Polish Market No. 7-8 (180) 2011
“Polish Market” is a prestigious English-language magazine published since 1996. In its pages, it promotes the Polish economy, businesses, regions and Polish science and culture.
Polish Market :: 7–8/2011 15 years PUBLISHED since 1996 No. 7-8 (180) 2011 :: www.polishmarket.com.pl Innovation and modernity Energy Mining Steel industry Eastern markets Ryszard Florek President of FAKRO KATOWICE COAL HOLDING SA Coal - S afe ty - En (KHW SA Katowice) t n e m n o r i v We have energy for the fu�re JOIN US We are a Polish energy holding with 16-percent market share in national energy sales. Our company is re�onsible for production, diﬆribution and delivery of electrici�. Our main focus is continuous development. We already deliver electrici� to over 2.5 million households and 300 thousand companies. Moreover, our company uses 162 thousand km of power lines in an area covering a quarter of Poland. We are looking to the fu�re with energy. 45 hydropower plants and a number of windmills connected to our network give us 30 percent of the market share in electrici� production from renewable sources. We are a national leader in green energy production. www.energa.pl Leader in oil and fuel logistics Severstallat Silesia Achieve more together Steel distributor and processor Riga, Latvia Sosnowiec, Poland Severstallat Silesia Sp. z o.o. NowopogoĹ„ska 1; 41-200 Sosnowiec, Poland T: +48 32 364 24 01; F: +48 32 364 23 03 e-mail: firstname.lastname@example.org; www.severstallat-silesia.pl Contents 7-8/2011 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 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 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 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 PRESIDENt’s award The Economic Award of the President of the Republic of Poland # 18 Henryk Jezierski, Undersecretary of State, National Chief Geologist: Shale gas – an inimitable opportunity # 64 Polish Economic Nobel Prize # 20 transformation and privatization Fakro – we are successful on the global market # 22 INNOVATION Artur Woźniak, President of the Polish Pharmaceutical Holding (PHF): Haste is only good for catching fleas # 74 Progress 2011 Innovation Gala # 24 Eastern cooperation Andrzej Najgebauer, Professor at the Jarosław Dąbrowski Military University of Technology in Warsaw and school’s Prorector for Research: Detecting threats # 37 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 Ecological energy for economy and industry # 39 4 :: polish market :: 7-8/2011 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 Marek Zuber, a financial markets analyst: Will the euro zone survive? # 93 Sandra Wierzbicka: Poland-Ukraine # 82 law & taxes 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 Correction The 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-todate. LOT was the first European airline to introduce EMB 170 airplanes. The deliveries 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.” 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 The Editorial board apologizes for the mistake. Publisher: Oficyna Wydawnicza RYNEK POLSKI Sp. z o.o. (RYNEK POLSKI Publishers Co. Ltd.) President: Krystyna Woźniak-Trzosek Translators: Maciej Bańkowski, Grażyna Śleszyńska, Sylwia Wesołowska-Betkier, Sandra Wierzbicka Vice-Presidents: Błażej Grabowski, Grażyna Jaskuła Photographers: Jan Balana, Łukasz Giersz 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@example.com Polish Market Online Editor-in-Chief: Wiktoria Grabowska Editor-in-Chief: Rita Schultz firstname.lastname@example.org Editorial board: Jerzy Bojanowicz, Ewelina Janczylik, Janusz Korzeń, Maciej Proliński, Jan Sosna, Magdalena Szwed, Janusz Turakiewicz, Sandra Wierzbicka, Elżbieta Wojnicka. 6 :: polish market :: 7-8/2011 English Editor: Sylwia Wesołowska-Betkier Sales: Phone (+48 22) 620 38 34, 654 95 77 Katarzyna Malinowska – Sales Director email@example.com Natalia Suhoveeva firstname.lastname@example.org Ewelina Surma email@example.com PR: Joanna Fijałkowska firstname.lastname@example.org 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. Unsolicited material will not be returned. The editors reserve the right to edit the material for length and content. The editors accept no responsibility whatsoever for the content of advertising material. Reproduction of any material from this magazine requires prior written permission from the Publisher. Editorial 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 questioned, especially after Germany decided to close part of its nuclear power plants. And then, an alternative for Poland appeared – shale gas. The first drilling results are promising, but we have to wait several more years for reliable and complete data on our resources. 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 Geological Services and the National Geological Institute – 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 estimate of the Polish shale gas resources,” says Henryk Jezierski, Undersecretary of State, National Chief Geologist, in an interview published 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 Clinton, as well as President Obama are interested 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 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 protests in the United States, where such production is underway. However, one thing is certain: no risk, no growth, no innovation, 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-Trzosek President Rynek Polski Publishers Co. Ltd. July 1 has become an important date for Poland. Here we are, having taken over the Presidency from Hungary, and now leading in the EU Council is our job. Among others, the priority of the Polish Presidency is that the process of signing association agreements and creating free trade zones progressed within the Eastern Partnership, particularly completion or significant progress in negotiations with Ukraine and Moldova. Polish Presidency will also strive for progress in negotiations concerning visa liberalization. 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 European Union is to encourage this country to cooperate with the West, however, provided that the country respects basic rules of democracy and human rights. “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 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 category 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 economic 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 European 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 significant references to the Southern dimension of this policy, should be considered a good sign and an attempt to move away from thinking about European Neighbourhood Policy in terms of rivalry between its Southern and Eastern dimensions.” Let us remain optimistic and hope that our priorities and cooperation with our partners from the East will bring business partners and will earn Poland the opinion of the promoter of Eastern Partnership. Rita Schultz Editor-in-Chief 7-8 /2011 :: polish market :: 7 German Chancellor Angela Merkel in Poland Angela Merkel and her husband, Professor of Quantum Chemistry Joachim Sauer, paid a private visit to Pomerania 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 Polish 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 international relations. I am looking forward to this visit, hoping that it will be mostly a private one, providing rest and leisure to the Chancellor,” said the President before the meeting.:: President visits Slovakia Bilateral economic, trade, and political cooperation, and the priorities of the Polish Presidency of the EU, constituted the subjects of talks in Bratislava between the Presidents of Poland – Bronisław Komorowski, and of Slovakia – 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, Poland and Slovakia are linked by relations at “an absolutely above standard 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,” observed Gašparovič at the conference. The Slovakian President added that it was the time for his country “to emphasise its role, while Poland can promote our interests.” After the meeting with his Slovakian counterpart, the Polish President 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 National Council of the Slovak Republic, Richard Sulik. :: Polish President talks to the President of the European Council about Eastern policy President’s participation in the inauguration of the Polish Presidency Eastern policy, particularly towards Moldova and Ukraine, was one of the issues discussed during the meeting of Bronisław Komorowski and the President of the European Council Herman Van Rompuy. “I would like to observe with enormous satisfaction that there is far-reaching agreement on the subject of the prospects of European 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 Summit in Warsaw, which is due to take place in September. Both politicians met at the Belvedere Palace on the occasion of the inauguration of the Polish Presidency. President Komorowski “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 Polish 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, opening good prospects for the future. There is a lot to be glad about, and to be proud of. The Polish 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. 8 :: polish market :: 7-8/2011 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. :: Prime Minister on the Polish Presidency Prime Minister Donald Tusk has presented the priorities of the Polish Presidency in the Polish Parliament. He emphasised that during Poland’s Presidency the Polish government will not only make efforts to maintain, but also improve, Poland’s status as a responsible 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 responsibility with regard to the EU’s foreign relations,” he stressed, adding that Poland will focus on maintaining and improving its status as a responsible state which is able to deal with its economic and financial issues. The Prime Minister underlined that Poland has developed its image as a country which is becoming the new driving motor of the European Union. “Today Poland is treated as one of the leaders - of which unfortunately 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 politicians and EU Member States. Donald Tusk remarked that it is important for good political initiatives to appear during the Presidency. “We have a significant interest in Poland’s Presidency being remembered by Europeans through issues including the finalising of long-term processes,” he said. “It is possible that during the Polish Presidency we will see the completion 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 agreement and the agreement on free trade. “This would be the first successful step in the process of bringing Ukraine closer to Europe,” the Prime Minister stated. “I think that those who are strongly opposed to my government should for these few months attempt to act respectfully and refrain from thoughtless and aggressive statements directed against the promotion of Poland’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 decisions 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 rotating Presidency of the Council of the European Union. The first point on the agenda of the European Commission’s visit to Warsaw was the plenary session, during which the most important elements of the Polish Presidency programme were discussed. Prime Minister Donald Tusk and European Commission President Jose Manuel Barroso, as well as Ministers and Commissioners, discussed the issues of the new long-term EU budget, energy policy, universal EU patents, the Single Market Act, the establishment of a European Endowment For Democracy, the new regulation concerning cohesion policy, and the legislative 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 respective Ministers worked with Commissioners in thematic groups. During these individual 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 Presidency and the Commission. “If Europe is incapable of taking collective decisions based on cooperation, then all European countries will have to suffer the consequences. When we speak about the EU, what is important 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 optimism and enthusiasm will become contagious,” Barroso added. :: 7-8/2011 :: polish market :: 9 Our Guest Construction We have to promote innovation Prof. Michał Kleiber President of the Polish Academy of Sciences (PAN) There are many firms in Poland that are truly innovative, though completely unknown. For this reason 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 enterprise models. Publicising genuine successes of innovative firms, successes that are so rarely noticed by the media, is an important part of our joint activity aimed at developing our country. We all too often discuss matters which are of little or no importance from the point of view of the real interests of the Polish economy. 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 assessment In Poland, there are still too many constraints hampering the development of innovation. There are administrative barriers in the form of regulations that are not conducive to risk-taking in innovative activity. Among these regulations are such important laws as the law on public procurement, law on public-private partnership and the law on offset projects, or investment in Poland by foreign suppliers of military equipment. In line with the letter and spirit of our law, the best thing is to carry out safe projects, which do not require taking any risk. But this is no road to big success – businesses ready to take well-calculated risks, something possible only in the proper regulatory environment, have the greatest achievements. Another barrier 10 :: polish market :: 7-8 /2011 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 uncertain success of innovative activity because it is necessary to know how to assess the risk. Our history provides a partial excuse for the situation – 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, confidence is needed that this kind of activity may be truly profitable, as is the case across the world. Wise Poland The “Wise Poland” manifesto I have recently published is the result of my determination in fighting the widespread disbelief that success based on human creativity can be achieved. I know the problems that Polish innovators are facing. But every day I meet many people who prove that creativity in thinking about a firm’s activity may bring about real successes. Unfortunately, this potential is not sufficiently exploited in Poland. At school, there is no emphasis placed on developing students’ creativity and ability to work together in a team. Apart from creativity, the eagerness and ability to work together is the key condition of success. You may be creative and at the same time cooperate with others, reach compromises in discussion and know how to reach agreement on the most difficult issues. Polish people do not trust institutions or each other. Meanwhile, it is impossible these days to do great things all on one’s own. :: Our Guest Construction Let us favour ambition and innovation Prof. Krzysztof Rybiński Rector of Vistula University What is innovation? It means putting into practice an idea which creates a new value for a firm or country. It is worth emphasising that one of our strengths is that Polish people are enterprising. 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 examples 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 Innovation in the Polish Economy, we present the first examples of institutional cooperation between universities 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 computing 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 advantage 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 innovationbased economy. Unfortunately, the report also presents 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 widespread, especially in the public sector. We are still not greedy enough – I mean not only greed for money but also greed for international success 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 project 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 workaholics – instead of developing innovation, we work almost the longest hours in the world. The Polish education system and the system of financing scientific research are assessed very poorly. It even seems that it eliminates innovators. 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 waking up in people, something which offers hope for the development of our country.:: 7-8 /2011 :: polish market :: 11 Mobile laboratory measuring road infrastructure Research achievements and road practice Prof. Leszek Rafalski, director of the Road and Bridge Research Institute (IBDiM) W hat do you think are the key transportation issues connected 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 estimates, 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 construction of 906 kilometres of motorways and 2,101 kilometres of expressways 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 modernization of railways, coordination 12 :: polish market :: 7-8 /2011 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 Institute (IBDiM) is a leading Polish scientific institution dealing with problems of infrastructure. Our research and implementations, expertise and consultations support investments, modernizations and renovations of roads and bridges. We also help to introduce rational road network management systems. We recognize the state of roads and bridges using modern 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 communication construction. The results of our research and our experience is used by both road administration – on the national and local level, and companies executing road works. Does research conducted by the Institute result in a high level of innovation of this sector of the economy? In the recent years IBDiM participated in the development of many innovative solutions working with other research institutions and enterprises. Examples of this are innovative projects like: LED Road Signs (DZD) – electronically controlled new generation signs with variable content; Active, Intelligent Road and Bridge Safety Barriers (AIBDiM) using artificial intelligence in monitoring and controlling of road barriers, as well as the Intelligent System of Complex Vehicles Identification (ISKIP) enabling automatic identification of the vehicle based on simultaneous recognition of such characteristics as colour, brand, type and the registration number. thickness of the structure. However, this technology often makes it difficult for users to travel smoothly on the motorway, 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. Traffic speed deflectometer seen inside the mobile lab How do you use European experience to stimulate investments and support investors? IBDiM actively cooperates with foreign centres and participates in numerous international organizations. It is associated e.g. in FEHRL – the Forum of European National Highway Research Laboratories bringing together the leading European institutions dealing with the issues of roads and bridges. This organization creates strategic research programmes (SEERP) which are the basis of later research projects financed by the European Commission. A representative of IBDiM is an employee of FEHRL secretariat. This has direct bearing on the transfer of modern solutions for Polish road practice. IBDiM is also a partner of many European programmes. An example of the high level of our research is, one of the three in Europe, Mobile laboratory of pavement parameters quantification based on non-destructive 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 PNEN norms. Numerous modern materials such as polymer pavements, polymer modified emulsions, thin hot and cold layers were introduced to Polish road construction practice. Recently, 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 thickness of individual layers. One way of cost-effective building is staging the Implementation of the intelligent system of comprehensive vehicle identification project What is the scale of needs and completions in the field of bridge construction in Poland? What are the good examples of such investments? It is difficult to precisely determine the overall needs in the field of new bridge construction. The analyses carried out few years ago show that 20 new bridges are needed only on the Vistula River in order to ensure adequate traffic conditions in Poland. At present, the construction of the longawaited North Bridge in Warsaw is underway. Speaking about bridge investments 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 innovative 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 Institute www.ibdim.edu.pl Researching road barriers: Crash test in a training site 7-8 /2011 :: polish market :: 13 Our Guest Construction Poland offers its advice and experience, bets on partnership 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. “European Dilemmas - Partnership or Rivalry?” is the slogan of the forthcoming 21st Economic Forum in the Polish mountain resort of Krynica Zdrój. The forum is the most important meeting in Poland of politicians, business people, researchers and media people from European countries, especially Central and Eastern Europe. What do you expect of the debates? I think that partnership is a fundamental 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 between new and old European Union members or rich and poor members. One should remember that the partnership also applies to dialogue with external countries, which is a very important item of our common discussion. We need to create a new approach to the neighbourhood policy without dividing it into eastern or southern policy. The neighbourhood policy should be expanded by the export of our economic achievements, legal regime, food safety and standardisation rules, and other elements necessary in building a single market. In the difficult time of economic crisis in the world and in Europe, we will not be talking about any largescale EU enlargement. But Poland’s and other countries’ experience shows that economic integration has a very favourable impact on the development 14 :: polish market :: 7-8 /2011 of both a new member state and the remaining EU members. Our proposal for discussion within the European Union Council of Ministers and with the Eastern Partnership members will be how to expand the area where the EU internal market regulations are in force, especially regulations on the free movement of goods, services and capital. Do you expect the Eastern Partnership programme to be a success? 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 Partnership members but also North African countries. Twenty five years ago Poland and Ukraine were at the same level of economic development. Now, Poland is several times more developed than Ukraine. And one should remember that our integration with the EU contributed the most to this development. It is a very good argument for our Ukrainian partners, showing them that difficult pro-integration decisions are worth taking and that challenges associated with the integration process are worth accepting. What impact can the difficult economic 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 Union has to cooperate with its neighbours, 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 instrument supporting their economic growth. Otherwise, the neighbouring countries will not use the opportunity offered by economic and political integration. 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. 21 Economic Forum st Krynica, Poland, September 7-9, 2011 „European Dilemmas- Partnership or Rivalry?” The Economic Forum in Krynica has became an important spot on the political map of the world and probably the only one, where East meets West on such a large scale » More than 120 plenary sessions and panel discussions, lectures of the personalities of the public sphere, workshops and round table discussions; » 2 000 invitees from Europe, Asia, USA and Middle East countries The base for the 2011 Economic Forum programme will be groups of topics discussed during the 2011 edition: Macroeconomics, Business and Management International Politics, Forum of Regions, Energy Forum, Innovations and Sustainable Development, New Economy, State and Reforms Cultural programme: literature evenings, presentation of movies, concerts, evening cocktails organised by the Economic Forum partners; Wide variety of recreational events scheduled for September 8 and 9 after 4pm more various than in 2010 www.economic-forum.pl contact: email@example.com On June 20 you accepted your nomination as a member of the EU-Russia Gas Advisory Council from EU Commissioner for Energy Günther Oettinger. What is your most important task in this institution? 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 energy policy will be the main political topic we want to propose for discussion 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 communicated 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 internal energy market, third party access rights (TPA) and the transparency of commercial contracts. I think that by appointing me to this post the European Commission wanted to point to the process which Poland had started in relations with the Russian Federation in 2010. In the near future natural 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 partners. This is how I see my role in the Gas Advisory Council. Interestingly, I am the only central government official in the Council. The prospect of using shale gas has been discussed in Poland for a few years now. And you said that natural gas may experience its “golden age” soon. If so, does Poland have a chance to become a shale gas superpower? Or is it too early to say so? I would very much like gas companies’ estimates concerning Polish 16 :: polish market :: 7-8 /2011 © Carlo Taccari - Fotolia.com Our Guest Construction shale gas resources to come true. As far as I know, the geological structure of the Polish shale gas deposits is almost identical with that of the deposits in the United States. Consequently, 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 report 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 patiently for more news about gas deposits. On April 11 Poland became a member of the Council of the International Renewable Energy Agency (IRENA). You represent our country. The Council promotes renewable energy and its use. How is Poland going to pursue the Council’s tasks? The idea to set up an international agency for renewable energy originated in Germany. And this is how the idea to promote renewable energy 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 Assembly, which is its highest authority, held its first meeting in early April. The Assembly formally approved Abu Dhabi as the IRENA headquarters and formally elected its statutory bodies. 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 technologies. For the European Union the problem of renewable energy means discussion about sustainable development 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 offering reliable information about which technologies are worth promoting and adopting. An objective and analytical approach to this issue is needed. 