace was acceler-ating. Telecommunications prices dropped.

In 2011M3, the pace of growth in produc-er prices in the industrial sector accelerated quite sharply compared to 2011M2 – to 9.5% versus 7.5%. In manufacturing, price growth was faster than a month earlier - prices rose by 9.5% year on year; in mining price growth slowed to 22.4%. In the water supply, sewage and waste management and land reclama-tion sector prices also grew at a slightly slow-er pace than in February (6.2% year on year). Inflationary trends intensified the most in the production of coke and petroleum products while they eased in the production of tobac-co products.

In 2011M3 average construction and as-sembly prices rose by 0.6% in year-on-year terms versus an increase of 0.4% a month earlier. This was due to a rise in prices in the sector of civil engineering facilities and spe-cialist construction work – they went up by 0.8% - and a slight increase in the building construction sector (up by 0.2%). Transport and warehousing prices grew by 2.3% year on year - faster by 0.1 pct. points than in Febru-ary. In the telecommunications sector, pric-es decreased year on year by 1.2 pct. points. The decrease was slightly lower than in the previous month.

Central bank and monetary policy

At a meeting on May 10-11, 2011 the Monetary Policy Council decided to raise central bank interest rates by 0.25 pct. points, with the reference rate going up to 4.25%, the Lom-bard rate 5.75%, the deposit rate 2.75%, and the rediscount rate 4.50%.

The decision to raise the rates was due to the consistently increasing inflation indices for Poland. The Council assesses that in coming months CPI inflation will be at a heightened level, mainly due to a rise in prices of raw

Source: Central Statistical O�ce (GUS)average nominal wages (seasonally adjusted, left axis)real wage change, Mt/Mt-12 (non-seasonally adjusted, right axis)

4%

3%

2%

1%

0%

-1%

-2%

-3%

-4%

3,650

3,600

3,550

3,500

3,450

3,400

3,350

3,300

3,250

3,200

3,150


2010M1

2010M2

2010M3

2010M4

2010M5

2010M6

2010M7

2010M8

2010M9

2010M10

2010M11

2010M12

2011M1

2011M2

2011M4

2011M3

fig. 13. Wages in the corporate sector

fig. 14. Harmonised Index of Consumer Prices in selected countries, 2011M4, Mt/Mt-12

Source: Eurostat

Rom

ania

Est

onia

Lith

uani

a

Hun

gary

Latv

ia

Pol

and

Luxe

mbo

urg

Por

tuga

l

Slov

akia

Gre

ece

Aus

tria

Spai

n

Cypr

us

Finl

and

Bel

gium

Bul

gari

a

Ital

y

Den

mar

k

Ger

man

y

Mal

ta

Fran

ce

Net

herl

ands

Slov

enia

Swed

en

Czec

h R

epub

lic

Irel

and

Euro

are

a

Euro

pean

Uni

on

Icel

and

Nor

way

Swit

zerl

and

Croa

tia

Turk

ey

8.4

%

5.4

%

4.4

%

4.4

%

4.3

%

4.1

%

4.0

%

4.0

%

3.9

%

3.7

%

3.7

%

3.5

%

3.5

%

3.4

%

3.3

%

3.3

%

2.9

%

2.8

%

2.7

%

2.4

%

2.2

%

2.2

%

2.0

%

1.8

%

1.6

%

1.5

%

2.8

%

3.2

%

3.1

%

1.3

%

0.1

%

2.3

%

4.3

%

Economic Monitor

X :: Polish Market :: 7–8/2011

materials and oil on global markets. So far the rise has not been neutralised to any sig-nificant extent by changes in the exchange rate of the zloty.Source: www.nbp.pl

The decision to raise the central bank interest rates means the continuation of the Council’s policy to restrict lending activity for business-es. The Council points to the continued rela-tively fast increase in mortgage loans for house-holds coupled with a drop in consumer credit.

In 2011M4 the seasonally adjusted M3 money supply fell by 0.9% compared to the previous month. At the same time, growth in this monetary aggregate slowed in year-on-year terms. In 2011M4 the M3 money supply was higher by 9.1% than a year earlier ver-sus 10.9% a month earlier (non-seasonal-ly adjusted data). In 2011M3 the seasonally adjusted M1 money supply (latest data) was by 1.8% higher than in 2011M2. The rate of its change in year-on-year terms was 17.8% and was higher than in the previous month. Source: www.stat.gov.pl

At the end of 2011M5 the WIBOR interest rates were 4.45% (WIBORM3) and 4.36% (WIBORM1). Source: wibor.money.pl

Trends on the warsaw Stock Exchange

On May 4, 2011 the Warsaw Stock Exchange launched the WIG-Ukraine national index. At the end of 2011M5, the WIG20 blue-chip index stood at 2,903.61 points, the WIG broad-market index at 50,025.61 and WIG-BANKI at 7,112.78.