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 organisation has every chance to play a very important role in the future. Interview: Ewelina Janczylik President’s Award The Economic Award of the President of the Republic of Poland Bronisław Komorowski, the President of the Republic of Poland, has granted the Presidential Economic Awards in Poznań. They went to the best four Polish enterprises selected from among 13 companies that had been nominated 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 President of Poland presents the award to the representatives of Novol: Piotr Nowakowski and Piotr Olewiński © photos: prezydent.pl 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 18 :: polish market :: 7-8 /2011 The President of Poland presents the award to Marek Szymański, the executive director at WATT President’s Award Polish Economic Nobel Prize 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. W hat does Corporate Social Responsibility mean for you? Is it just meeting formal and legal requirements or also social activity and eco-friendliness? P. Olewiński: Novol’s activities are guided by the principal of sustainable development because of the belief that the implementation of projects aimed at environmental protection, although it does not bring immediate financial benefits, is necessary in order to ensure ecological safety and the conservation of natural values of our surroundings. Novol, owing to sustainable and integrated policy, seeks to reconcile the need to achieve satisfactory economic performance with deep concern for the natural and social environment. Undoubtedly, the implementation of the international programme “Responsible Care” (www.rc.com.pl) is an important element in achieving these goals. It is an expression of commitment to voluntarily undertake effective measures ensuring the implementation of principles of eco-ethics, the improvement of working conditions, increase of process safety and staying in touch with the environment. In order to improve the results of environmental performance, NOVOL has implemented and certified for compliance with the international standard ISO 14001: 2004, an environmental management system. You have received the award in the Corporate Governance and Corporate Social Responsibility category. It concerned companies which show particular attention to management 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 internal and external contacts. Creating a proper working atmosphere and respecting another people is an essential component of our everyday work. P. Olewiński: A steady team of people, whom we can trust is a powerful asset of our company. Over the years, there are better and worse periods in business and it is precisely in these vulnerable times that our approach to this way of working pays. A good team makes it easier to navigate 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 20 :: polish market :: 7-8 /2011 President’s Award FAKRO – we are successful on the global market Interview with Ryszard Florek, president of FAKRO Ryszard Florek receives the President’s Economic Award from Bronisław Komorowski, the President of the Republic of Poland 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. Global competition forces companies to continuously increase quality, be innovative, motivates them to act and develop. It has the features of sportsmanship, where the prize at stake is winning in the worldwide economic competition. FAKRO has successfully won over foreign markets. Today it is the world’s second largest producer of roof windows. The FAKRO Group, employing 3,300 people, consists of 12 production companies and 14 distribution companies located in Europe, Asia and America. FAKRO roof windows are distributed in 47 countries worldwide. The company is also the world’s leading manufacturer of attic stairs. The work of my associates and employees in Poland and abroad has also contributed to winning such a prestigious prize. It is also thanks to our distributors, roofers assembling our roof windows and customers who choose our products. It is them who give us the opportunity to develop an international business. Our success is also the result of excellent cooperation with foreign partners, who are very committed 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 companies which drive the economic development of our country and create Poland’s prestige on the international arena. After all, it is Poland that has become the global leader in roof window manufacturing. What, in your opinion, is the most important in managing a company? To manage a business you need to have specific knowledge and perseverance 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 undertakings should be carried out with persistence, unconventional thinking and responsiveness to market changes. Flexibility in relation to market and customer requirements, as well as continuous investment in product 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 people, who believe that even the most fantastic visions can come true. The condition of belonging to such a group is knowledge, diligence and determination in pursuing a goal. The success of a company is always built by people. In a changing economy an increasing role is played by the knowledge and attitude of employees. This is the “competitiveness factor” that allows companies to find their niche on the market. What makes your products desirable also outside of Poland? FAKRO always approaches individually customer needs. Due to climatic and architectural differences these 22 :: polish market :: 7-8 /2011 President’s Award needs are very diversified. But there are many features that all our customers 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 windows is their safety. FAKRO roof windows are equipped with a special topSafe reinforcement system, which significantly increases the window’s resistance to break-ins, and additionally protects against accidental opening, 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 system protecting against removing the glass and a handle with lock. This way the window is in different ways protected 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 automatic air inlet V40P, which is typically mounted in roof windows. By automatically 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 adding that FAKRO has the warmest window on the market – FTT U8 Thermo – in its product line. It is tailored to the needs of passive buildings. When assembled with the Thermo flashings, it has the heat transfer coefficient of 0.58 W/m 2K, which makes it the most energy efficient roof window in the world. The preSelect and proSky roof windows series are a symbol of comfort. PreSelect is a new-generation roof window with two separate functions of opening the sash: tilting and rotating. The separated opening functions provide stability and increase the user’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 unobstructed view outside. The rotation function is used to wash the outside of the window and to install the awning. ProSky windows have large dimensions 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 innovative companies in Poland. Where does this modern approach come from? What are the activities taken 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 centre which employs over 70 engineers. FAKRO has filed almost 80 patent applications. We export not only roof windows, but also solutions and the creative technological thought developed 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 successful 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. W hat are your further development plans? For years, we have been consistently executing our company strategy of building a global business and strengthening our number two position in the world. We are aiming at reducing the gap to the global market leader in roof window production. A higher share in the global market means lower costs, mainly of distribution, while it limits the possibility of price differentiation for our main competitor, which today is the main constraint for FAKRO’s development. :: FPP - V preSelect roof window FTT U8 Thermo roof window 7-8 /2011 :: polish market :: 23 Innovation Progress 2011 Innovation Gala 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. The purpose for organizing this ceremony was the announcement of the most innovative firms on the Polish 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 University and the co-organizer of the event, highlighted in his speech the strengths of the Polish economy, owing to which companies who think truly innovatively 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 development and create insurmountable barriers. Yes, we have brilliant youth, but the system of education itself is on a very poor level. We can also boast some examples of innovation, 24 :: polish market :: 7-8 /2011 however, bureaucracy known to all and risk aversion discourage investors. Such examples could be multiplied. The night of 28 June showed that we must think positive and support companies, which are not afraid to take chances and create an innovative 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 innovative businesses. Such events are very important, as in Poland attention is often directed towards things of little importance from the point of view of Poland’s interest. Prof. Kleiber believes that everything should be done to encourage Polish entrepreneurs to show their achievements, to boast them. In attendance was also Prof. Henryk Skarżyński, one of the most famous Polish researchers, who bets on innovation. 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 independently, the award went to Integer.pl. In the best innovative project in the utility and versatility category two companies were awarded: Hydromega and Unikkon Integral. In the ecology 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 institution Grupa TP was acknowledged. In the best innovative project in the telecommunications category Exatel S.A. was awarded and in the best innovative project in the banking category the winner was Alior Bank. :: Photos: Łukasz Giersz private banking HIGHER CULTURE OF BANKING. Alior Bank raises standards in every ﬁeld of banking, also in Private Banking. You can experience it in our Private Banking Branches: Warsaw, Al. Jerozolimskie 94, Marzena Pietrzak, PB Office Manager, +48 782 892 129; Gdańsk, al. Grunwaldzka 163, Jan Stranz, PB Branch Manager, +48 726 235 713; Katowice, ul. Rynek 12, Ewa Stelmaszek, PB Branch Manager, +48 782 893 391; Kraków, ul. Pilotów 2, Janusz Patla, PB Branch Manager, +48 723 685 006; Poznań, ul. Szyperska 14, Agnieszka Ostoia–Nowak, PB Branch Manager, +48 723 685 343; Wrocław, ul. Marii Skłodowskiej-Curie 34, (Grunwaldzki Center Building, 5th ﬂoor), Edyta Wantuch, PB Branch Manager, +48 726 087 692. www.aliorbank.pl 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 switches 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 service, 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 investment. You pay only for the use of it. Customers have an impact on the shape of the service by reporting their needs, which we gradually realize. Our service can be used by businesspeople as well as regular 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 being 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 Chamber of Commerce for Electronics and Telecommunications. It serves as an application engine there. The SZOK service, delivered also via the Internet, promotes process management, providing exemplary models of organization for small and mid-sized enterprises. It allows these companies to use process management without the need to spend money on consultants, who would help describe the processes in the organization. The models provided by SZOK are proved and they were designed with the use of the best world practices. In addition to the iPartner24 service, mis24.pl is also the administrator of a networking portal for wine lovers – nasze-wina.pl. The portal 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 portal, 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) Bożena Lublińska-Kasprzak President, 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, reward and award such companies. It is worth that they and their heads become a kind of celebrities, that they are in the media. Our experience and research show that these examples are important. They encourage 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 interested in introducing cutting-edge innovative solutions. Innovation does not always require a lot of money. Often it can be an organizational or marketing change, one that can be introduced even by employees themselves. PARP has recently completed a competition “Creating Tomorrow” promoting employees who, by themselves, prepare innovative projects within their companies. Artur Niewrzędowski (Talking Heads) and attorney Michał Wochnik 26 :: polish market :: 7-8 /2011 STRONG POINT OF ANY KITCHEN Ferro kitchen battery from scratch-resistant high quality steel www.ferro.pl 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, judges, 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 institutions 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 participate in its implementation. The system is used not only by individual users, but also institutions, and media helping us in promoting and developing new technologies. To date we have sold over 1,000 licences. 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 create ever new, ever more perfect programmes. This is also how MagicScribe was developed. Jarosław Chałas (Chałas & Partners Law Firm), Jerzy Marszalec, PhD (Innovatech Consulting) Dominik Wojewódka President, Ecotech Each award makes me happy. In this case I am particularly happy because of the reputation of “Polish Market,” as well as the participation of the academic circle from which I derive. Granting us the award exactly on this day is very symbolic 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 construction of our plant near Opole. Part of the proceeds will be dedicated 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 Armenia considering two very large projects. We have acquired these contracts owing to the GreenEvo project supporting Polish export technologies. We have also signed a letter of intent with Vietnam for the decommissioning of chemical residues remaining after the war. It is also a major project which will probably 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. 28 :: polish market :: 7-8 /2011 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) Innovation Krzysztof Chełpiński (mis24.pl), Krystyna Woźniak–Trzosek (Polish Market), Bożena Skibicka (MIS SA), Agnieszka Nogajczyk–Simeonow (PTE Allianz), Dorota and Grzegorz Ciechomski Mirosław Kasprzak (PTE Allianz) and Natalia Suhoveeva (Polish Market) Anna Rosińska (Enel-Med), Rita Schultz (Polish Market), Aleksandra Trochimiuk (Tailor&Baker) Polish Market: Sandra Wierzbicka (editor and translator), Katarzyna Malinowska (marketing director), Maciej Proliński (editor), Błażej Grabowski (vice-president) Marek Zuber (economist) and Rafał Hiszpański (Warta) 7-8 /2011 :: polish market :: 29 Innovation Waldemar Budzyński Vice-president for Technical Affairs, Exatel Exatel is one of the largest telecommunication companies 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 innovative networks in Europe with a length of 20,000 kilometres 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 backbone networks for a good few years now. Last year, Exatel decided 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 telecommunications, which reduces the necessary investment outlays as well as the costs of maintaining the network (i.e. through reducing electricity consumption). Henryk Lewiński (Israel-Poland Chamber of Commerce) and Jarosław Dąbrowski (a Finance) Zbigniew Zienowicz President, Hydromega Sp. z o.o. Since the beginning of your activity you have been dealing with designing and producing hydraulic systems and industrial automation, but you have also been running research. The common feature of all our projects are actuator-based hydraulic 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 interesting ideas and knowledge, which until today is its greatest asset. Consistent policy has led to many innovative products which today 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. Maja Sujkowska (ECKP), Beata Sujkowska (Ecoacoustic), Jarosław Chrobociński (Le Regal) The title which you have won is a confirmation that a well thought-out tactic, creativity and introducing innovative projects 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 development institutes. We have a certain ease in establishing contacts with the world of science. I believe than we are helped by our passion 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 Lidke (EFL), Balbina Wołongiewicz (Natura Drogerie) 30 :: polish market :: 7-8 /2011 Innovation 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) Rafał Brzoska President, InPost Sp. z o.o. Prof. Michał Kleiber 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 solutions 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 receive 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 Paczkomaty 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, implementing a platform enabling comprehensive sales of products and services through Facebook or introducing Paczkomaty was inspired by the current trends on the e-commerce 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 functionality – are accepted by the market with caution. It takes a lot of time to change consumer habits and systematically build their confidence in completely new, non-standard 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. Prof. Henryk Skarżyński 7-8 /2011 :: polish market :: 31 Innovation Marcin Bosacki Head of International & Social Media, InPost Innovations 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 Polish 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 Customers 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. Aneta Raczek President, Ferro Every prize makes me happy. It is a sign of recognition and acknowledgement that our adopted strategy makes sense. The awarded VerdeLine brings benefits 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 consideration 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 behaviour on the environment around us. Rafał Czekaj Director of Innovation, Alior Bank This is the first award we have received for the Digital 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 innovation 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 interactive way, but first of all they build a completely different relationship 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 conversation as partners. Thirdly, it shows our commitment to reduce the amount of paper documents, printed and copied in a branch. On the one hand it minimizes costs, but on the other hand, it is about environment protection. 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 important 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 impossible” and so managed to create several unique solutions. Prof. Krzysztof Rybiński Krzysztof Chełpiński (mis24.pl) Marcin Bosacki (Integer.pl) 32 :: polish market :: 7-8 /2011 The 16th Silesian Gala of the BCC (Śląska Gala BCC) 28 August 2011, Promnice Śląskie The most prestigious regional project, gathering entrepreneurs, opinion-leaders, politicians and representatives of Silesian economic 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. ADVERTISEMENT The Nowy Styl Group is a European leader and one of the biggest manufacturers 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 financial support to the Group. Currently, the Group is implementing a project called “Innovative Technologies in Furniture Industry - Construction of a Modern Production Plant at Nowy Styl Sp. z o.o. and Introduction of Innovative Products to the European Market.” The project is being implemented under Activity 4.4 – New Investments with High Innovative Potential on priority axis 4 Investments in Innovative Projects, under the Innovative Economy 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. :: 7-8 /2011 :: polish market :: 33 Innovation Bożena Lublińska-Kasprzak (PARP) Jacek Kliszcz (PWS Konstanta) Jacek Kopyra (Korporacja Radex) Zbigniew Zenowicz (Hydromega) Aneta Raczek (Ferro) Rafał Czekaj (Alior Bank) Tomasz Nowakowski (Telekomunikacja Polska) Dominik Wojewódka (Ecotech) Waldemar Budzyński (Exatel) 34 :: polish market :: 7-8 /2011 mobile Internet without a subscription At Orange dla Firm, we understand that there are situations where you or your employees need to use the Internet. Thatâ€™s why, with our Business Everywhere Day by Day offer, you pay only for the days on which you use mobile Internet. access changes with Orange details of the Business Everywhere Day by Day promotion at www.be.orange.pl business changes with Innovation Don’t be frogs: an innovation in cost management What connects a frog with innovation, 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 similarity to business is significant. We know examples of companies that had operated in comfortable conditions of income, but had been closed to changes and innovative solutions and, as a result, lost their places in the market. 21st Century business means focus on innovation in the interests of future income, sustainable development in the interests of future generations and costs associated with the activities of the company to raise funds for the aforementioned. A guarantor of dynamic growth and space for innovation is focus on core-business processes. Everything that is solely a useful process or expenditure, rather than a strategic one, needs full control and transparency, and a competent business partner. Entrepreneurs, when asked what is most important to them in collaboration with their suppliers, answer: :: product/service quality, because it ensures single expenditure without increasing the cost to cover the defects of a poor-quality product (additional supplies, rapid intervention purchases, etc.). :: product/ service effectiveness, because it ensures single expenditure without increasing the cost of the additional quantity of seemingly low-cost and low-capacity products; efficient service is the minimum 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 36 :: polish market :: 7-8 /2011 useful costs present in any Company, regardless of its size or business profile, is the processes associated with the supply of office supplies. A negligible area, provided that it works smoothly, and “it’s harmful”. Why? Every employee in the company is involved in the process of the purchase, receipt and consumption of these products; products and services are supported by key business processes and for this reason we want you to look at this seemingly insignificant process very seriously. If you care about time and costs we suggest 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 European 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, operational know-how has helped to satisfy the most demanding and the most developed companies; also on the Polish Phone: 801 300 002 www.lyreco.pl market. The Lyreco projects are based on a full analysis of Customer needs with concern for all aspects of sustainable development. Their goal is to transfer the costs associated with the process 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 improvement without additional cost to the Customer. You just simply need to ask the Lyreco consultant what Lyreco can do to increase the cost competitiveness of your business. Anna Wolska Corporate Accounts Sales Director Proposed innovative cost management Improvement in the Company’s competitiveness without affecting the quality of the core business. High quality Cost discipline Minimising the number of documents A wide choice of premium and budget products Budget control The selective limitation of useful costs The support of sustainable development A guarantee of non-violation of the main processes Reporting and clarity of costs Innovation Detecting threats “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. On March 31, 2011, the Senate passed a Development Strategy for the Military University of Technology 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 academic and military schooling system. In preparing the strategy I based on the Armed Forces Development Strategy 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 carry on a large number of R&D projects we need adequate technology. At the same time it must be kept in mind that since 2003 WAT is a civilian and military college. This is why our strategy speaks about education under the EUobligatory three-tier Bologne system with a strong focus on Ph.D. studies. Three years ago we had only 140 doctoral 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 professorships), we can also safely say we are a technical university. In various rankings together with civilian technical universities we place among the top ten schools. This is a very good position considering the number of technical universities in Poland and our relatively short tradition in educating civilian students. We are, however, unrivalled among military schools. In concepts developed by the National Security 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. Especially those who are to deal with highly-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 optimum study environment for 10,00012,000 students, of which 10–20% would be military students. That’s all a professional army like ours will be able to take in annually. A nd 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. Moreover, please bear in mind that most of our research work concerns military 7-8 /2011 :: polish market :: 37 Innovation technology and its employment for our country’s internal and external security, and involves a variety of scientific disciplines. This is also written down in the strategy document. Our other field is hi-tech, especially modern highly-resilient materials with high safety parameters. We also conduct studies on advanced laser technology and optoelectronics, especially their applications in reconnaissance gear used to detect biological, chemical, 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 security-connected specialties open for military and civilian students. Our graduates have no trouble finding work, in fact they’re quite sought after. Not least thanks to our traditional order and discipline, which makes them excellent employees. W hich of your research labs would you call your leading units? Quite certainly the certified labs dealing with cryptology, optoelectronics, electromagnetic compatibility and vehicles. These labs work on certified machinery and equipment. The income these labs generate isn’t very high but the fact that we do have certified 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 Faculty are on a number of security projects carried out in partnership with other units. For instance the Wasko company helped us develop a so-called National Encryption Device which enables the rapid coding of data, including 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 under the operational programmes Innovative 38 :: polish market :: 7-8 /2011 Economy, Human Capital and Infrastructure and Environment. In 2005–2007, when we started using EU structural funding, we received PLN2.1 million for training and investment projects. But already in 2008-2010 our school sealed contracts for a record PLN180.5 million. In all, we received PLN287.2 million for research work. The over-threefold rise in R&D funding between 2008 and 2010 was largely due to high-budget target and EU-sponsored development 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 carried 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 projects underway at our school, there’s something interesting going on in all our departments 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 European Defence Agency? It’s the other EU countries that want to work with us. Of course we’re willing to cooperate and currently we are in fact participating on a number of grant projects, among others in battlefield survival and optoelectronics. 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 prestigious. You say that WAT trains specialists in security fields. Next year Poland will be hosting 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 optoelectronics team equipped to protect against biological threats. We and some other organizations developed the technology this team will use. They underwent tests quite recently. These technologies enable the early identification 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 metres, we knew right away that there were infected passengers on board who had to be isolated from the rest. Does this mean you’re able to say if a plane that’s just landed is carrying someone infected 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 visits? These are representatives of various companies and institutions. They usually come, take a look around, and then contemplate if they should invite us as a partner in a consortium. Sometimes such projects need an academic school among the project partners, and we have a strong position and vast experience in military technology as many of our staff work on NATO projects. What novelties can we expect in the academic year 2011/2012? We’re working on some new special faculties. I think this year will be difficult because here are some new R&D centres on the market, notably the National Research and Development 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 preparing new qualification criteria, partly dictated by changes in academic education laws. This in turn could result in considerable curriculum changes. Interview: Jerzy Bojanowicz Innovation Ecological energy for economy and industry Paweł Malkowski Intensively developing economy worldwide has started contributing to severe climatic changes. Climatic changes at our globe threaten human existence via extreme weather phenomena, 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 temperature on our planet by from 2°C to 6°C. Scientists 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. According to the requirements of that protocol, industrialised countries are to reduce greenhouse gas emissions by approx. 5% by 2012. The diagram presents recommendations for particular countries in the area of limiting greenhouse gas emissions. The Kyoto Protocol has been ratified 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 developed a policy in the area of air pollution in the document entitled “Ecological policy of the state for the years 2007-2010 considering the perspective for the years 2011-2014.” Among the most important activities of the Ministry of Environment Protection, there is support of investments in the area of air protection undertaken by business 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 System - 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, outof-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 necessary for generation of each of such forms of energy separately. The application of tri-generation systems in the summer improves the economy of electricity cogenerated with heat at low customer demand for heat and the existing demand for chill. From the practical point of view, tri-generation is a technological expansion of cogeneration by the possibility of producing chill. Fig. 1 presents energy efficiency of energy generation based on the traditional method and of cogeneration of electricity and heat. Innovative technologies 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 municipal management in Wodzisław Śląski, supplying domestic hot water to a large residential estate and two public buildings, hospital and a sports facility with a swimming pool. Planned design works include new systems for cogeneration of energy, using biogases in the tri-generation system for production of heat, electricity 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 hospitals, namely wherever there is simultaneous need for electricity, heat or chill.:: 7-8 /2011 :: polish market :: 39 Energy & Mining & Steel Industry Billing systems – how do you do it? Piotr Gapanowicz, Billing Manager, Business Applications Unit, Infovide-Matrix SA Billing systems which are implemented by energy companies support the basic processes related to paying for commercial products and services provided to clients. They are currently also used in the field of customerrelations management, which is why modern billing systems enable companies 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 achieving a competitive edge through innovation, and the ability to properly prepare and implement a billing system becomes vital. to define the requirements for the system in the form of reorganised business processes. These changes may, on the one hand, arise from the necessity to adjust processes to the system being implemented, and on the other, from the intention to revamp solutions which are not optimal. When approaching implementation it is also necessary to ensure the compliance of the system with the binding regulations 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 implementing such a complex project. The organisation must be prepared for considerable effort, including involving people whose daily responsibilities are different in the project. The decision to involve specific employees/ business process experts in the project is a significant factor in its success. Supporting the organisation with external resources for the needs of project 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 Fields connected with implementing billing The implementation of billing should be considered in organisational, methodological, equipment and systems contexts. The most important, however, is the business aspect. Business needs should dictate the implementation 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 flexibility of products provided by companies. Hence, besides a clear definition of the business goal, it is essential the abilities of users. The readiness to give acceptance to the system should be preceded by running a relevant sequence of tests and audits, taking into account individual operations, processes, acceptance, and performance tests. The project start should be additionally defined with the SLA criteria for its operation, and on the basis of this a procedure should be created to manage and implement the project start system. Switching to “golife” should be preceded by preparing a proper plan for switching from project start, and verification during its course. IT aspects of system implementation 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 platform we need, and how much flexibility we expect in the area of configuration. 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 during implementation. The requirements specified for the areas of reports, data migration, and interfaces are also of importance. Summary Hardware Documentation System and database software Billing application Binding law Switching to “Go-life” Reports / BI BILLING IMPLEMENTATION Organisation Data migration System maintenance procedures Interfaces Training System tests / audits 40 :: polish market :: 7-8 /2011 Business processes A company deciding to change its billing system must be prepared for intensified involvement during project implementation. The above issues are the most important factors at play during the implementation of any billing system. It should be remembered that in order for such implementation to be successful, a detailed pre-implementation analysis must be performed. This will allow better preparation of the project and more effective planning for carrying out the investment, and also facilitates the preparation of proper monitoring and control mechanisms for the progress of the project and the right criteria for its acceptance.:: Energy & Mining & Steel Industry Wiesław Różacki, President of Rafako S.A. In the period of extraordinary market turbulences it is worth to ask fundamental questions 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 citizens. This is the only way to guarantee a relatively 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 people for more or less proven theories that underpin Europe’s crusade against climatic changes, which, let’s not be afraid to say it, will be a suicide for EU member states. Energy security of entire Europe lies in its interest. It can be ensured only through the security 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 modern high efficiency coal-fuelled power industry. There is no better option for Poland than the development 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 renew, 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 hydroelectric resources. Therefore we can seriously diversify 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 cooperation with major partners in the construction 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 politicians and officials. Europe needs sustainable energy development in each of its member states. If we do not want another crisis, we should respect 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 decisionmakers, 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.:: ADVERTISEMENT 7-8 /2011 :: polish market :: 41 Energy & Mining & Steel Industry The positive energy market in Poland 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 Electricity in Poland is almost entirely produced from the coal coming from domestic resources, and its share is the highest among all European Union countries. Although we can observe a growth in electricity consumption, it may soon stop as a result of only a slight rise in new generating capacities, combined with the necessity to switch off the ageing infrastructure, and stricter environmental protection 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 society groups to over 23% in the lowest income group, i.e. one in four zlotys. These are among the highest indicators 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 energy is consumed for heating purposes (approximately 80% in residential buildings) which results from poor insulation and loose windows, inefficient ventilation, and inadequate heating 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 42 :: polish market :: 7-8 /2011 relies on electricity. It is advisable to rationally use the lighting system and household appliances, and to replace old equipment with new and energy-efficient units. In single-family dwellings 65% of heat is wasted as a result of it escaping through insufficiently insulated floors, roofs and ceilings. Energy consumption The structure of basic fuel consumption in the commercial power industry Source: Energy Market Agency SA Fuel type Energy consumption in the Polish economy improved considerably after the transition period, i.e. at the beginning of the 1990’s when it was twice as high as the average value 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 Polish economy reached 3% annually, and the trend towards achieving convergence 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. 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% Electricity Energy security is the priority issue in Polish energy policy. The government aims at improving the security of supply of all energy sources, including coal, crude oil, natural gas and electricity. 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 cogeneration plants); :: developing and modernising the domestic industry system; :: expanding cross-border connections in order to substitute the equivalent of 25% of the electricity consumed in Poland until 2030; :: modernising and expanding the distribution network; :: developing renewable energy sources and increasing energy efficiency, which will also trigger an increase in the level of security of electricity supplies. The Polish electricity sector is currently characterised by its out-of-date infrastructure. Nearly half the current generating capacities are over 30 years old. As a result, it was necessary to implement new short- and medium-term investments, in order to satisfy the demand for electricity and heat. (based on the IEA Energy Policies, Polish Review of 2011) Institutions in charge of the energy policy in Poland: :: Ministry of the Economy, :: Government Commissioner for Nuclear 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 Consumer Protection, :: Materials Reserve Agency, Energy & Mining & Steel Industry :: Central Statistical Office, :: Market Agency, :: environmental funds. 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 consumers sector in Poland, one may note strong competition between the providers, whereas the products and services offered to households are practically unattractive. The Energy Law Act adopted by the Parliament of the Republic of Poland on 10 April 1997 and the related executive Acts (regulations), including especially those issued by the Ministers of the Economy and the Environment, constitute the legal basis for the functioning of the energy market in Poland. Following the accession to the European Union, the Polish legislation concerning the energy market was adjusted to European law (including especially to the EU Directive on the Principles of the Common Electricity Market). The process of creating a competitive energy market in Poland took several years. This led to establishing specialised procedures for its functioning. The functioning of the energy market is based on complex and continually-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 simultaneous elimination of the previously-binding ones. Energy prices and taxes The prices of such commodities as coal, crude oil and petroleum products are defined by the market. They are neither regulated nor subsidised. Electricity prices imposed on end-users are not subject to regulation, except for the household charges which need to be approved by the Energy Regulatory Office. Government plans provide 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 consumer groups. It also approves the charges for network activity which entails the transmission and distribution of electricity and gas. Final fuel prices in Poland are inclusive of 23% VAT whereas the prices of petroleum products are additionally encumbered with an excise tax and a road tax. The excise tax has a considerable impact on the final fuel price and on the structure of fuel consumption in Poland. The lower tax rates 44 :: polish market :: 7-8 /2011 Polish energy policy until 2030 The electricity production forecast by fuel type Source: study based on the energy policy assumptions in Poland until 2030 The Polish Energy Policy until 2030 (PEP 2030) defines the principal objectives and measures to reduce the environmental impact of the electricity and energy sector, to increase energy efficiency, to make use of nuclear energy and to develop renewable energy and biofuels. This document defines 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 intensity in the EU/IEA countries amounts to 0.45 tonnes of CO2 /MWh. PEP 2030 further refers to the obligations imposed in the new EU directive concerning the Emissions Trading System and it provides a list of various measures which need to be taken in order to meet these obligations. These measures provide for drafting the CO2 reduction scheme for the facilities which will obtain free-ofcharge emission licences in 2014–2019, as well as for expanding the investment plans supporting the emissions reduction. 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 17.0 30.1 Water energy (pumping) plants 1.0 1.0 Waste 0.6 0.6 TOTAL 140.1 156.1 12.2 19.3 Renewable energy Share of energy from renewable sources (%) The Polish Energy Policy until 2030 also sets a new strategy for carbon capture and storage (CCS), comprising the introduction of CCS readiness standards in new power plants, active participation in the Commission’s initiative to construct large CCS demonstration facilities in Poland, and intensified research and development activities related to CCS technologies. Other measures stipulated 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 growing prices and diminishing resources, Poland, as an EU country, has to develop a competitive and sustainable model of an energy policy. Energy policy in Poland is, to a large extent, determined by EU directives 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 construction of at least three nuclear systems 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 supply channels, and it continually increases its share of gas and renewable energy sources. The key issue will be to secure the necessary gas supplies, whether through the pipeline network or through the imports of LNG and/or domestic gas production from conventional or unconventional resources. Energy consumption in Poland has dropped in recent years, though it is still higher than the average consumption in the European Union. Only a few or perhaps several energy groups will survive on the European energy market. This time is coming and Polish enterprises are facing the last chance to strengthen their market position. This issue was considered during the European Electricity Market panel discussion, as part of the 3rd European Economic Congress organised in May in Katowice. The electricity sector is extremely capital consuming, hence the natural tendency to expand the size of enterprises. :: Energy & Mining & Steel Industry 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) 1 PGNIG SA GK Michał Szubski 2 PGE SA GK Tomasz Zadroga 3 TAURON POLSKA ENERGIA SA GK Dariusz Lubera Warsaw 21281161 2457184 2936099 na 32716 Warsaw 20476465 3627087 4276250 4185333 45714 Katowice 15428879 991393 1257314 1399259 28480 4 ARCELORMITTAL POLAND Sanjay Samaddar SA 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 Włodzimierz Hereźniak 2952043 5545 6941 13599 46 10 POLSKI KOKS SA Katowice Operating profit for 2010 (in PLN thousands) Employment in 2010 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 7-8 /2011 :: polish market :: 45 Energy & Mining & Steel Industry 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 Financial data in PLN thousands 46 :: polish market :: 7-8 /2011 na Source: companies Energy & Mining & Steel Industry LOTOS for energy security in the united Europe 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. Grupa LOTOS has been, and wishes to remain, an active participant in this discussion, and an initiator of change in the area of energy security. According to its management, a common European debate regarding the future of the energy sector is necessary, 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 organization with a permanent representation to the European Union, to speak for the interests of energy sector 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 include businesses, research institutions and other organizations from Central Europe operating in the broadly defined energy sector, is to play a key role in initiating and giving opinions on EU directives. CEEP is of the opinion that each EU country should have an opportunity to exploit its own energy resources and that the European Commission should review the proposed solutions in terms of their impact on the consumers and the economies 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. CEEP therefore actively participates in shaping the opinions relating to the Roadmap 2050, EU’s roadmap for the energy sector. There is full agreement that the concept to combat climate change, presented by the European Commission, is a noble goal. However, the adverse climate changes are a global phenomenon which can only be counteracted through globalscale accords and the European Union is just one of many economic organisms in the world. Therefore it must take into consideration the fact that the elimination or limitation of certain sectors of industry within Europe, will cause industrial 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 market, could translate itself into higher energy production costs, especially in member states with less developed potential. The effect of this will be that solutions adopted by the European Commission, rather than have a positive impact on the energy independence 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 communities 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 LOTOS went from an idea to a concrete action. On 15 June 2011, a letter of intent for the joint construction of underground reservoirs for the storage of crude oil and liquid fuels was signed with PERN Przyjaźń, a Polish major crude oil pipeline operator. Construction 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 cubic 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 created 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 infrastructure, the province of Pomerania 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 construction of storage reservoirs in salt caverns represents the most economically efficient and safest solution to the problem of storing crude oil and liquid fuels, and represents a current solution 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 European decision-makers, these challenges will undoubtedly be successfully resolved for the benefit of all European citizens and the security of our continent.:: 7-8 /2011 :: polish market :: 47 Energy & Mining & Steel Industry Energy – a European challenge 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. We must prepare for the competition 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 requirements described in the EU’s climate package. Originally European politicians talked about the year 2015 as the launch date of the common market. Today, 2014 is mentioned. This process is already taking place before our eyes. Although some Polish officials consistently try not to notice that. Already today, the Polish power system has the technical capabilities to send/ receive almost onethird 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 increase of energy prices under the banner of environmental protection may become a source of further problems. Moving production burdened with high CO2 emissions and the associated 48 :: polish market :: 7-8 /2011 loss of jobs is a major challenge even today. Therefore the proponents of radical solutions in environment protection should be asked whether they indeed mean the reduction of CO2 emissions and the reduction of energy consumption in the economy, or do they just want to cause environmentally 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 sectors which have existed in Europe for years. It is worth noting that all of Europe is responsible for the production of some 14% of CO2 in the world. Our successes in the field of limiting pollution have a limited impact on the global situation. Especially that the economies of the United States, China, India and Brazil emit more and more CO2. In my opinion it is necessary to rekindle the debate on the EU forum concerning the CO2 emissions reduction targets and ways of calculating them, as well as the size of fees for various licenses and certificates. A particularly important task is the debate on the fuel structure. In June, during the Euroelectric conference, the largest and strongest organization of European energy companies, I put forward the proposal of the so called European fuel mix, or the use of the energy potential of the particular European regions and the total clearance of the targets of the climate policy. Owing to this, each region would acquire energy from the dominant energy sources in a given area (France – atom, Scandinavia – 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 refine the details. If nothing changes, Europe will soon receive a high bill for green energy, 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 otherwise 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 concerns also Germany, the Czech Republic, Bulgaria, Romania and the United Kingdom. Although each of these countries in varying degrees. PGE – the Polish Energy Group will consistently modernize its coal-fuelled power plants; we will also invest in renewable energy sources and develop the first in Poland nuclear power plant. Because it is hard to imagine a modern civilization without electricity.:: It’s time to think about changing the oil in your car! Platinum oils were tested during the toughest rallies, gaining approval of the best competitors. You can be sure that they will also check out in your car. Change your oil for Platinum – regardless of what you have used so far *. Platinum is a guarantee of the highest parameters and optimal performance of the engine under any conditions. Now the new – Platinum Classic – a wide range of oils for gasoline, diesel and LPG engines – in a unique package 4l + 0.5l for free! * If keeping compliance with the requirements of the vehicle manufacturer. Energy & Mining & Steel Industry Be Smart Eco with Energa Group 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. Smart Eco Auditing – a good beginning In its bid to meet customer needs Energa Group has introduced 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 required amount of hot water, ventilation and air-conditioning 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 obligatory for public, service and housing facilities in Poland. Energy Audits help raise energy efficiency. These professional audits analyse selected aspects of an organisation 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 usage Among Energa Group’s Smart Eco products is Actual Settlements 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 settlements 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 Settlements. 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. 50 :: polish market :: 7-8/2010 Economy andIndustry Finance Energy & Mining & Steel Innovation and Partnership Energa-Operator, Poland’s fourth-biggest electricity distributor, is working hard to become an innovation leader on its market. Smart Eco Advertising A special offer for corporate clients, this entails a wind turbine 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 producers Smart 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 beautiful Energa 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.:: The company’s remote reading system for municipal customers (currently 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 become 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 existing role and possibilities of power users. We are developing our IT and telecom systems, and we have not forgotten about the modernisation of our existing infrastructure, which is crucial for our services”, says Energa-Operator President Leszek Nowak. Energy security Energa’s investments in new technology 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 failure 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 Intelligent Peninsula project which entails the construction of a smart grid in the Hel Peninsula, launched in partnership with the Institute of Power Engineering. Meeting customer needs Energa-Operator is also busy with the mass-scale introduction of advanced remote meter-reading systems, which are crucial for the construction of intelligent networks. These systems are the company’s response to customer 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 reading system will also make energy usage more efficient as it will limit distribution and trade losses. Mission–partnership The company’s mission is ensuring energy security in partnership-based relations with customers. New technology and major infrastructure investments 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 distribution market. :: 7-8/2010 :: polish market :: 51 Energy & Mining & Steel Industry A marketplace with energy... 