Compared to 2011M4, the three indices changed respectively by -0.33%, 0.03% and 1.89%.

Among the companies listed on the main market, 130 recorded a positive rate of return. Source: www.gpw.pl

Almost half of all WSE indices were lower at the end of 2011M5 than at the end of 2011M4.

WIG20 gained 19.30% compared to 2010M5. WIG-CHEMIA recorded a high in-crease of 130.12% year on year and 11.00% month on month. WIG-PALIWA rose by 39.65% compared to a year earlier and by 0.83% compared to a month earlier. WIG-BUDOWNICTWO dropped in year-on-year and month-on-month terms by respective-ly 23.81% and 1.89%.

The WIG-Ukraine index is the first and only index outside Ukraine composed ex-clusively of Ukrainian companies. The de-cision to launch the index was a conse-quence of the rising number of Ukrainian issuers on WSE.Source: www.gpw.pl

At the end of 2011M5 the WIG-Ukraine index comprised the following companies: Kernel, Astrada, Mililand, Agroton, Sadovaya, KSG Agro and Industrail Milk Company.

Balance of payments

Preliminary data from the National Bank of Poland (NBP) indicate that in 2011M3 there were drops on the balance of payments cur-rent account, capital account and financial account.

In 2011M3 the current account balance was negative at EUR-1,376 million, which rep-resented a decrease of 67.6% compared to a year earlier – in 2010M3 the current account balance totalled EUR-821 million. In 2011M3 the balance on goods was EUR-715 million, which represented a drop by 70.6% compared to a year earlier. In 2011M3 the value of goods exports was estimated to be EUR11,122 mil-lion and the value of goods imports EUR11,837 million, up by 4.7% and 7.2% year on year. The balance on services was positive and amount-ed to EUR386 million, which represented a rise by 21.4% compared to 2010M3 when it stood at EUR318 million. The balance on ser-vices was positive thanks to a positive balance on transport services (EUR211 million), for-eign travel (EUR135 million) and other ser-vices (EUR40 million). Source: www.nbp.pl

The balance on current transfers decreased by 46.3% from EUR521 million in 2010M3 to EUR280 million in 2011M3. Income on the current transfers account amounted to EUR565 million, down by 30% compared to 2010M3, while expenditure amounted to EUR285 million, down by 0.3% compared to 2010M3. The balance on income was neg-ative at EUR-1,327 million, with a positive balance on employee wages (EUR98 mil-lion) and a negative balance on investment (EUR1,425 million). The size of the negative balance on income was influenced by income of non-residents from interest on debt secu-rities (EUR278 million) and from interest on credit (EUR191 million).Source: www.nbp.pl

There was a drop on the capital account bal-ance by 46.2% year on year. In 2011M3 the balance amounted to EUR280 million against EUR396 million a year earlier. Revenue on the capital account amounted to EUR224 million and was lower by 46.0% than in 2010M3 when it stood at EUR415 million. Expenditure on the capital account amounted to EUR11 mil-lion, down by 42.1% compared to 2010M3.

In 2011M3 the financial account balance improved by 116.9% from EUR1,583 million in 2010M3 to EUR3,434 million. Polish direct investment abroad dropped significantly – by 201.4% - compared to 2010M3 and amount-ed to EUR-838 million. Foreign direct in-vestment in Poland amounted in 2011M3 to EUR1,458 million, against EUR1,280 million

fig. 15. Changes in prices of selected consumer goods and services in 2011M4, Mt/Mt-12


tran

spor

t

cost

of h

ousi

ng(r

ent a

nd u

tilit

ies)

rest

aura

nts

and

hote

ls

heal

th

othe

r go

ods

and

serv

ices

food

and

non

-alc

ohol

icbe

vera

ges

alco

holic

bev

erag

esan

d to

bacc

o pr

oduc

ts

educ

atio

n

hom

e fu

rnis

hing

s

recr

eati

on a

nd c

ultu

re

com

mun

icat

ions

clot

hing

and

foo

twea

r

0.8%1.7%2.7%2.8%3.3%3.7%4.3%5.8%7.2%7.6%

-0.8% -1.1%

Economic Monitor

7–8 /2011 :: Polish Market :: XI

in 2010M3, down by 13.9%. Portfolio invest-ment assets increased by 14.9% to EUR-223 million from EUR-262 million. Portfolio in-vestment liabilities increased by 159.1% to EUR1,785 million. The balance on the ac-count of the remaining investment assets was negative and lower by EUR783 million than a year earlier. In 2011M3 the assets amounted to EUR-2,012 million. On the side of liabili-ties, the account stood at EUR3,390 million, up by EUR2,106 million compared to 2010M3.