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... An interview with Grzegorz Onichimowski, the President of the Management Board of Towarowa Giełda Energii S.A. (POLPX) 52 :: polish market :: 7-8 /2011 What in your opinion are the key energy issues facing Poland in the near future – during our Presidency, but also later? Will a common European energy market be established? Let me first ask about the contexts in which Towarowa Giełda Energii S.A. (the Polish Power Exchange) is now operating. Europe, despite opinions often expressed in public, puts strong emphasis on so-called “energy solidarity.” But it’s not that everybody benefits from this turnover of money... That’s precisely what the contemporary market is trying to achieve – a win-win situation... For example, Poland reduces emissions, and our neighbour provides us with energy from renewable sources. The EU is currently in the process of creating 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 environmental norms. It’s good that Poland is stressing the importance of integrating 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 mainly 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 climate package, which anticipates the reduction of the emission of greenhouse gases by 20% until 2020. The key issues of our Presidency include the rules for applying common emission factors, which will constitute the basis for the allocation of free entitlements 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 auctions and free entitlements within the derogation for the power sector. According to the European Commission, the common European energy market will come into being in 2015, and possibly even in 2014. Energy & Mining & Steel Industry What are the implications? It means that we are actually supposed to take advantage of our existing industrial capacities, mainly to safeguard against emergency situations, and to transform them into typically 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 common 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 mechanism today, and one of POLPX’s important strategic objectives is our European activity. We can already speak about combining the Polish and Swedish markets within the market-coupling mechanism, providing opportunities to sell energy produced in Poland to other markets, or to buy less expensive energy from neighbouring countries. As regards the technical aspect, we are satisfied with the functioning of this market. We also value the cooperation with Nord Pool Spot, our Swedish 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 Republic and Germany. In the former, we have approached OTE, and in the latter, EPEX Spot. Our Exchange is actively participating in the process of connecting energy exchanges to create a single exchange for the entire country or region. We are acting under the Association of European Energy Exchanges (Europex), which promotes the idea of consolidating energy markets through transborder connections. Representing the Polish market, POLPX, is a party to agreements that influence the management of network limitations, 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 exchange, which will be growing in importance in the coming years, due to the regionalisation, and then unification, of the European market. The Polish Power Exchange has been there for over 10 years. What is the role of the Exchange in stimulating, or putting in order, the Polish – liberalising – market? What benefits are linked to obtaining the status of a POLPX member? In short, what is the core of its activities? The role of the Polish Power Exchange 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 obligation to sell a considerable part of the energy on the Exchange was imposed 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 strategic goal is to enter new markets, including the gas and biomass markets. We are witnessing behavioural changes nowadays, especially in large energy companies, which are being consolidated vertically. These companies have realised that POLPX isn’t a threat to them, but rather a good tool to build efficiency within the group itself. If such large groups wish to ensure efficiency for themselves, they must be certain that individual components of this group are working according 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) 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%. 7-8 /2011 :: polish market :: 53 Energy & Mining & Steel Industry A New Strategy PERN Przyjaźń S.A. together with its daughter companies is a group dominating the Polish market. It is responsible for crude oil and oil-products logistics. It must be stressed that PERN, which is wholly 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 Druzhba (Friendship) pipeline. When we add to this the storage of strategic petroleum reserves 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. The company’s activity is the operation 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 revenue? 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; storage is next and finally the transportation of petroleum products. W hat 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 volume? Our infrastructure consists first of all of about 900 km straight line of crude oil pipelines, since at some 54 :: polish market :: 7-8 /2011 sections you’ll have two or even three lines, plus over 600 km of product pipelines by which fuel from refineries is sent. We also have three storage – crude oil tank farms: in Adamowo on the Belarusian border, in Miszewko 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 concrete bunds and equipped with a fire extinguishing system with injectors. Just imagine that a tank of 100 thousand 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 50year 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 bottom in them. In 2015 the revenues of the PERN Capital Group will exceed PLN2 billion and for PERN that will be PLN800 mln How would you characterise the companies which constitute the PERN Group? They differ in size and, what is a certain historical heritage, in the profile of their activity but in general they are linked with our basic activity. And so Naftoport is responsible for operating the oil port in Gdańsk and discharge 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. Unfortunately, when it comes to transhipment of crude oil and oil products, the assisting 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 Energy & Mining & Steel Industry 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 capital 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 fuels. Soon, together with our western partner we will establish a company which carry out this project. The PERN Group also includes OLPP (Logistic Operator of Liquid Fuels) and their subsidiaries: Naftoserwis (dealing with maintenance works) and Naftor (Property Security). The main profile of OLPP’s activity is the service of 22 fuel sites, where petrol and diesel oil are delivered from Orlen and Lotos refineries and then they are further transported by road to petrol stations. Other companies are: Cedria – dealing with inspection of the condition of pipelines and tanks and an international Sarmatia, who deals with the analysis of a prospective 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 socalled 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 facilitate 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 Belarusian 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 throughput 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 reliable 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 Germany have contracted. In the middle of June you signed a Protocol of Intent with Lotos S.A. Group about the joint construction of underground storage 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, including PERN and Lotos. Such facilities are already administrated by PKN Orlen near Inowrocław. The project is especially interesting 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 research but we already have a few locations in Pomerania. They need to be examined carefully (bore-holes) and then business analyses are to be carried out to check if the investment 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 implementation so far? Of course, earlier PERN also had a strategy but at the moment of the takeover of OLPP in 2009 and then of Siarkopol Gdańsk, the entity became so big that the strategy needed 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 respectively 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 different matters, contains various scenarios: optimistic and pessimistic. It takes into consideration the main, earlier mentioned investment projects which are consistently carried out. As far as the internal matters go, the most important thing is the integration of the companies forming the group as well as those which are to be established. So the main directions of the strategy are being 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 consideration various dangers which me must react to. It is hard indeed because our activity has a long term characteristics, which distinguishes it from production of consumption goods. That is why we monitor the market, predict certain trends and react adequately: by accelerating some processes and slowing down others. From our point of view the pessimistic scenario envisages reductions of deliveries via the Druzhba pipeline. For although 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 infrastructure (BTS and BTS2 systems) as well as their ports in Primorsk and Ust-Luga which may, but not necessarily must reduce transport 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 company is reaching the top of its capacity. Of course we are expanding the terminals, optimising 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. :: 7-8 /2011 :: polish market :: 55 Energy & Mining & Steel Industry Oil & Gas: hydrocarbons prevail The current trends in the global oil and gas market include surging prices, a growing share of China and other Asian countries, interest in unconventional gas sources, a shortage of gas for domestic use in the Middle East, growing cooperation between Russia and China, and the discovery and exploitation 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 fuels will remain high in the foreseeable future and the already operating producers will not have to deviate from their core competencies. This means that the expected alternative source will have to be produced by specialised companies. “There is also a growing awareness among oil and gas producers that many of the manufacturing capabilities needed for renewable energy production are beyond their scope. Consequently, an increasing number are leaving alternative energy to specialized producers and instead focusing on what they do best: locating, producing and processing hydrocarbons as efficiently as possible,” 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 National Oil Company is mentioned as an example of the new trend of mergers and acquisitions expected to be carried out by Asian companies. “Asian countries and other developing nations are prepared to go to whatever lengths necessary to make foreign acquisitions to secure future oil and gas supplies. This includes backing these deals with government support and funding.” Another market-changing event among the efforts to secure oil and gas 56 :: polish market :: 7-8 /2011 © Vitaliy Hrabar - Fotolia.com 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 limited. The development of cooperation between Russia and other Asian countries, especially Vietnam, is expected. As for international exports of gas, the United States has entered the scene. Since the production of shale gas started there, the US has become a selfsufficient nation in terms of energy. It has also freed resources to export. It is expected that the energy-craving China may become one of the major buyers of American gas. Yet other 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 domestic supply instead of imports. Although China has large gas reserves they remain unused due to “low permeability 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 repercussions 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 increasing gas shortages. The factors causing this ironic situation are mainly the booming GDP rate and the subsidy 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 expected. 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. Energy & Mining & Steel Industry The tricky mining boom 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. Labour shortage With the changing demographics, mining is particularly facing the lack of experienced middle managers. Mining companies are entering partnerships with educational institutions, but they seem not to be able to close the talent gap concerning the 30-50-year-old generation. Resources “Tracking the trends 2011. The top 10 issues mining companies will face in the coming year” by Deloitte Touche Tohmatsu Ltd. highlights that mining companies are currently facing a completely new situation. It is mainly connected with the growing demand for energy in China, India and other rapidly developing countries in Asia, Latin America and Eastern Europe. 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 mergers. But what are the issues all have to take into consideration? Deloitte experts have indentified 10 such issues they found to be crucial. companies are struggling to obtain permits and licenses. Therefore Deloitte advises analyzing companies’ operating models in terms of flexibility in responding to shifts in demand as well as understanding future demand trends. Climate change Dealing with local communities Local communities have heightened expectations from mining companies. These include fields like the impact on the environment and health, safety, land use and transparency. The report suggests enhancing collaboration among local communities, governments, environmental groups, investors, partners, employees and shareholders, as well as programmes for communities. Financing In the wake of the global financial crisis mining companies are dealing with the aftermath of the policy to prevent funding crises – halted operations, cut backs on production and many costcutting 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 financing. In some cases these are aggressive steps towards mergers and acquisitions. Therefore Deloitte recommends analyzing the quality of earnings and nature of costs, as well as clearly identifying the basis for competing for capital. Adjusting to demand Although the demand for commodities is sky-rocketing, mining companies are not able to simply ramp up production. Many countries have introduced steps to safeguard their own supply by curbing exports and mining The global competition for resources is becoming fiercer. Apart from geographical expansion, mining companies will need to find innovative solutions to extract a greater percent of materials. Government intervention Governments of many countries have recently imposed new taxes, royalties and regulations on their mining industries. They serve plugging government deficits, fighting corruption, promoting transparency and others. Mining companies should consider how they will be able to respond to the evolving national and global regulatory requirements. Mining companies keep their struggle to respond to mounting environmental challenges and the standards are getting higher. A greater rate of disclosure is expected and environmental risk assessments should be integrated into the overall risk management framework of the companies. Infrastructure Mining industry is particularly vulnerable to infrastructure shortages in the fields of transportation, water and energy supplies. A solution found by some mining companies is to enter partnerships to construct railways and ports, power plants and alternative energy generation. New revenue opportunities According to Deloitte these may include: turning coal into carbon offsets, providing energy for the future, investing in renewables and recycling waste.:: Strategic investing The global crisis has significantly impacted 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 little available capital from bank loans to other measures. Now they need to develop long-term investment plans, especially faced with the wave of hostile takeovers. 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. 7-8 /2011 :: polish market :: 57 Energy & Mining & Steel Industry Coal has been and will be important to Poland 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 The steam coal market analysis shows that in the second report in April 2011 the prices of coal in the discharge ports in Western Europe grew in terms of value, and the coal index exceeded 129 USD/t DES1 ARA2. These changes, reflected in the price growth, were triggered by the continual 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 Brenttype oil on the London Stock Exchange reached the level of USD125. At the end of April (following the stabilisation period 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, exceeded 130 USD/t DES ARA. Growing interest in these purchases among coal consumers on the European market was mainly caused by the weakening of the dollar in relation to other currencies, and by the growing prices of natural gas. The average monthly coal index (DES ARA) in April 2011 amounted to 128.02 USD/t, which corresponded to a growth of 2.88 USD/t, as compared to March (based on information on the functioning of the coal mining industry in April, and in the period January – April 2011, provided by the Ministry of the Economy). Considering the current pace of hard coal extraction, Poland may run out of its resources after 2035. The 58 :: polish market :: 7-8 /2011 Supreme Audit office has announced that the guarantee of coal supply is threatened by the irrational, and often predatory, extraction of coal by enterprises. Polish coal mines still continue a highly irrational coal resource management, which is oriented towards profit maximisation, without any prospects of resource protection (e.g., coal resources are exploited selectively; more problematic sections are left aside, which results in an incomplete use of resources). In the Polish mines, coal is usually extracted using the long-wall method. On the one hand, this allows cost-efficient extraction but, on the other hand, it generates 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 profitability sought by mining companies and the necessity to fully use the resources available are crucial to ensure the security of domestic coal supplies. The high proceeds of mining companies In the first four months of 2011, the state-owned coal companies generated a net profit of PLN902.8 million, according to data provided by the economic department. In the corresponding 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 provided by the Ministry of the Economy), coal mines extracted over 23 million tonnes of coal, which is approximately 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 million tonnes a year before (a growth of approximately 7.5%). Sales on the domestic market grew by several percentage 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 increased (from over 2.7 million tonnes to nearly 2.9 million tonnes) contrary to the imports of coking coal (a decline 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 before. 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 industry from the sales of coal (mainly 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 exceeded 2.5 million tonnes, which was less than half of that in the corresponding period of the previous year, when the stocks exceeded 6 million tonnes. Employment in the mining industry at the end of April 2011 amounted to 109.2 thousand persons (as compared Energy & Mining & Steel Industry 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 deleted 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 nearly PLN1.6 billion proceeds from the sales of coal, i.e. from the principal activity (against the considerably lower amount of PLN381.9 million earned a year before). Upon deducting the losses from other activities (including financial ones), net profit exceeded the level of PLN902.8 million. Jastrzębska Spółka Węglowa (which entered the Warsaw Stock Exchange 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 million. Poor supervision and accidents in coal mines – a still-unsolved problem In 2010 the number of accidents occurring in hard coal mines and in related 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 Selling price of coking coal (in PLN/tonne) 626.51 609.74 273.90 278.51 631.20 784.86 Source: data published on www.mg.gov.pl The employment structure in mining enterprises Hard coal mining in total Workers Technical supervision Data published as of Under ground 31.12.2010 75,512 30.04.2011 71,811 -701 -202 difference Above surface Administrative staff Other surface workers Total Under ground Above surface 14,674 13,080 5,569 4,235 51 110,121 14,472 13,048 5,626 4,250 50 109,257 -32 57 15 -1 -864 Source: www.mg.gov.pl service enterprises exceeded 2.6 thousand (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 errors 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 essential qualifications of the supervising staff – as well as insufficient or inadequate prevention measures, have a considerable impact on the frequency 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 usually do the work their own way, following 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.:: Total sales of hard coal by major consumers 2010 2011 April Share (in %) From the beginning of the year Share (in %) April Share (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 4,135,336 2,148,505 94,138 282,445 39,721 808,246 762,281 79.2 41.2 1.8 5.4 0.8 15.5 14.6 18,396,813 9,168,631 497,849 1,519,240 97,756 3,256,603 3,856,734 82.6 41.2 2.2 6.8 0.4 14.6 17.3 5,139,422 2,735,416 79,640 374,786 24,817 786,187 1,138,576 90.3 48.1 1.4 6.6 0.4 13.8 20.0 21,780,004 11,477,113 470,401 1,678,849 168,857 3,594,023 4,390,761 91.1 48.0 2.0 7.0 0.7 15.0 18.4 Exports to the EU – in total – through sales agents – directly by coal mines 1,084,352 980,253 104 099 20.8 18.8 2.0 3,861,965 3,498,181 363 784 17.4 15.7 1.6 550,223 462,293 87 930 9.7 8.1 1.5 2,138,574 1,737,628 400 946 8.9 7.3 1.7 Source: www.mg.gov.pl 7-8 /2011 :: polish market :: 59 Energy & Mining & Steel Industry Polish-US cooperation in shale gas exploration The process of granting gas exploration and exploitation licences in Poland 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 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. 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 Hillary Clinton, as well as President Obama are interested 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 energy security on a national basis as well as promoting national security through the transAtlantic space,” said US Ambassador to Poland Lee Feinstein. Why is this so important? Despite today’s technological advancement 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 60 :: polish market :: 7-8 /2011 in this respect on national energy markets and the global market is to raise raw-material 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 Energy Policy Until 2030 document with clearlydefined development paths and instruments. The priorities contained in it include raising energy efficiency and the security of energy and fuel supply, diversifying power generation by means of nuclear energy, raising the share of renewable energy in overall energy consumption, the development of competitive energy and fuel markets and environment protection. The new energy policy’s main aim is raising energy efficiency, in other Production Concession (from a presentation by M. Wągrodzka, Environment Ministry) words – maintaining zero-energy economic growth and bringing energy consumption down to the EU+15 level,” said Maciej Kaliski, 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, moreover these changes will be more difficult for Poland than for others as its economy bases on coal. A chance here could lie in the exploitation of Poland’s own energy raw-materials, 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, however, are the legislative and technological differences 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 Department at the Environment Ministry. Energy & Mining & Steel Industry Marcin Korolec Undersecretary of State at the Ministry of Economy Poland and the U.S. share similar energy conditions. Both countries have a relatively large share of coal in the energy structure and, like the US, Poland is striving for innovative green economy using its own energy resources. U nconventional 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 unconventional gas resources requires mutual cooperation. The exploration of unconventional gas reserves is a priority project for the Polish economy. This year, a report appeared on the shale gas resources developed by the US Government’s Energy 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 information about shale gas resources will be known after the exploration and verification of the geological documentation of licensed companies. It should be noted, however, that in the coming years, Poland’s energy and power sector will transform towards a greater demand for natural gas exploitation. 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 Chamber 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, Geology and Geological Licensing Department, Environment Ministry, Mark Swift,Area Manager for Continental Europe, Halliburton, dr John Damanti, Vice President, Oil&Gas Business Development EMEA, URS Corporation, Elżbieta Wróblewska, Project Head, Environment Protection and New Technology Team, Energy Department, Economy Ministry, Waldemar Ostrowski, Chief Engineer for Technology, PKE S.A. Tauron Group, Bogusław Krztoń, Director, Foster Wheeler Energia Poland, dr Leigh Hackett, VicePresident Sales&Marketing, CO2 Capture 62 :: polish market :: 7-8 /2011 Until today the Environment Ministry has issued around 300 mineral exploration licenses and 86 for unconventional gas exploration between the Pomorze and Lublin regions. Todate 7 drillings are underway, planned until 2017 are a further 120 obligatory and 100 auxiliary drillings. Gas drillings are a prime example of successful Polish-US cooperation. The leader in hydraulic fracturing is the Halliburton company. The process involves the pumping of large quantities of water with chemical softeners into rock drillings. To-date all hydraulic fracturing attempts in Poland have been successful. “On July 9, 2010, Halliburton achieved a major milestone in Poland by performing the firstever, large-scale hydraulic fracturing operation for PGNiG, the state controlled Polish oil Systems Alstom Power, Mall Reddy, Vice President, International Operations, Fluor Limited, Ilya Solovev, Commercial Director, GE Energy, Power & Water, Andrzej Chwas, Head, Nuclear Energy Department, Economy Ministry, Marcin Ciepliński, Director for Strategy and Development, PGE Energia Jądrowa S.A. (PGE Nuclear Power), Professor Grzegorz Wrochna, Director, Andrzej Sołtan Institute for Nuclear Studies in Świerk, Mats Olsson, Customer Project Manager for Northern Europe Region, Westinghouse Electric Company, Zimowit Iwański, Region Executive, Market Growth, GE Hitachi Nuclear Energy, Chris Maslak, Bechtel, Peter M. Perez, Deputy Assistant Secretary for Manufacturing, US Department of Commerce Service, Grzegorz Wiśniewski, President EC BREC, Institute for Renewable Energy, Krzysztof Sadowski, Board Member, Director for Strategy and Development, Białystok S.A. Thermal-Electric Plant, Mariusz Radziszewski, Head, Renewable Energy Sources Section, Energy Department, Economy Ministry, Krzysztof Pilch, Senior Development Manager, AES Wind Generation Europe, Brian Thompson, 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-President of PGNiG. Halliburton began with hydraulic fracturing in the 1980s and has since completed more than 270 fracturing projects in Europe. Thanks to special casings the fracturing 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 organize ourselves. We won’t have too many allies on this undertaking. EU policy as well as statements by EU state leaders show that Europe is very moderately enthusiastic about unconventional gas sources.” :: Compiled by: Sandra Wierzbicka Alter NRG (waste-to-energy), USA, Michael Wagner, Marketing Director GE Jernbacher – USA, Grzegorz Tomasik, Board Member, PSE – Operator, Tomasz Dąbrowski, Director, Energy Department, Economy Ministry, Dr Bartosz Wojszczyk, Global Director, Smart Grid Technical Solutions, GE Energy, Warwick Charlesworth, IBM Global Business Services, CEE Utilities, IBM and the companies: Arup, AES Poland Sp. z o.o., Białystok Heat & Power Plant Co., Elsamprojekt Poland, EM&CA S.A., Emerson Process Management, Energoremont Sp. z o.o., Foster Wheeler Energia Poland Sp. z o.o., Fluor, Geofizyka Toruń, Hochtief, Andrzej Soltan Institute for Nuclear Studies, Interco Trade Office, Lotos, Miller Canfield, Metso, Orlen Upstream, PKN Orlen, PGE, PGNiG S.A., Polskie Sieci Elektroenergetyczne Operator SA (PSE Operator), Relpol, SSW Spaczyński, Szczepaniak i Wspólnicy sp.k (attorneys at law), Seminars Conferences Consulting, Tauron Poland, Wachelka Inergis, Alstom, Babcock Power Inc., Bechtel Power, GE Hitachi, Shaw, URS Corporation, Westinghouse Electric Company LLC. Energy & Mining & Steel Industry Shale gas – an inimitable opportunity Interview with Henryk Jezierski, Undersecretary of State, National Chief Geologist W hat are the advantages of extracting 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 independent of Russian gas supplies; :: increased competitiveness of the Polish economy in relation to other EU countries – if the shale gas resources turn out considerable, we will be able to export this raw material; :: new jobs in the extraction regions and general improvement of their economic situation; :: technological development, acquisition of know-how and higher number of well-trained specialists in the search and exploitation of hydrocarbons; :: state budget and local government proceeds from taxes and utility charges; :: environmental benefits – compared to crude oil and coal, the latter constituting the basis for energy production in Poland, gas is an environment-friendly fuel; therefore, it constitutes a good link between hydrocarbons and renewable energy sources; :: better image of Poland in the international arena – even today the pace and scale of exploratory work in the country is viewed as impressive. 64 :: polish market :: 7-8 /2011 Shale gas is a great opportunity for Poland, not only in the economic sense, but also in the social, geo-political and image-building dimension. We must not miss it. 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 Polish shale gas resources. 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 reliable and complete data on our resources 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 higher. Not until the exploratory work is more advanced can we confirm the actual 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 Services and the National Geological Institute – the National Research Centre, 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 exploration and exploitation is highly exaggerated. Obviously, as any process of this kind, it interferes with the natural environment but it does not damage the environment to the extent 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 related threats to underground waters. However, the U.S. Environmental Protection Agency has not identified any instance of underground pollution related to this process, although it has already been conducted in the United States over million times! The recent foreign press releases show that the State of New York, which has introduced a moratorium on Energy & Mining & Steel Industry hydraulic fracturing, is now considering the reversion of this ban. Apparently, the New Yorkers have finally realised 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 pollute 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 drinking 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 properly secured (case-hardened) to isolate underground waters. Additionally, 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 Labour Inspectorate, mining supervision bodies and environmental protection bodies, like for example the Province Environmental Protection Inspectorate. We can more often hear about the negative impact of shale gas extraction on the local community’s health which worsens the quality of life. How would you refute the arguments expressed by the opponents? Each branch of extraction industry – surface and underground mining, crude oil exploitation, and finally shale gas extraction – has an unquestionable environmental impact. For us the raw materials obtained are necessary to live. On the one hand, there is the natural environment and, on the other hand, the raw material exploitation. Therefore, we have to maintain the balance between these two values, using our resources so that their negative impact could be minimised. For the time being, we cannot do without oil or gas, but we can take care of the environment through certain regulations and institutions, such as the Regional Directorate for Environmental Protection, the Province Inspectorate for Environmental Protection and the Regional Water Management Authority. As the National Chief Geologist, I would like to stress that Poland is ready to fully control the exploratory process, and to extract shale gas in the foreseeable future. :: ADVERTISEMENT 7-8 /2011 :: polish market :: 65 Energy & Mining & Steel Industry Mining through an expert’s eye Interview with Professor Józef Dubiński, Corresponding member, Polish Academy of Sciences Where does Polish mining industry stand on the global hard and brown coal market? There’s certainly a difference between the hard and brown coal market. Hard coal production is on the rise worldwide, the leading producers are China, the United States and India, who jointly account for nearly 65% of the global output. The unquestioned 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 losing against the imported coal? The answer, 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 producer, currently 8th on the global scale. Global brown coal production in 2009 came to 962 million tonnes. The biggest 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 possible future of Polish brown coal industry I have my doubts whether the 66 :: polish market :: 7-8 /2011 present production level will keep up in coming years. The currently-exploited beds are nearing exhaustion, and although Poland does have more brown coal resources, work on their development for mining is not progressing 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 nuclear energy. Could this be an opening for Polish mining industry and clean coal technology? Personally I don’t quite understand what is going on. We need technical checks on existing nuclear plants, where necessary there will also have to be decisions about their future. But closures should be rationally motivated and not undertaken for any other than purely technical reasons. Personally I don’t think the withdrawal from nuclear power by countries like Germany will mean bigger openings for the Polish mining industry, if any at all. There are no plans to replace nuclear power with coal energy. 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 annually 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 power. So-called clean carbon technologies 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 raising efficiency in energy production from coal and energy saving. Only after achieving success in these spheres will it be sensible to talk about technologies like CCS. For quite some years now you are President of the World Mining Congress. This year’s 22nd congress will take place in Istanbul. What will its motto be and what will Polish 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 Mining.” We will turn attention to the fact that mining in the 21st century needs innovation. In my opinion most important 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 importance of areas like coalpit design, accessing resources, work planning. Also planned are special sessions on rock mechanics, work safety, environment protection in mining areas, automation and coal processing. There will also be an interesting debate on “intelligent mines.” The participation of Polish firms in the congress is supervised by the World Mining Congress Polish Committee at the AGH University of Science and Technology in Kraków. We expect around 30 delegates from Poland. During the debates the Poles will focus on issues in which we specialize, like work safety, environment protection in mining areas, new machinery and monitoring systems, legislation and others. :: Energy & Mining & Steel Industry The Mining Restructuring Company (SRK SA) is one of the largest operators in the coal industry offering attractively located, revitalized, brownfield land properties and buildings. These estates once were the infrastructure of currently closed coal mines and were used as storage areas or accompanying areas not directly 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 existing transport networks or in areas where such infrastructure is modernized or built from scratch. We offer former mining sites forming compact complexes of 10–20 hectares perfectly suitable for the location of large retailservices networks and logistics centres in the Upper Silesian conurbation in cities with over 100,000 residents such as Sosnowiec, Jaworzno, Katowice, 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 enlargement of the Śródmieście district. Spółka Restrukturyzacji Kopalń Spółka Akcyjna 41–914 Bytom, Strzelców Bytomskich 207 Tel. 32 35 13 316, 32 35 13 301, Fax 32 35 13 309, 32 35 13 310 www.srk.com.pl a clear legal status, access roads and are earmarked for services and industry 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 interested in running coal mining of deposits at greater depths than the deposits extracted by the mining industry or making available the deposits in the immediate vicinity. This offer is addressed to entities licensed to engage in work providing access to or exploit the specific coal deposit. These properties are located in the former collieries: “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 education schools and residential buildings 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 conurbation, develop complex industrial, commercial and entertainment compounds. 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 properties at attractive prices. :: The same applies to the site of the liquidated mine „Katowice – Kleofas” in Katowice at Obroki Street, which the city has also earmarked for housing 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 connected to the necessary utility infrastructure. This is a unique offer giving the possibility to quickly invest and develop on favourable terms which are provided by operating within the Katowice Special Economic Zone. We have property listings in the areas of the former 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 Trzebinia. Investment projects on the properties can quickly move through the phase of implementation as they have 7-8 /2011 :: polish market :: 67 Energy & Mining & Steel Industry About the company The Severstallat group of companies comprises 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. Andrejs Aleksejevs President of the Board of JSC Severstallat (Latvia) and Severstallat Silesia Sp. z o.o. (Poland) What is the current situation on the European steel market? The Europe of today has a demanding economic environment and though exciting in many aspects is the subject of large expenditure in the realms of workplace safety, social 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 products in large quantities are available to the global arena at comparatively lower prices. A re there any significant changes on the horizon? The most significant transformation is in the current strategy for most metal producers 68 :: polish market :: 7-8 /2011 being directed toward the “downstream steel sector” yet strictly maintaining the efficiency of the business. Virtually all European metallurgical companies are expanding their distribution 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 outsourcing 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 production of tubes, steel strips and blanks we provide our customers with high-value-added 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 exceed 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.:: Energy & Mining & Steel Industry Successes and challenges of steel industry in Poland 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 forecasts for the steel sector are favourable, which is the effect of the recent market revival. However, steel industry insiders warn us against taking excessively optimistic viewpoints. The steel market has recently shown considerable fluctuations as regards prices. 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 competitiveness of this sector. Unfortunately, their amount in Europe is declining, and their prices have been soaring. This may imply that steel production 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 systematically and rapidly. The development in such fields as the machine industry, car industry, construction and the household appliance sector triggers 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, according to Romuald Talarek, President of the Polish Steel Association, who expressed this view during the European Economic Congress in Katowice, which took place in May this year. “If the situation from the 1st quarter and the 1st half of the year persists, I believe that producing 8.6 million tonnes of steel should not be a problem 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 domestic steel use is still high, reaching 60%. 7-8 /2011 :: polish market :: 69 Energy & Mining & Steel Industry Ranking of Polish Steel distributors, Polish Union of Steel Distributors – 2010 data. Steel turnover in PLN thousands 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 quantity (729,000 tonnes) and value (PLN2.6 billion). In the same period the imports of steel products amounted to 1.69 million tonnes, which was 12% more than the imports in the corresponding period of the previous year. In the same period, the Polish steelworks 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 amounted to PLN2.7 billion, and the value of imports to PLN5.3 billion. In the 1st quarter of 2011, the number 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 European 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 Europe, is another crucial factor. Producers are increasingly apprehensive for the growing prices of electricity. The unfavourable climate changes 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 competitiveness of this sector. The steel industry is responsible for 4% of the total pollutant emissions. In accordance with EU directives, this level will have to be reduced by 20% in nine years’ time, i.e. until 2020. 2012 will see the introduction of an excise duty on energy products, amounting to PLN35–40 per 1 tonne of steel, which will create a considerable constraint on the competitiveness of the steel sector, given the already high electricity prices. “The steel industry should be exempt from this excise duty. The power industry should not pass the costs related 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 competition,” 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 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. Steel distributors in Poland have returned to the growth path, which is reflected in the ranking compiled by the Polish Union of Steel Distributors (PUDS). The companies which made considerable changes to their business following the 2008-2009 crisis 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 turnover in the entire history of the PUDS Ranking. Considering the recent price trends, one may expect that the dynamic growth in turnover may soon be followed by record-breaking profits in this sector. On average, distributors sold 15% more steel (in tonnage terms) than in 2009, and the turnover growth exceeded 30%. This is an obvious sign that the good times have returned for the steel industry. :: 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. 70 :: polish market :: 7-8 /2011 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 Ranking of Polish steel distributors, Polish Union of Steel Distributors – 2010 data. Net profit in PLN thousands No. Name of the company 1. ThyssenKrupp Energostal S.A. Net profit in 2010 (in PLN thousands) 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 Energy & Mining & Steel Industry The Polish steel market “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 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 Championship and the steadily-rising demand for consumer goods like cars, household articles, radios and TV sets and machinery”, Romuald Talarek, head of the Polish Steel Association (HIPH), rightly wrote in his preface to the Association’s Polish Steel Industry 2011 report. The 3rd European Economic Congress in Katowice (May 16–18) devoted three panel sessions to the steel market 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 industry. 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 advisable 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 considerable bearing on services which generate 60%. However, a modern steel industry needs modern-minded employees and feasible proposals from the R&D sector on matters like emission reductions”, 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 future looks promising, however certain 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. Quality will be an alternative as long as we have a technological advantage. Our sheet steel lines, which among others produce for the automotive industry, 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.” :: 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 million 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-processed 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 production 4.3% to 455,000 tonnes. Domestic steel consumption rose 20% and steel imports 22%. 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 biggest steel manufacturer in Poland accounting for around 70% of the domestic steel industry’s production potential. ArcelorMittal 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 million 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 downstream production and distribution businesses. In 2010 Severstal, 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 Resources, 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 construction, automotive, machinery, and oil and gas industries. Our Russian 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 Severstal’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 locations and created European distribution centers in Poland and in Latvia in order to supply Central Europe and Baltic Sea countries 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 processing as Europe is the site of numerous energy, gas, environmental and railway projects. 7-8 /2011 :: polish market :: 71 Energy & Mining & Steel Industry 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 reinforcement producers by 15%. PUDS members operate 70 longitudinal and transverse cutting lines with a joint annual capacity 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 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. Independent distributors still hold a strong position, although distribution by producers is becoming increasingly widespread. There is also a mixed model with firms run by producers and independent 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 future 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-developing market. Konsorcjum Stali adopted a distribution model based on processed products. This is why the company created a servicing centre and began work on a large cold-rolled strip servicing centre. 72 :: polish market :: 7-8 /2011 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 enduser 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 Mannesmann 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 expected 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 expect KCZ 4 billion in profits, in 2013 the figure should come to CZK10 billion. Opinion The case of Polbank Prof. Małgorzata Zaleska Heralds of change 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. The Greek Eurobank EFG, owner of Polbank, which is a Polish branch of the Greek credit institution, has decided to sell it. Polbank is one of the twenty branches of this credit institution in Poland, and definitely the biggest. The branches in question have already 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 branches of credit institutions are steadily developing, which, considering the cross-border aspect of their operation, increases the influence of external 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 cover it by the Polish supervision and deposit guarantee system. Transforming Polbank into a bank fully under Polish regulations may be considered another example of the impact of the global economic crisis on the structure of the Polish banking sector. Earlier examples of this included the change of ownership in BZ WBK and the merging of GBW with MR Bank. Planned acquisitions Raiffeisen 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 expected to be 6th in the ranking based on assets size. The bank will have a widespread, well-placed, and recognised network of branch offices. It is also important that, after merging, the banks will create an extensive portfolio of products and services. Raiffeisen Bank is specialised in corporate 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-recognised brands, logos, and images. This will probably lead to marketing campaigns connected to the merger and its effects, which will be as interesting as the economic and legal changes. The need to change the law To carry out the merger of Raiffeisen Bank and Polbank, banking law has to be changed to allow the transforming of a credit institution branch into a bank. Such a transformation should not only be possible, but is absolutely 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 authorities. 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 institutions to be transformed into banks. At the same time, it must be noted that this issue requires a change in EU regulations, to start with. Legal requirements and the transformation process An amendment to the Act on Banking Law provides that a credit institution acting as a branch may open a bank in Poland in the form of a jointstock company, by contributing all the capital components of the branch. In practice, this means a change in the legal form involving the formal liquidation of the credit institution branch and the establishment of a new bank, while transferring the entire infrastructure, liabilities (deposits) and receivables (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 rightly emphasised in the regulations concerning such decisions. A bank created by transforming a branch is to be obliged to maintain the basic safety measure - the solvency ratio - at the level of at least 12% for the first 18 months of activities, which is higher than for the banks already present on the market (at least 8%), but lower than newly-established banks (a minimum of 15%). A favourable assessment It follows from the above that in creating Polish banking law, past legislators 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 development that Polbank will stop being a branch of a Greek credit institution in Poland. Problems experienced by a large credit institution branch are easily 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 Polbank will in turn come under Polish protective regulations, banking market supervision, and the deposit guarantee system, which will be beneficial both to clients and banking sector safety networks. :: 7-8/2011 :: polish market :: 73 Transformation and Privatization Haste is only good for catching fleas “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 Pabianice. Although employment has declined slightly due to the computerization of the company, this did not affect top-class professionals. 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 completely different amount of money. 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 privatization. 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 catching 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 profited and so did the company. This is true. The proceeds to the Treasury for its 85% stake amounted to PLN300 million. This is a good price. Pabianice also has a new owner. As provided in the contract, Adamed bought 95% of the employees’ shares at the same price as received by the Treasury. That rarely happens. The employees did really well in this. Some families earned as much as PLN80,000. It also kept all employees, even though no contracts required it. And what is important for the region and its development – Adamed has practically moved 74 :: polish market :: 7-8 /2011 The pressure on investors running for Polfa 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 admit – the decisive one. The pharmaceutical sector – as one of the few – records high profits every year. No one has yet lost money on this business. Besides, it is not the last takeover for Polfa Warszawa. We are observing a consolidation trend on the global markets. In a few years, the new owner will certainly receive a fair profit by further restructuring the company and taking advantage of the synergy 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 domestic 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 generated by the company in 2010 when sales grew by 11.3% on 2009. This year the company intends to increase it by a further 6.1%. When we look at the current results of the company, achieving such ambitious results seems completely realistic. It is also worth noting the growing sales of Polfa Warszawa on foreign markets. The company achieved this growth through an extensive 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-infection drugs production. We have also achieved a high market position in the group of insulins, psychotropic drugs and dermatological products. Polfa has 75 hectares of land and that is a burden. An investor from the pharmaceutical sector does not want to play developer. The large labour force protected by welfare package until 2012 is also discouraging. Perhaps it would be better to sell the land and the business separately? You are already 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 within Modlińska, Płochocińska and Ekspresowa streets. It is located some 500 metres from the Modlińska/North Bridge Route communication 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. Therefore the company, not waiting for the completion of the privatization, is looking for buyers 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 Polfa Tarchomin still seem realistic? I will surprise you. We will sign the agreement later this year. Do you still have an ace up your sleeve? I will pull it out when the time is right.:: PLN727 million from the state budget to support hi-tech investments The Council of Ministers has adopted the “Programme for the Support of Investments of Importance to the Polish Economy 20112020.” The Polish Information and Foreign Investment Agency (PAIiIZ) is the only operator of the programme to accept grant applications. 