In 2011M3 the balance on transfers with the European Union was positive and totalled EUR436 million. The inflow of EU money reached EUR347 million in current trans-fers and EUR211 million in capital transfers. At the same time, Poland contributed EUR212 million to the EU budget.Source: www.nbp.pl

financial results of non-financial enter-prises

In 2011Q1 the non-financial enterprises sur-veyed by the Central Statistical Office (GUS) recorded better results than a year earlier for all types of activity except financial op-erations.

In 2011Q1 revenues from overall business op-erations totalled PLN512.7 billion, which rep-

resented a rise of 12.0% from PLN457.7 bil-lion in 2010Q1. Business expenditures totalled PLN485.5 billion and were higher by 11.6% than a year earlier; in 2010Q1 they amount-ed to PLN434.9 billion. Revenues from the sale of products, merchandise and materi-als increased by 12.9% from PLN441.4 billion in 2010Q1 to PLN498.3 billion in 2011Q1. The cost of the products, merchandise and mate-rials was PLN471.9 billion versus PLN420 bil-lion in 2010Q1, with the balance on the sales account being PLN26.4 billion, or by 25.8% higher than in 2010Q1.

In 2011Q1 profits from other operating activity increased by 32% year on year from PLN1.38 billion in 2010Q1 to PLN1.82 billion. The balance on financial operations deteri-orated significantly from PLN396 million in 2010Q1 to PLN-1,020.5 million. Non-recur-ring profits increased by 74.4% from PLN27.0 million to PLN47.1 million. The balance on

the business operations account totalled PLN27.2 billion in 2011Q1 versus PLN22.8 billion in 2010Q1, which represented a de-crease of 19.5%.

In 2011Q1 net profit was by 14.0% higher than a year earlier and amounted to PLN29.2 billion. Net loss was by 1.1% lower than in 2010Q1 and totalled PLN7.3 billion.

The cost index dropped from 95% in 2010Q1 to 94.7% in 2011Q1. The rate of re-turn on the sale of products, merchandise and materials improved from 4.8% to 5.3%. The rate of gross return on sales rose from 5% in 2010Q1 to 5.3% in 2011Q1 while the rate of net return on sales went up from 4.0% to 4.3%. The first-degree financial liquidity ratio rose from 38.7% to 38.9%, the second-degree li-quidity ratio rose from 105.0% to 106.4%.Source: www.stat.gov.pl

National budget

At the end of 2011M4 the national budget deficit amounted to PLN21.6 billion, widen-ing by PLN4.3 billion compared to the end of March. The deficit reached 53.8% of the amount planned for 2011 as a whole.

In 2011M1-4 national budget revenue amount-ed to PLN87.5 billion and expenditure amount-ed to PLN109.1 billion. Budget revenue reached 32% of the total amount planned for 2011 un-der the budget law (up from 23% a month ear-lier) while budget expenditure reached 34.8% of the total amount (up from 25.5%). Compared to a year earlier, the percentage for budg-et revenue was similar while that for budg-et expenditure was lower by 0.6 pct. points.

In 2011M1-4 the year-on-year growth in revenue slowed while growth in expendi-ture accelerated compared to the figures for 2011M1-3/2010M1-3. The budget deficit rose from PLN17.3 billion at the end of March to PLN21.6 billion, or from 43.1% of the amount

Table 2. Selected components of the balance of payments, in PLN millions

2010M3 2011M2 2011M3

Current account -821 -806 -1 376

Balance on goods -419 -331 -715

Balance on services 318 264 386

Balance on income -1 241 -1 294 -1 327

Balance on current transfers 521 555 280

Capital account 396 1 397 213

financial account 1 583 4 435 3 434

Polish direct investment abroad -278 -320 -838

Foreign direct investment in Poland 1 280 1 129 1 458

Portfolio investment - assets -262 -176 -223

Portfolio investment - liabilities 689 -357 1 785

Other investment - assets -1 229 7 -2 012

Other investment – liabilities 1 284 4 034 3 390

Derivative financial instruments 99 118 -126

Official reserve assets -343 -4 678 -1 558

Source: National Bank of Poland (NBP)

Table 3. Government revenue and expenditure in 2011 according to preliminary data

2011 budget law

In PLN billions % of annual target

2011M1-3 2011M1-4 2011M1-3 2011M1-4

Revenue 273.1 62.7 87.5 23.0 32.0

Expenditure 313.3 80.0 109.1 25.5 34.8

Deficit (–) / Surplus (+) -40.2 -17.3 -21.6 43.1 53.8

Source: Ministry of Finance, May 16, 2011

Economic Monitor

XII :: Polish Market :: 7–8/2011

planned for the whole year to 53.8%. Com-pared to a year earlier, the implementation of the budget deficit plan was by 2 pct. points more advanced.