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 entrepreneurs who are planning 1) investments in the priority sectors – automotive, electronics, aviation, biotechnology, modern services and R&D; 2) new production investments in other sectors, with minimum 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 investments 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 following proportion – 56% for creating new jobs and 44% for investment 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 Economic 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 technological process, the plant will produce a high-quality product - rPET, i.e. a fully-fledged material for the thermoplastic manufacturing of new bottles. The investment costs of PRT Radomsko are estimated at PLN36 million. The company plans to employ at least 30 people. PRT Radomsko belongs to the ALPLA group, a European leader in the production of PET packaging. 76 :: polish market :: 7-8/2011 Interprint Polska Sp. z o. o. intends to expand its production facility and launch a new innovative production line for varnishing decorative 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 permit 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. After 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 level 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 satisfied 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 published 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 strategy of building a European Production Centre. The company, which is celebrating the 20th anniversary of its entering the Polish market, 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, Director of Production and Logistics at 3M, the CEE and MEA regions. :: Eastern Cooperation So close, yet so far 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. Modernization Eastern Partnership (EaP) is a programme of economic and political approximation of the countries of the eastern bloc with the European Union. It is also a support programme for the comprehensively understood modernization 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 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 category of half-free countries. In the same category are Moldova, Georgia and Armenia. While Azerbaijan and, even to a greater extent, Belarus are deprived of freedom. Another important issue is the level 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 undertake their official duties. The level of corruption is enormous. With the exception of Georgia, where according to research by Transparency International, it is at a level close to Italy’s. The level of perception of corruption in Georgia is smaller than in Bulgaria and Romania belonging to the EU. Yet in other EaP countries corruption is very severe. It manifests itself in almost every aspect of life and affects not only the morale of the societies, but also the investment climate. So close, yet so far In the cultural aspect, the reconstruction of ties between the region and Central and Western Europe is needed. In the case of Southern Caucasus countries, which were first called Europe in the declaration of Eastern ADVERTISEMENT 7-8 /2011 :: polish market :: 77 Eastern Cooperation Partnership two years ago, it is an attempt to establish theses ties. This raises the question whether the societies of Eastern Europe want European integration. General data as to the degree of support for European integration are very reassuring. In Armenia 81% of the population wants EU membership, 11% are against; in Georgia – 79% is in favour, 2% is against; in Moldova – 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 different. Then, integration with the EU is supported by 38% of the population in Georgia, 33% in Moldova and 1420% in Ukraine. The societies of these countries often 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. Belarus At the moment the situation in Belarus is extremely worrying. This is a country that in the recent months through the cumulated changes in the economic policy and the lack of structural reforms has fallen into a huge crisis. Belarusian rouble was devaluated by over 60% as compared to the end of last year, and the government of Belarus is introducing various administrative restrictions on exports. In addition, there has been a drastic decline in terms of the degree of respect of human rights and civil liberties. The percentage 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 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. 78 :: polish market :: 7-8 /2011 Łukasz Adamski, an analyst at the Polish Institute of International Affairs (PISM) Therefore, if any significant changes occur, Poland will be expected to propose 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 sanctions against the regime. These are extreme approaches, while in practice it is about balancing these components. In my opinion, a dialogue with the regime 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 repressive. As regards the second method, Poland intensively supports civil society in Belarus. Examples could be the Konstanty Kalinowski Scholarship, owing to which hundreds of young people from Belarus can study in Poland, and the Belsat TV sponsored by the Polish Ministry of Foreign Affairs. Thanks to Belsat Belarusians have access to free information and works of Belarussian literature. Ukraine In Ukraine in the last year and a half the talks on the creation of an overall deepened free trade zone with the EU have gained momentum. It is an institution, 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. which may in a real way enforce the harmonization of Ukrainian law and economy with EU countries. Signing this document will be a very important impetus pushing Ukraine towards closer cooperation with the EU. Perhaps 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 possible 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 power, to limit the already very little independent judiciary and harassment of opposition by the selective application of law in Ukraine. In addition, Ukraine will hold parliamentary elections next year and there is a danger that they will not be considered as fulfilling democratic standards. Moldova, Georgia, Armenia, Azerbaijan In Moldova, on the one hand there is a government considered to be proEuropean, but on the other hand the government of Vlad Filat, in spite of a very successful propaganda, according 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 leader when it comes to law abiding and fighting corruption, but the concern is that President Mikheil Saakashvili 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 democratic country, although the degree of repression is now lower than in Belarus. In Armenia, a significant mobilization of civil society and attempts to liberalize the political system have been observed in the recent months. 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”. Eastern Cooperation The Southern and Eastern dimensions of the European Neighbourhood Policy are balanced “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). Eastern Partnership is a long-term strategy for developing relations with 6 countries – Armenia, Azerbaijan, Georgia, Moldova, Belarus and Ukraine. Its primary purpose is political and economic rapprochement of these countries with the EU. EaP outlines a comprehensive model of relations between the EU and each of these countries. Each recipient of the partnership can count on political association and economic integration with the EU on condition that it embraces democratic standards and introduces a market economy based on transparent criteria and standards. Polish priorities in the field of the European Neighbourhood Policy, especially its Southern dimension, are formulated quite generally in the programme of the Polish presidency: “Polish presidency will seek cooperation based on partnership, focused on supporting democratic transformation, and the construction of modern state structures in relation to Southern Neighbourhood.” However, in the context of Eastern 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 presidency wants the process of signing association agreements and creating free trade zones to progress within the EaP.” This refers to the completion or significant progress in the negotiations with Ukraine and Moldova. The second important area are the negotiations on liberalising 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 condition however is that Belarus respects democracy and human rights. The expectations towards Poland in relation to EaP are considerable, however we should not lose sight of the 80 :: polish market :: 7-8 /2011 situation in the Southern Neighbourhood. Poland has largely demonstrated its commitment to the matter of the South by putting forward the concept of European 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-governmental organisations in the countries where there are authoritarian regimes. This is a mechanism surpassing the institutional 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 official path of earmarking assistance, often because of the existence of authoritarian regimes. If not for the situation in North Africa, this proposal would be ignored, but now it has been incorporated into the Review of ENP. It is equally important for the Eastern Partnership. Another new financial instrument introduced by European institutions due to the crisis in North Africa is the Civil Society Facility – a new line of funding managed by the European Commission granted also primarily to NGOs in the region. It should be emphasised that we should not evaluate negatively the impact of the South on the East, nor analyze the development of ENP in terms of rivalry between these two dimensions. If we look at ENP in a historic perspective, we see that both dimensions have had a rather positive than negative influence on each other. When the Union for the Mediterranean was founded 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 adoption of EaP in 2009 served as a model for the new policy concept for the South. It can be inferred then, that what is currently happening in the South will also serve the East in the longer term. The meanings of civil society and democratisation are stressed in the current Review of the European Neighbourhood Policy. The so‑called deep democracy is mentioned. And it is what is really needed 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 similar to the role of other EU countries. Member states pursuing their development policies in line with the objectives of EaP can contribute to the promotion of democracy. The Polish Ministry of Foreign Affairs has launched a special programme of financing projects in EaP countries. In addition, an interesting initiative within the framework of the Visegrad Group has been initiated recently. The V4 countries, including Poland, have agreed to establish a special fund within the existing Visegrad Fund allocated to the realization of projects in countries belonging to the Eastern 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 Cooperation 20 years of good neighbourhood on the way to EU Ambassador Extraordinary and Plenipotentiary of Ukraine to the Republic of Poland Markiyan Malskiy What in your opinion are the priorities in the development of Polish-Ukrainian relations 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 relations between the two States were established as early as on 4 January 1992. This marked the beginning of the dynamic, gradual development 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 establishing diplomatic relations, both countries, acting through joint agreement and trust, have achieved a high level of political and economic cooperation, which regularly 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-beneficial 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 European integration, and cooperation in the energy sector, including cooperation in the field of energy security, and strengthening the humanitarian aspect of Polish-Ukrainian cooperation. We are facing the challenge of preparing 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 alternative to the strategic partnership between Ukraine and Poland. Our countries and nations are developing good neighbourly relations in harmony and respect, and building a common European home together. What are Ukraine’s expectations towards the Polish Presidency of the European Union? Firstly, it should be observed that Poland is a Member State of the EU and NATO that is developing very dynamically, and has every 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 Presidency of the EU, and both sides are well aware of the opportunities arising from this fact. We, along with our Polish partners, expect 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 creating 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 European integration. I am convinced that this event will also be of great importance to Poland. 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 policy 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 opportunities 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 Community 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 implementation of the action plan for the liberalisation of the visa system from the EU, which will enable us to take another step towards achieving 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 cooperation between Ukraine and the EU within the framework of the “Eastern Partnership” initiative. We are ready to take full advantage of the potential and opportunities offered by this initiative in all areas that suit our ambitious 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. :: 7-8 /2011 :: polish market :: 81 Eastern Cooperation Poland-Ukraine “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 BIZ Over the last few years Ukrainian companies have made numerous multi-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 purchased in 2006; and the Gdańsk Shipyard was bought shortly after (both investments are in effective operation today). They were joined by a new coinvestor – a Russian company – making it a multilateral investment. Since 2008, Centrostal Bydgoszcz, which sells metallurgical products, has also been owned by a Ukrainian company. 82 :: polish market :: 7-8 /2011 Polish investments in Ukraine are smaller in value, but more numerous. 1,200 Polish enterprises operate on the Ukrainian market today. As of 1 January 2011 the value of Polish investments 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 local and Western-European producers. The Ukrainian market remains a highrisk market, yet for experienced investors 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 provinces 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/imports Trade between Ukraine and Poland is currently at a high level. It has not reached the 2007 figures yet, when both countries recorded record trade Eastern Cooperation turnover- USD9 billion. During the economic crisis the turnover fell almost threefold, although already since 2009 another increase has been observed. Last year the turnover reached USD4.7 billion (including ca. USD1.8 billion – Ukrainian exports). Over the last 10 years Ukraine has had a negative 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 increased more than twofold, and Polish exports to Ukraine have grown by over 20%. The stock exchange Cooperation in financial investments is developing very well. Since May of this year the Warsaw Stock Exchange has featured the WIG-Ukraine stock index. At present, there are 5 Ukrainian companies on the WSE Main List and 2 on the alternative market. The majority 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 received ca. USD400 million. About 10 new Ukrainian companies are planning 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 companies hold first place among all foreign companies listed on the WSE. Problems and solutions Currently the greatest problem in economic cooperation is the state of our shared border. The number of border checkpoints between Ukraine and Poland is three times less than the number of border checkpoints that Poland used to have with Germany (before Poland’s accession to the EU). In order to solve this problem, 4 new border checkpoints are under construction. The process is being made faster by the joint organisation of the EURO 2012 European Football Championship. Until the kick-off the existing checkpoints will be fully redeveloped, passenger traffic will be separated from freight, and the number of lanes will be increased. Today the border is a bottleneck, and an obstacle to higher turnover and transit possibilities. Talks with the European Commission are under way, with the aim of resuming common customs clearance, which existed before Poland’s accession to the Schengen Area. This would allow a twofold decrease in waiting times at the border and reduce the formalities. Production certification is yet another barrier. Poland and Ukraine currently have no agreements signed recognising examination by certification units. Ukrainian products to be exported to Poland must have a European certificate, and the same is true for Polish products going to Ukraine. Obtaining a certificate in Poland is sometimes more difficult than in other EU countries. There are cases when third countries profit from certification. One such case is the import of pellets to Poland. It mostly goes through Baltic 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 radical tax system reform. Since 1 January 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 January 2011 to 2014 a gradual reduction in income tax is planned, and it is already 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 introduced. Big companies conducting their activities in Ukraine complained that the VAT return is a very slow procedure and it is associated with onerous inspections on the part of internal revenue authorities. A system of automatic VAT returns has been introduced, but a very limited number of Ukrainian companies are using it today. It requires meeting certain conditions. Aside from reducing the number and amount of taxes, Ukraine has also introduced other incentives for entrepreneurs. Clean energy device producers 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 industry 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 customs is being prepared in Ukraine. On the international scene Ukraine’s European aspirations, which are supported by Poland, constitute a vital element in the cooperation of the two countries. Currently, not just Poland, 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 Russia 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 standstill, the talks are already advanced, with both sides ready to reach a compromise. 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 capabilities to the EU. Points of conflict concerned the inclusion of Ukraine’s agricultural products into the agreement (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 important 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 rebranded – this will apply to the production of brandy, sparkling wine, and some other types of wine. Ukraine is a member of the Commonwealth of Independent States (CIS). It has bilateral agreements with CIS countries. It also holds membership in international and regional organisations 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. 7-8 /2011 :: polish market :: 83 Eastern Cooperation India: a welcome warm as the weather 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 Ryszard Sznajder President of the Board of the Polish ‑Indian Chamber of Commerce “In the 2040s at the latest India will become the main economic power in the world, and it will remain for good,” insisted 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 activity. Even in the last few years India’s economic growth has sustained a level of 8-9% annually. From 2006 to 2010 84 :: polish market :: 7-8/2011 India advanced from 15th to 12th position 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 economic partner, it has historical economic relations with Poland. In India Polish people are looked upon favourably. However, “our sales today are pathetic – they constitute only 0.2% of the whole turnover of India, which, given that India is the second most populated country in the world, seems inexplicable,” 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 because in India one can produce everything at a lower cost. Moreover, “according to the Indian Ministry of Commerce and Industry, 49.5% of India’s imports is fuel (predominantly oil), gold, and diamonds. Those are products, which Poland cannot export,” stressed Miklaszewski. Further positions on the list of products that are imported to India are occupied by goods from the engineering industry – mechanical and electrical, 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 devices, iron, steel, organic chemicals, electrical machines, vehicles and goods for individual projects implementations. According to Polish Ministry of the Economy, coke is the number 1 product exported to India (Poland occupies 2nd place among the suppliers of coke products to India, almost 15% of the market), rolled goods (14th place), vehicle parts (0.5%, 23rd position), scrap metal, rubber, lathes, car parts and fireproof goods. In many of these sectors, Poland’s main competitor is China. According to the Indian Ministry of Commerce and Trade, in first place as far as imports from Poland 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 providers of caprolactam, also produced in India with the use of Polish technology, as well as refined copper - 2nd place on the suppliers’ list, carbon disulfide – 2nd place, wafers – 1st place and cosmetic 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 reality. The main forms of business activity Eastern Cooperation Foreign Direct Investments permitted in India 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 partner, often a minor one, in a mutual enterprise enables one to avoid making a series of mistakes, facilitates operating a business and establishing trade contracts. A common approach is the commercial 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 socalled project office. It is connected with the realisation of a specific project in India, after getting an order or after winning a government or private-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 either 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 implementation of a given project. When planning to operate in India, one should take into consideration not only the legal form, but also the analysis of the legal regulations in a given 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 stipulated 37 top priority sectors, in which foreign investors can relatively easily acquire permission to operate. However, there is still a hindrance in the clause that there should be 74% of foreign capital, while home equity should constitute the remaining 26%. This is not always the case. Companies with 100% foreign capital can also operate in India, but this requires special permissions,” said Świerzewski. It is interesting that in Indian business reality formally 40% of investments come from Mauritius. It even happens that Indian companies reinvest in India through companies located 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 paying it again in India. In Mauritius the tax rate equals 0%! :: “You will find our welcome is as warm as our weather; it is easy to do business in India - 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. Telecommunications :: With no capital limit for production activity :: Up to 74% foreign capital share in the business assets are possible 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 foreign 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 entities 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 bridges Hard 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 managing coal industry plants without the right to mining Roads, motorways, ports and harbours :: Such investments are allowed of up to 100% by automatic permission Trade :: Foreign direct investments are allowed of up to 100% by automatic permission for trading companies conducting the following activities: Export :: Wholesale trade :: Import of goods or services, provided that at least 75% is supplied to order and sold between companies within the same group and not to third parties Press :: Not allowed Energy :: FDI of up to 100% in the field of projects concerning manufacturing, distribution and the transmission of electrical energy other than nuclear power plants Medicines and pharmaceuticals :: FDI allowed up of to 100% in the field of medicines manufacturing, 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 permission Mail services :: Allowed up to 100% in the scope of mail services Pollution 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 7-8/2011 :: polish market :: 85 Events Eastern Cooperation Poland and Thailand: friendship and cooperation Thailand 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 intensive. Once again the organisers managed 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 exhibition. 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, jewellery, utility and decorative products, 86 :: polish market :: 7-8/2011 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 information. The opening ceremony was inaugurated by His Excellency the Ambassador of the Kingdom of Thailand to Poland, Arkasid Amatayakul, and the Minister-Counsellor of Commercial Affairs of the Thai Embassy in Poland, Sathaworn Subsoontorn. “It is one of the most important projects aimed at presenting to Poles new opportunities in the field of commercial cooperation. We wish to make our commercial partnership stronger for the benefit of consumers, and to look for new opportunities for common undertakings. I believe that the Made in Thailand Exhibition will contribute to strengthening relations between our countries and nations alike,” declared Ambassador Arkasid Amatayakul. The greatest attraction of the Made in Thailand Exhibition 2011 was undoubtedly the Thai classical dance group, which had visited Poland only once before. It was a one-of-a-kind performance, and also one of the very few occasions 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 dances, 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,” addressed 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 certainly be helpful in concluding agreements and transactions, and developing business in Thailand. Thai film screenings have also become part of the tradition of the Made in Thailand Exhibition. This year we were also able to see excellent, prize-winning motion pictures, including “The Legend of Suriyothai”, directed by Chatrichalem Yukol – a remake by Francis Ford Coppola of the most expensive Thai super-production from 2001, telling the story of the famous 16th-century Thai Queen Suriyothai. :: Małopolska Małopolska The 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 saying Małopolska have Kraków in mind, but this is a mistake. The government of the province has set a very important goal for itself – the development of the region through the development of tourism and creating an image of Małopolska as one of the most attractive 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 fidelity to him. She denied to marry a nobleman 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 history 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 wanting to protect themselves from the invasion 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 binding the treasure with the castle in Tropsztyn. That was when the castle was taken over by him and the search for the treasure began. Unfortunately, after less than 6 years the quest was discontinued due to the tragic death of the descendant of this family... Tourists Photo: M.Grychowski, courtesy of UMWM a region brimming with temptations Niedzica Castle 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 Marcina (Mount Martin) and castle ruins in Tarnów, and the Castle in Czchów popularly called the Tower. The Ethnographic Museum in Tarnów, housed in a 13th-century mansion, is worth recommending. The exhibit concerns the Romani culture and history. Each year the Museum organizes many events, of which the most famous one is the Roma Caravan Memorial. Everyone should visit the Auschwitz Nazi concentration camp built in 1940 in the town of Oświęcim. This place of tragic events is listed as a UNESCO heritage site. About 3 kilometres from Auschwitz, there is another camp Auschwitz II – Birkenau, established in 1941. Currently it is a museum site. The visitor is pierced by silence and the story told remains in memory for a very long time. A guide tells visitors about the history of Auschwitz and Auschwitz II – Birkenau during a 7-8 /2011 :: polish market :: 87 88 :: polish market :: 7-8 /2011 The camp in Oświęcim downhill and cross-country routes on Palenica. Małopolska, and especially its leading city Kraków, boast several cultural events. Every year thousands of fans flock to the Coke Life Music Festival, Polish Music Festival, jazz meetings and PAKA cabaret review. Zakopane invites visitors to the International Festival of Mountain Folklore in August, while Bukowina Tatrzańska to Sabala’s Storytelling Photo: R. Moździerz, courtesy of Tarnów District Museum 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, understand 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-recommending 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 historic chambers and the Kraków Saltworks 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 shoreline of the lake is covered with beaches 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 rubber rope. Małopolska, especially the area of Kraków, Zakopane and Podhale can be enjoyed from the bird’s perspective. Good fun guaranteed. Probably everyone has heard about the famous raftsmen from Pieniny Mountains called Flisacy. Their stories 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. Pieniny Mountains have also something in store for skiers. There are several Photo: M.Grychowski, courtesy of the Chairman’s Office of the Małopolskie Province (UMWM) Małopolska and Highlanders’ Carnival. Nowy Sącz offers the Mountain Children Day. And Tarnów is worth visiting for the festival 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 extreme sports will also find something for themselves. Summer and winter, everyone will find here something of interest to themselves. :: Zalipiańska Cottage 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 INFORMATYCZNOWDROŻENIOWE 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 Oświęcim 100248 682 643 428 826 29 CHEMOSERVIS-DWORY SA Wojciech Mazur 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 90 :: polish market :: 7-8 /2011 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 20 years of EFL On the occasion of the 20th anniversary of the European Leasing Fund (EFL), a new strategy will be put into effect in hopes to double the company’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-innovative solution, where one party (in this case EFL) transferred to another party the right to use a particular product on instalment basis. The European Leasing Fund deals primarily with the leasing of passenger 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 newlycreated factoring company, Crédit Agricole Commercial Finance Polska S.A. EFL celebrated its anniversary by launching new strategies to the market. 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 efficiency of distribution and the company’s expansion through such additional tools as the Internet and specific programmes facilitating cooperation with suppliers. The new strategy also involves introducing innovative solutions in this area and extending the package with a factoring agreement. EFL estimates that the new strategy 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 introduction of innovative products. :: 7-8 /2011 :: polish market :: 91 Opinion A recipe for leaders 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. in many businesses, all changes are driven by external factors – they are forced and result from, for example, the necessity to keep up with the competition, meet the growing customer’s expectations, or improve poor financial results. Frequently, this is the only solution known to managers. 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 reactions to a changing environment, they can be the result of a master plan. The strategy of pacing changes is precisely based on planning and implementing 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 innovation every 3 months. This approach 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 tempo also causes employees to be more effective, because they know what to expect and when, which allows them to concentrate and focus on the realisation of successive tasks. Even if the pace is fast, thanks to the predictability of actions, it is easier for employees 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 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. 92 :: polish market :: 7-8/2011 also a quick and smooth transition between one activity and another. Change management is a weak point in many businesses – this concerns moments when the enterprise completes one marketing campaign and embarks on another, goes from designing one product to another or enters new markets. Each of these changes should occur in accordance to a formalised management procedure. It should be the simplest and shortest one possible. A good manager is the one who treats every change as an opportunity 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 important that it is suited to the rhythm of the market. Seasons of the year, different client expenditures, supplier cycles – although these factors appear to be obvious, their strategic potential is frequently ignored. The synchronisation of the firms’ rhythm with that of the market does not always require a speeding up of actions; in certain 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 demand for it. The rhythm of changes in different markets is not identical – the development and life cycles of different products differ and the general rhythm of managing the firm should be adjusted 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 dynamically changing sectors. Another issue that the manager must keep in mind while introducing 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 fastpaced markets. A firm that only reacts to events in fast-paced conditions may not keep up with implementing changes – its actions can be chaotic, another event will take place, requiring 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 functions in accordance with a foreseeable, imposed tempo, a manager will be able to work out every phase. The manager will also be less distracted by frequently false signals flowing 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 leader 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. :: Opinion Will the euro zone survive? Marek Zuber The author is a financial market analyst 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, because anything is possible. But if it did, it would be a colossal discredit to virtually the entire political class of today’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 unprecedented long period of cooperation between individual countries. Centuries-old animosities faded, countries, which had led disputes from generation to generation are jointly making decisions about their future. Of course, not everything is as it should be. Despite that, the idea of a united Europe, an area without wars, is carried out. Is it worth to risk and go back in the process of integration? The crisis of 2008 revealed the problems of European countries. Not only European, in fact. Years of living on credit, beyond means, spending notowned money, had to end as it did. I disagree with the thesis that the current problems of Europe are the continuation of the crisis whose peak was observed 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 stimulate economies, we would not be observing the current problems. In addition, the recession which was also an outcome of the financial crisis, has also worsened the situation. On the other 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. Actually, the same can be said about the largest 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 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 public finances. And it is hard not to agree with this thesis. If the largest European 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 rationalization of public expenditure programmes. Not everyone is sufficiently ambitious, but it seems that the situation 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 financial crisis happened in 2008. If it hit us a few years later, it might actually endanger the duration of the current system. Probably, European societies accustomed to extravagance would talk their politicians into greater nonchalance in spending public funds. At present, there is a chance to contain the situation. I am not saying that all the countries which currently make the euro zone will stay in it. Because not all deserve 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, whether they will want to subdue to the regime 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. Unwillingness to undertake it should disqualify. 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 paying 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 disaster provided that a formula for reducing the effects of this bankruptcy for other countries is invented. This refers primarily to preventing a significant 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 accelerating reforms in the euro zone. The argument that Greece should have been allowed 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 budget deficits and public debts. The consequences 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 accepted by investors, economists and politicians. Of course, there would be perturbations, but on a smaller scale. So, will the euro zone survive? I hope it will, because it is an important 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 conditions of its functioning. For example, an effective system preventing excessive indebting of member states must be created. And indeed, perhaps, someone will have to be discarded from the euro zone. For the sake of Europe. :: 7-8/2011 :: polish market :: 93 Law & Taxes Scrambling with procurement law 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 Paradoxically, the legislature decided to exclude from public procurement law a regulation that probably would help to solve many current conflicts. Public Procurement Law prohibits changes to the provisions of the agreement in relation to the contents of the offer, under which the contractor was chosen, unless the contractor predicted possibility of any such change in the contract notice or in the terms of the contract and the conditions of such a change. Usually one of the tender documents are the future agreement’s general conditions or pattern. 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” inadmissibility of changing the contract and the liquidation based on the principle of “rebus sic stantibus” during procurement, 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 legal 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 construction and investment industry. Executing the procurement is a dynamic and complex process. Often even the contracting authority is not able to foresee all circumstances which may affect this process. However the specificity of long-term contracts is that they can adapt to changing conditions. The stipulation for the introduction of more flexible regulations, finds its justification in the 94 :: polish market :: 7-8 /2011 light of numerous cases of termination of contracts by contracting authorities and the creation by the National Board of Appeals (KIO), a sort of “precedent” by agreeing to award a “free hand” to complete the implementation 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 jurisprudence of both the Supreme Court and the Supreme Administrative Court, the provisions permitting derogations from a fundamental mode of procurement must always be strictly construed, and the list of conditions which allow the individual modes is to remain closed. In accordance with Article 67 Paragraph 1 item 3 of the Public Procurement Law, it is possible to award a freehand 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 foreseen 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 relationship. 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 assign a “free-hand” for the completion of the stadium in Wroclaw, because: :: i mmediate execution of the contract was required and the Purchaser had shown that the minimum duration of the investment was barely 17 months :: It was not possible to keep the time limits set for other modes of procurement. The Board had adopted 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 situation. “ Due to the special nature of the investment and the importance of maintaining the deadline of 30 June 2011 (completion date imposed by UEFA’s stadium), the Board considered that the situation in which it was deciding to award a „free-hand” was exceptional. :: the Employer repeatedly undertook attempts to motivate the contractor (demanded the submission of a recovery plan, etc.). The Employer proved using evidence that, firstly, the reasons for the termination of the contract did not lie on his side, and secondly, that this situation could not have been foreseen 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 contract 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 opposition from the President of UZP, is a clear signal to legislators. We should consider the possibility of introducing 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 awarding a “free-hand” with the existence of such circumstances. :: Law & Taxes Pursuing a career in a regulated profession in Poland Foreigners 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 Chairperson General Partner’s Board at European Center for Legal Consultations 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: attorney, legal advisor, stock broker, geodesist, architect, building engineer, chartered auditor, pharmacist, physician, dentist, veterinary surgeon, nurse, midwife, laboratory diagnostician, psychologist, teacher, fireman and others. Persons staying in Poland and intending to personally work in a profession or run a business that is not considered a regulated one may do so without the necessity of undergoing the procedure verifying their qualifications. In this case, a decision from an employer or going through the standard procedure of registering a business in an appropriate form is all that’s needed. The legal basis for carrying out the said procedure of approving qualifications 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 technical professions. Because the indicated laws encompass several hundred different professions and types of business activities, listing all of them is aimless (an exact list is included in the appendix 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, Iceland, Norway) 96 :: polish market :: 7-8/2011 :: citizens of the Swiss Confederation :: members of their families :: citizens of third party countries possessing a permit for a long-term European Communities residency, as per the act of 14 June 2003 on foreigners (Dz. U. [Journal of Laws] 2006, No 234, item 1694, with amend.) Regulated professions are professions that require meeting certain requirements described in separate regulations of each EU member state concerning access to the given profession. The deciding body for the majority of regulated professions in Poland are professional self-governing bodies, which condition the ability to legally 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 bodies then the decision rests directly with a unit of government administration. Regulated business activity is an activity whose performance in a given member state is dependent on the possession of certain qualifications. The term qualifications is understood as knowledge and abilities of a general, trade or professional character. The confirmation of appropriate qualifications is usually automatic, provided that the migrant possesses appropriate professional 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 business activity in a member state, from which he or she comes from. The document confirming the possession of appropriate professional experience by a foreigner is a certificate issued by an appropriate body in the country in which the activity was previously carried out. If the foreigner does not meet the necessary criteria to automatically qualify to carry out a regulated business activity on the basis of professional experience, the recognition can be granted in accordance with an appropriate procedure. During a proceeding to recognise professional qualifications, the organ supervising a given profession or a certain type of business activity checks whether the applicant possesses an appropriate level of education and qualifications meriting the right to practice a given profession in the country in which it has been earned. In a situation where the appropriate 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 period 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 accepting country, it can determine that remedial measures are necessary. The appropriate body will decide about the necessity of applying remedial measures only after analysing the documents certifying professional experience of the applicant and concluding that the occurring differences have not been remediated. Remedial measures may include an ability test or an adaptation internship (lasting 3 years). As a rule, the choice between an ability test and an adaptation internship is up to the applicant, unless the regulated profession requires an exact knowledge of national law and its fundamental and lasting characteristic is giving legal advice and assistance. The appropriate institution in Poland in matters concerning accrediting foreign diplomas and scholarly degrees is the Department of International Affairs and Recognition of Diplomas of the Ministry of Science and Higher Education. It is worthwhile to mention at the end that there is a small group of professions or public positions whose performance, 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 citizenship. These professions include judge or Member of Parliament. :: premiery / premieres Persona IX/2011 Dziadek do orzechów i Król Myszy / The Nutcracker and the Mouse King XI/2011 Halka XII/2011 Senso II/2012 Latający Holender / Der Fliegende Holländer III/2012 Opowieści biblijne / The Biblical Parables IV/2012 Medeamaterial IV/2012 Słowik / Le Rossignol V/2012 terytoria / territories Oresteia X/2011 Jakob Lenz III/2012 Medeamaterial* IV,V/2012 Zagłada Domu Usherów / The Fall of the House of Usher VI/2012 opera 1 WIELKA KLASYKA / The Great Classics Turandot X,XI/2011 Halka* XII/2011, I/2012 Wesele Figara / Le Nozze di Figaro I/2012 Madame Butterfly II/2012 Latający Holender* / Der Fliegende Holländer* III,IV/2012 Nabucco I,IV/2012 Słowik* / Le Rossignol* V,VI/2012 Traviata VI/2012 opera 2 WIELKA KLASYKA / The Great Classics Łucja z Lammermooru / Lucia di Lammermoor X/2011 Turandot X,XI/2011 Don Giovanni XII/2011 Halka* XII/2011, I/2012 Senso* II,III/2012 Latający Holender* / Der Fliegende Holländer* III,IV/2012 Pasażerka / The Passenger V/2012 Dama Pikowa / The Queen of Spades VI/2012 balet 1 WIELKA KLASYKA / The Great Classics Romeo i Julia / Romeo and Juliet X/2011 Dziadek do orzechów i Król Myszy* / The Nutcracker and the Mouse King* XI,XII/2011 Bajadera / La Bayadère II/2012 Święto wiosny / Le Sacre du Printemps II,III/2012 Tristan III,IV/2012 Opowieści biblijne* / The Biblical Parables* IV,V/2012 Kopciuszek / Cinderella V,VI/2012 balet 2 TYLKO U NAS / Only at Teatr Wielki Persona* IX,X 2011; VI/2012 I przejdą deszcze… / And the Rain will Pass... IX,X/2011; I,II/2012 Romeo i Julia / Romeo and Juliet X/2011 Święto wiosny / Le Sacre du Printemps II,III/2012 Tristan III,IV/2012 Opowieści biblijne* / The Biblical Parables* IV,V/2012 Kopciuszek / Cinderella V,VI/2012 abonamenty packages 2011/2012 III dni sztuki tańca / 3rd Days of Dance Mazowsze: Święto tańców polskich / Polish Dance Feast Holland Dance / Jiří Kylián: Last Touch First Tanztheater Wuppertal / Pina Bausch: Café Müller, Das Frühlingsopfer Tanztheater Wuppertal / Pina Bausch: Vollmond Polski 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 Dance Compagnie Accrorap / Kader Attou: Symfonia pieśni żałosnych / Symphony of Sorrowful Songs IX/2011 mój abonament*/ My season tickets* Siedem dowolnych tytułów spektakli operowych i / lub baletowych Any seven opera and / or ballet performances wielki dla małych / The Great for the Youngs Dziadek do orzechów i Król Myszy* / The Nutcracker and the Mouse King* XI,XII/2011 Słowik* / Le Rossignol* V,VI/2012 Kopciuszek / Cinderella V,VI/2012 udział w cyklu edukacyjnym Poranki muzyczne ** / participation in educational cycle Music Mornings** wielki dla małych poranki muzyczne** / Music Mornings** Instrumenty Dęte Blaszane / Brass wind instruments X/2011 | III/2012 Zaczarowany świat złotej blachy / The magical world of the golden brass XI/2011 | I, V/2012 Zabawa i dialog instrumentów dętych drewnianych / Fun and dialogue among the woodwind instruments I, II/2012 Duet flet i harfa i kwartet smyczkowy / The flute and harp duo and the string quartet X/2011 | IV/2012 Magiczny świat instrumentów perkusyjnych / The magical world of percussion instruments XI/2011 | I,III/2012 Śpiew / Singing XII/2011 | IV,V/2012 * 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 Cultural Monitor In the European league of opera masters 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 The Opera Europa Association International 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 opera stage to an important player in the European league of opera masters,” said Waldemar Dąbrowski. Starting from the 2011/2012 season, the Musical Director of the Warsaw opera is Carlo Montanaro, who made his debut in the National Opera as a conductor in “Turandot”, directed 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 – Teatro dell’Opera in Rome, Teatro Massimo in Palermo, and Deutsche Oper in Berlin. “The final line-up for our new season would not be possible without enhancing this co-production network with prestigious foreign institutions – Bregenzer Festspiele and operas from Bologna, Copenhagen, Palermo and Saint Petersburg,” stressed Dąbrowski. 98 :: polish market :: 7-8 /2011 This season, audiences will be able to see two 19th-century masterpieces – Stanisław Moniuszko’s “Halka” directed by Natalia Korczakowska, and Richard Wagner’s “The Flying Dutchman” 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 Frenchman of Polish origin, renowned for his phenomenally original interpretations of 18th and 19th century music, will extract a universal dimension from this score,” promised Dąbrowski. Russian music will have a particularly strong representation on the Warsaw stage this year. There will be the ballet première of Tchaikovsky’s “Nutcracker,” which is beloved by audiences, with choreography by Wayne Eagling and Toer van Schayk, and a new performance of Igor Stravinsky’s “Nightingale” directed by Alexander Petrov. According to Waldemar Dąbrowski, the strongest pillar of this bridge connecting Poland with the East may be Andrei Konchalovsky’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 Petersburg. It will be a giant performance with nearly 500 people on stage! The visit of another foreign company is also going to be a massive event. The Pina Bausch Dance Theatre is coming to the National Opera in September! The 2011/2012 season will also feature a continuation of the series 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 series “Terytoria” (“Territories”) we will see “Medeamaterial” and “Senso.” 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, inspired by Luchino Visconti’s famous film, will be directed by Hugo De Ana from Argentina. :: 3 rd Days of Dance III Dni Sztuki Tańca 12/09/2011, 19:00 MAZOWSZE ZESPÓŁ LUDOWY PIEŚNI I TAŃCA FOLK SONG AND DANCE ESAMBLE 13/09/2011, 19:00 LAST HOLLAND DANCE TOUCH FIRST CHOREOGRAFIA CHOREOGRAPHY: JIŘÍ KYLIÁN, MICHAEL SCHUMACHER, SABINE KUPFERBERG 16, 17/09/2011, 19:00 CAFÉ MÜLLER / DAS FRÜHLINGSOPFER TANZTHEATER WUPPERTAL CHOREOGRAFIA CHOREOGRAPHY: PINA BAUSCH 18, 20/09/2011, 19:30 PERSONA POLSKI BALET NARODOWY POLISH NATIONAL BALLET CHOREOGRAFIA CHOREOGRAPHY: ROBERT BONDARA 21, 22/09/2011, 19:00 VOLLMOND TANZTHEATER WUPPERTAL CHOREOGRAFIA 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 EXPRESSION JAPOŃSKI ZESPÓŁ REIKA REIKA JAPANESE COMPANY CHOREOGRAFIA CHOREOGRAPHY: REIKA 27/09/2011, 19:00 SYMFONIA PIEŚNI żAŁOSNYCH LA COMPAGNIE ACCRORAP CHOREOGRAFIA CHOREOGRAPHY: KARDER ATTOU | MUZYKA MUSIC: HENRYK MIKOŁAJ GÓRECKI Par tner Patroni medialni: 12-28/09/2011 Cultural Monitor Culture is everywhere! 