Among various types of receipts for the national budget, non-tax income increased the most in 2011M3-2011M4. Growth in in-come from taxes was slower, except for in-come from personal income tax. Growth in receipts from the European Union and other non-refundable sources was the slowest. As regards expenditure, spending on domestic debt service grew the fastest while growth in spending on Poland’s own contribution to the EU budget was the slowest. As regards sources used to finance the deficit, the amount from foreign sources increased the most. Among domestic sources, bonds were the most im-portant item – their value rose in 2011M4 by 22.1% compared to a month earlier.

Growth in central government debt has been accelerating since the beginning of the year.

At the end of 2011M3 central government debt, called State Treasury debt, totalled PLN532.8 billion and was higher by 11.3% than a year earlier. Since the beginning of this year it has been growing increasingly fast. This is especially true of long-term domestic debt, which was higher in 2011M3 by 27.1% than in 2010M3. Medium-term debt was higher by 4.2% and short-term debt was lower by 34%. In a breakdown by creditors, the fastest in-crease was recorded in debt owed to foreign investors (up by 49.4% year on year). At the end of 2011M3 this debt totalled PLN139.7 bil-lion. Growth in the debt owed to non-banking domestic investors was slower - it increased by 5.5% year on year – although at the end of 2011M3 it was nominally higher and totalled PLN250.5 billion. Debt owed to commercial domestic banks totalled PLN142.6 billion and was lower by 3.5% than a year earlier.

At the end of 2011M3 foreign debt amount-ed to PLN199.5 billion and was higher by 13% than a year earlier. Its growth slowed com-

pared to the previous two months. Both me-dium-term and long-term debt increased year on year. The main part of foreign debt – that is debt in Treasury bonds – rose in 2011M3 by 8.3% year on year, against an increase of 8.2% in 2011M2, and amounted to PLN156 billion. Debt in loans amounted to PLN43.5 billion and was higher than a year earlier by 34%. The increase was faster than in the previous months. A rise in debt owed by Poland to the European Investment Bank – by 36% year on year - contributed the most to this increase.

Notes

It is always clearly stated in the text if the data given are seasonally adjusted or in cu-mulative terms. Otherwise, the data are non-seasonally adjusted and in non-cumulative terms. GUS and Eurostat use the TRAMO-SEATS procedure for seasonal adjustment. Time series cleared from the impact of sea-sonal factors by the authors of the report have been adjusted using the ARIMA X-12 method.2011M4 – April 20112011Q1 – first quarter of 20112010H2 – second half of 20102011M1-4 – cumulative data for the January-March 2011 period2010Q1-4 – cumulative data for the period from the 1st to the 4th quarter of 2010Mt/Mt-12 – rate of change for a given month compared with the same month a year earlierMt/Mt-1 – rate of change for a given month compared with the preceding monthQt/Qt-4 – rate of change for a given quarter compared with the same quarter a year earlierQt/Qt-1 – rate of change for a given quarter compared with the preceding quarter

Team of experts

Robert Pater, PhD, Łukasz Cywińskiin conjunction with Tomasz Soliński, PhDInstitute of EconomicsUniversity of Information Technology and Management in Rzeszówwww.ig.wsiz.pl

fig. 16. Producer and consumer prices in Poland

fig. 17. Government revenue and expenditure, in PLN millions

Source: Central Statistical O�ce (GUS)construction pricesinflation industrial prices

-4%

-2%

0%

2%

4%

6%

8%

10%


2010M1

2010M2

2010M3

2010M4

2010M5

2010M6

2010M7

2010M8

2010M9

2010M10

2010M11

2010M12

2011M1

2011M2

2011M4

2011M3

109

,06

8.4

87,

45

3.0

expenditure

actual figure for 2011M1-4 actual figure for 2011M1-3 2011 budget law target

revenue Source: Ministry of Finance

313

,34

4.4

273

,14

4.4

80

,03

6.9

62,7

15.5

Polish Market No. 7-8 (180) 2011

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Transcript of Polish Market No. 7-8 (180) 2011