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 Carlos Pinana The Polish Guitar Academy is an international cultural and educational project continuing the summer master course in the classical guitar 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, 100 :: polish market :: 7-8 /2011 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 basis of international, cultural, and academic cooperation. Residents and visitors of the most beautiful places in this region are invited to come into contact with great guitar art. It is a unique occasion 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 attractive space of Wielkopolska,” stresses Przemysław Kieliszewski. “Culture is everywhere” is the motto of this year’s festival, which, apart from presenting the most talented classical guitarists in the world, also stimulates the creation of new musical works. This year the festival 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 direction of Agnieszka Duczmal. The festival will have master recitals, chamber concerts, workshops, concerts for families with children, and openair performances. This year the programme has been extended to present various shades of guitar music – from classical, flamenco and acoustic guitar to jazz and rock and roll. “Our Academy will be featuring several dozen artists from all over the world, including completely new faces. I’ve invited some of the best classical guitarists in Europe,” declares Łukasz Kuropaczewski. “Thomas Müller-Pering is one of the most excellent figures on the German guitar scene. An Italian, Carlo Marchione, who is extremely well-versed in early music, is a never-ending fascination. Alexander Swete from Austria, who often cooperates with the Vienna Philharmonic, 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 Honorary Pearl in the Culture category. The ranks of stars will be joined by the excellent classical cellist Andrzej Bauer, a representative of Polish rock and roll, Kuba Badach with the Poluzjanci band, and Martyna Jakubowicz. The festival’s highlight will be the guitar 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 energetic British vocalist Z-Star, will play the finale concert -“A Tribute to Jimmy Hendrix.” :: Cultural Monitor Compiled by Maciek Proliński Tribute to Komeda East of Stratford The 15th Gdańsk Shakespeare Festival is scheduled to take place between 30 July and 7 August, and will be organised by the Theatrum Gedanense Foundation. The festival dates back to 1993 when the first Gdańsk Shakespeare Days were organized. Since then the Foundation has been bringing the most interesting 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 International Association of Theatre Critics. This year’s major event will be the new adaptation of “The Tempest,” by the internationally-celebrated Lithuanian Oskaras Korsunovas. After a two-year break the festival will again feature Russian productions of “King Lear” and “Hamlet” directed by Nikolai Kolada and also the original Finnish small audience performance “Anatomia Lear,” inspired by “King Lear,” in which the figure of Lear is a puppet. We will also see the Polish-British production of “Macbeth” 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. :: 102 :: polish market :: 7–8/2011 2011 brings a great opportunity to remember one of the “icons of Polish jazz” – Krzysztof “Komeda” Trzciński (1931–1969) – the prematurely-departed selftaught 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 schedule includes workshops and lectures with renowned figures from the world of jazz, screenings of films featuring Komeda’s music, exhibitions of jazz-related 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. :: 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 satisfaction of being close to art and its creators, leisurely conversations and meetings,” said Grażyna Torbicka, the event’s artistic director. This year, under the section “Viaggio in Italia” we will see films by Roberto Rosselini, the father of neorealism, which are rarely shown in Poland. The influential director Liliana Cavani, who takes up controversial matters with great artistic results, will be another of the festival’s featured artistes. 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 Zbigniew Zamachowski, an accomplished actor with many unforgettable creations in Polish and foreign films, for many years one of the leading theatre actors. Another great attraction of the festival will be the presence of Grzegorz Królikiewicz, rarely seen in public, avantgarde, and rebellious film director, an expert and theoretician of the cinema. The yearly Cinema Lesson meeting will be accompanied by screenings of Królikiewicz’s films, which will be introduced by the author. :: Chopin on a small scale From 5 to 13 August Duszniki Zdrój will host the 66th International Chopin Festival. The nine days of the festival 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, brandnew 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. :: Cultural Monitor Witkacy and Others The true, alternative OFF The 5th OFF Festival, which is the essential Polish alternative festival (created by Artur Rojek, leader of Myslovitz, a Polish rock group) will be held between 5 and 7 August, for the second time in Katowice, in Dolina Trzech Stawów, one of the most attractive corners of the city, located close by the Muchowiec airport. The greatest star of the event will be the vocalist of Sex Pistols, John Lydon, to perform with Public Image Limited. 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 forthcoming album! :: Photo: Courtesy of Wilanów Palace Museum Until 15 August the Orangery in the Wilanów Palace Museum presents the second edition of the “Latent Capital” cycle, created by the Museum Władysław Jan Grabski; Stanisław Ignacy Witkiewicz, “Improvised Scenes with Janina Turowska,” Düsseldorf Monster along with the Profile Foundation. This time, under the name “Witkacy and Others” we can admire an interesting and extensive collection of Stanisław Ignacy Witkiewicz’s (Witkacy’s) photographs, 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 literary works and paintings, and recently also his aspect of a “demonic photographer.” The exhibition also presents drawings, paintings, and curiosities that Witkacy collected. :: For Chopin and around Chopin Between 16 August and 1 September the 7th International Music Festival Chopin and His Europe – “From Mahler to Liszt and Noskowski” is to take place in Warsaw. The festival has been organized since 2005 when it immediately 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 connected to the music of other 19th-century and later composers. The concerts feature European compositions from the 18th century to contemporary 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 Stephen 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. :: The high-art Wratislavia Cantans Schola Theatre of the Wegajty 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 subject 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, Photo: Courtesy of the organiser 2-18 September will be the time of the 46th International Wratislavia Cantans Festival, featuring oratorio-cantata, symphonic, and chamber music concerts, opera and ballet performances, instrumental recitals, church music concerts of various denominations, and presentations of visual artworks of all ages, styles, and cultures. All this in the most beautiful venues in and around Wrocław. the joint forces of the recognised soloists, Gabriela Consort & Players 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. :: 7–8/2011 :: polish market :: 103 Cultural Monitor Something to be proud of Photo: Igor Kohutnicki WOŚP 2011 “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). 104 :: polish market :: 7-8 /2011 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 previous experience. Such ideas as “volunteering” or “civil society” were only just entering the Polish consciousness. I believe that voluntary service should be complementary to the state, something 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 contributed 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 presents study results showing that Poles are quite passive in various civil activities. 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 everybody 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 service 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, worldrecognised NGO without an agenda in Poland. What is wrong is that the formal knowledge of most of our citizens 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 Cultural Monitor often forget that we’ve always had an enormous human, creative capital. Sometimes, when wonderfully united, this capital shines. The Great Finales of the Orchestra are such times... Yes, the Orchestra is already a recognised brand. If we put it all into perspective, 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. The work ethos, many pro-country actions, building... after all PKP, Poczta Polska were once synonyms of quality... As a country, we have industries in which we are highly-specialised experts. Our construction 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 computergame development, for example, but I’ll give you a different one. I’m reading 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 somewhere. We should have some distance. And we should stop showing ourselves in a bad light. We are hardly experts in public relations... and yet WOŚP keeps enjoying the highest public confidence in Poland. And this can’t be achieved by the best PR activities... For me, personally, the most important thing here is to have educated and competent people, who clearly understand the mission of the institution. Management should also be transparent. Everyone, from the President 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 institution should state its goals and strategy 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 richest states won’t take action, or they will, but it will be five times more expensive. 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 nothing. 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 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. We’re aware that we enjoy great public support. From the very beginnings of our existence we have been saying that even though we are a foundation, a totally crazy and spontaneous effort, our activity is also a well-managed business. We’ve received lots of awards – the Order of Polonia Restituta, the Medal of Tadeusz Kotarbiński, and also “Polish Market’s” Honorary Pearl. Every such award is a joy, but it doesn’t lull us into a sense of security. We are disobedient 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 something that stays with us... Let’s talk about some of these actions... We’ve bought over 20,000 stateof-the-art medical devices for the USD110 million we’ve collected. From the smallest, such as modern pulse oximeters and vascuports, to complex mobile radiography units, ultrasound and MRI scanners. This is a result of taking care of every penny, and the good interest rates negotiated for our money, which lies in a bank for a year. WOŚP is also implementing serious medical programmes for the youngest patients – the Public Hearing Screening Programme, the Retinopathy of Prematurity Programme, the Infant Flow Programme, the Programme for Treating Children with Personal Insulin Pumps, and the Educational Programme “We Rescue and Teach How to Rescue.” The foundation does not provide individual help, and Photo: Paweł Wołochowicz Jerzy Owsiak 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 healthcare institutions - we only hand over equipment as a gift from the Foundation. 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 participating 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 average reader of “Polish Market” and asked him or her to list 10 companies that take part in the WOŚP Great Finale they would name maybe five... Why am I saying this? Because the Orchestra has never had a purely commercial basis. That is to say, if somebody told 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. 7-8 /2011 :: polish market :: 105 us “We’ll support you, but we want an enormous advertising vehicle that will tell people a lot about us,” it simply won’t work. This requires very focussed advertising campaigns. The fact that I mention 30 names of companies during that one day is only a way of saying thank you to the employees 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 everyday blog, music, and films. It’s a portal of good news. Something that really appeals to me. On television you always have this “sword” of viewership 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 condition is “to be,” and addressing the question “what content does it have?” Quite recently I told a well-known automotive company producing offroad vehicles, “come to our Woodstock Festival and show them!” And they say “those are kids on holiday. They won’t buy our cars – neither today nor next year.” Right, but you’ll be amazed when in five years these people – these extremely sensitive and creative 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 atmosphere. The musical way of saying “thank you” to young Polish people involved in the Finale is the 106 :: polish market :: 7-8 /2011 photo Marek Krasowski Cultural Monitor Krzysztof Materna, Marek Kondrat, Jerzy Owsiak, Jerzy Buzek 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 philosophy. Doing good through happiness, love, and fun. We’ve also created 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 artistic merit. For the people who go there, Woodstock is an incredible experience. You see, it’s a little like in family businesses, like in Lego. People 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 former German border, near Brandenburg – a place which holds little charm for Germans themselves... And suddenly 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 Poland.” 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 between 4 and 6 August. Its foreign stars will be Skindred, Dog Eat Dog and the Prodigy. This year, to celebrate the 30th Anniversary of one of the most important Polish rock bands – Republika – and 10 years after the death of its memorable leader, Grzegorz Ciechowski, we’ll have a special concert with the most emblematic songs of the band. Members of Republika will be accompanied on stage by such artists as Kasia Kowalska, Ania Dąbrowska, and Jacek Bończyk. Another interesting event will be the “Projekt Grechuta” concert dedicated to one of the greatest Polish singers-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 conversations, at which Lech Wałęsa, Tadeusz Mazwiecki, and Leszek Balcerow icz have spoken of Poland. This year’s guests will be the President of the National 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 Uprising 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. Events 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 TU InterRisk VIG Jan Bogutyn, PhD with Member of Parliament Adam Szejnfeld – Chairman of the “Friendly State” Committee 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 Meeting of the Friends of the Polish Success Academy President of Multico SA Zbigniew Jakubas and Director Iwona Jacaszek – Coca Cola HBC Polska All supporters and friends of the Academy of Polish 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 development 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, Professor Longin Pastusiak, Prof. Janusz Dyduch, Vice-president of the Polish Federation of Engineering Associations (NOT), Ryszard Konwerski, the President of the Polish Business Club Association and Judge Anna Maria Wesołowska. The reason for this meeting was the establishment of the Polish Success Academy Club, headed by Ambassador Witold Rybczyński, PhD. During the event the Certificates of Financial Credibility were awarded, for the first time in cooperation with the Economic Information Bureau InfoMonitor S.A. (BIG InfoMonitor). The certificates were handed by the President of BIG Mariusz Hildebrand and the President of the Polish Business Club Association, Ryszard Konwerski.:: 7-8 /2011 :: polish market :: 107 Events Cross-border opportunities of SMEs “Going beyond the domestic market: how to increase the likelihood of success on the international stage. Crossborder 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 Libiszewski, partner at Wardyński & Wspólnicy, Antonella Negri-Clementi, President of Global Strategy, graduate of Bocconi University, and Anna Polak-Kocińska representing the Polish Information and Foreign Investment Agency (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) Anna Polak-Kocińska (PAIiIZ) Antonella Negri-Clementi (Global Strategy) Krzysztof Libiszowski (Wardyński&Wspólnicy), Antonella Negri-Clementi (Global Strategy), Rita Schultz (Polish Market) Photos: Maciej Górski/SGH 108 :: polish market :: 7-8 /2011 Events Luxury and b eauty The Polish Night “Luxury and Beauty” was organised in Cannes during the famous film festival. The event was attended by the greatest Polish and international celebrities, and hosted by Mariusz Pujszo and Kurka Wodna Productions. Mariusz Pujszo and Francois Chopiner 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 attracted many celebrities to the Carlton Hotel. The highlights of the evening were the fashion shows of famous Polish designers Sylwia Romaniuk 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 delivered 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. :: Mariusz Pujszo, Grzegorz Hajdarowicz 110 :: polish market :: 7-8/2011 Weronika Rosati Fabian Prevot and Paweł Deląg 15 czerwca 2011 roku odbyła się uroczystość wręczenia diamentów do złotej statuetki lidera polskiego biznesu dziękujemy partnerom uroczystości, a wszystkim laureatom serdecznie gratulujemy. anwil s.a. cereal partners poland toruń-pacific sp. z o.o. control process s.a. cykoria s.a. ferro s.a. główny instytut górnictwa ireneusz 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 wyłączny partner telewizyjny program 1 tvp relacja z uroczystości na: www.bcc.org.pl Events Deni Cler Milan Show Autumn-Winter 2011/2012 A show promoting the Deni Cler autumnwinter 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 celebrities, including Beata Ścibakówna and Monika Richardson. The world of fashion and stars awaited this event holding their breaths. The stylist of the show was Tomasz Jacyków, a friend of the brand. The colours 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 suggest also beautiful furs and Montgomery coats. This season’s novelties are rain boots and Italian umbrellas. All clothes are made from fine fabrics such as flannel, knitted fabrics and lightweight wool blends.:: 112 :: polish market :: 7–8/2011 Economic Monitor Economic Monitor May 2011 Key economic trends 6.2% against 11.3% in 2010Q4. In 2011Q1 total 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, construction and service sectors. Growth in construction 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 indicates future economic trends, fell in 2011M5 Poland’s real GDP growth accelerated in 2011Q1 thanks to a rise in receipts from indirect 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 expenditure 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 previous 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 – 15 10 5 1.5% 1.4% 1.0% 2.9% 3.1% 3.7% 4.6% 3.9% by 0.5 points. May was a second month in succession 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. Consumer demand, which was the driving force behind the economy last year, is expected to weaken. There are no clear prospects for a revival 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 situation point to relatively moderate growth trends. In 2011Q1 the European Union economy slightly accelerated while a slowdown was noted in the United States, G7 countries and OECD countries. According to the Monetary Policy Council, the slowdown was only temporary. In most developed countries, economic growth is still hampered by high unemployment and on-going adjustments in household, corporate and institutional balance sheets. In response to mounting inflationary pressure, the largest emerging economies and some developed economies are tightening their monetary policies. Source: www.nbp.pl 4.3% Industry 0 2009Q1 2009Q2 2009Q3 2009Q4 2010Q1 2010Q2 2010Q3 2010Q4 2011Q1 -5 -10 -15 Gross Domestic Product Total consumption Gross capital formation Source: Central Statistical Office (GUS) Fig. 1. Seasonally adjusted GDP growth in Poland, Qt/Qt-4 In 2011M4 the pace of growth in seasonally adjusted industrial output accelerated. However, in 2011 growth in industrial output will probably 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 employment is on the rise. In 2011M4 industrial output rose by 6.6% year on year. The increase was slower compared to 7–8 /2011 :: Polish Market :: I Economic Monitor 10.0% 8.0% 6.0% 4.0% 4.3% 4.8% 6.5% 7.9% 0.1% 2.5% 2.3% 2.9% 4.4% 9.6% -0.7% 1.0% 4.0% 5.7% 6.5% 2.0% 2.5% 2.5% Austria Poland Germany Sweden Estonia Norway Switzerland United States Canada Mexico Chile Japan Australia South Korea Israel Indonesia G7 European Union Euro Area 3.7% 3.6% Slovakia 2.6% 3.0% Belgium South Africa 2.7% Netherlands 2.5% 2.6% Czech Republic NAFTA 2.2% France OECD 2.1% Hungary 1.3% Denmark 1.8% 1.0% United Kingdom -6.0% Italy -4.0% 0.8% -2.0% Spain 0.0% Greece 2.0% -4.8% 4.0% -8.0% 2010Q4 2011Q1 Source: OECD Fig. 2. Change in seasonally adjusted GDP, Qt/Qt-4, in selected countries the 7% recorded a month earlier. The seasonally 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 seasonally 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. Industrial output will continue to increase in successive months of 2011 but at a slower pace than in 2010. In 2011M4 output growth accelerated 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 electricity, gas, heat and hot water and to 3.2% in water supply, sewage and waste management and land reclamation. In cumulative terms, in 2011M1-4 the rate of change in industrial output in year-onyear 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 beginning of the year. The pace of growth decreased 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 employee was by 5.2% higher than in 2010M1-4. Source: Informacja o sytuacji społecznogospodarczej kraju. Kwiecień 2011; www. stat.gov.pl The pace of growth in labour productivity is slowing consistently. In 2011M1-3 producII :: Polish Market :: 7–8/2011 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 adjustments 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 decrease in all orders – both domestic and foreign ones – reached 13.9%. Despite that, the number of new orders stays at a much higher level than in 2009, which means that the situation in the industrial sector is not likely to deteriorate soon. Among commodity groups in key industrial 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 slowdown in output growth in January, February and March. The output of energy-related 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-durable 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 February. The output of durable consumer goods fell by 4.7% compared to April 2010. In 2011M4 output increased in year-onyear terms in 25, out of 34, segments of the 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 semitrailers (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 foodstuffs, which accounts for over 15% of the total industrial output, was by 10.2% higher 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 output of machines and equipment fell by 6.0%. Source: Informacja o sytuacji społecznogospodarczej kraju. Kwiecień 2011; www. stat.gov.pl The business climate indicator in manufacturing did not change much from the previous month. No significant changes were recorded in the individual components of the indicator describing changes expected in the situation of the sector in the next months. Projections for the next months were still optimistic. The seasonally adjusted general business climate indicator in manufacturing stayed in 2011M5 close to the previous month’s level. It amounted to 2 points. The current situation was again assessed negatively. However, the advantage of pessimistic views over optimistic ones decreased slightly - from -3.4 points to -2.8 points. The assessment of the economic situation of the sector in the next Economic Monitor 16% 14% 12% 10% 8% 6% 4% 8.5 9.0 9.4 9.4 10.1 10.6 10.4 10.4 10.7 9.6 9.7 9.8 8.1 2% 2010 2010 2010 2010 2010 2010 2010 2010 2010 2010 2010 2010 2011 2011 2011 2011 M1 M2 M3 M4 M5 M6 M7 M8 M9 M10 M11 M12 M1 M2 M3 M4 in cumulative terms in non-cumulative terms Source: Central Statistical Office (GUS) 15.0 14.1 13.5 8.2 8.0 7.5 5.8 4.6 beverages food products wood, cork, straw and wicker products chemicals and chemical products paper and paper products wearing apparel printing and reproduction of recorded media leather and related products textiles other transport equipment rubber and plastic products metal products motor vehicles, trailers and semitrailers metals other non-metallic mineral products furniture tobacco products 18.5 16.9 16.5 machinery and equipment 24.7 23.8 21.0 pharmaceutical products 27.8 computers, electronic and optical products coke and refined petroleum products Fig. 3. Change in industrial input, Mt/Mt-12 2.8 In 2011M4 construction and assembly output rose by 15.6% year on year, slowing from 24.2% a month earlier. The temporary slowdown came as no surprise following a period of rapid growth. Seasonally adjusted data are a better indicator of the situation in construction 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 recorded in the previous two months. In cumulative terms, in 2011M1-4, the non-seasonally adjusted output rose by 17% year on year against 18.8% in 2011M1-3. Of the three segments 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 accelerating. The output of specialised construction work grew at a slightly slower pace than 9.2 0% 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 construction of civil engineering facilities, especially motorways and other roads, is now the main force driving construction growth. Residential building is also recovering after a period of decline. 10.3 10.1 electrical equipment 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 negative views is equal to the percentage of positive ones. The assessment of financial liabilities 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 situation of the sector in the next months, no major changes were noted in its individual components. The assessments of expected changes in production and order books were still optimistic. There was weak optimism in projections for financial liabilities and pessimism in employment projections. -0.5 -1.2 -1.2 -4.8 -5.9 -17.9 Source: Central Statistical Office (GUS) Fig. 4. Change in output in selected manufacturing sectors, 2011M1-4, Mt/Mt-12 a month earlier (up by 25.8%). In 2011M4 the output of businesses dealing with the construction of buildings dropped quite significantly. 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 output rose in all types of construction. The output of civil engineering facilities was up by 26.1% year on year while the output of buildings was up by 12.9%, with the output of residential 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- 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 distribution buildings up by 28.8% and office buildings up by 25.7%. The output of civil engineering facilities accounts now for the largest share of the total construction and assembly output. The output of airport roads grew the fastest (up by 167.6% year on year). Spending on the construction of motorways, expressways, streets and other roads, which accounts for the largest share of all expenditure on the construction 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. 7–8 /2011 :: Polish Market :: III Economic Monitor 25 20 not change from the previous month. Projections for changes in order books, the companies’ financial situation and employment had been deteriorating slightly for three months. However, this seems to reflect only temporary pessimism and uncertainty whether the growth trend in sales would persist. 15 10 5 0 -5 Trade 2010 2010 2010 2010 2010 2010 2010 2010 2010 2010 2010 2010 2011 2011 2011 2011 2011 M1 M2 M3 M4 M5 M6 M7 M8 M9 M10 M11 M12 M1 M2 M3 M4 M5 general business climate output order books (projection) Source: Central Statistical Office (GUS) Fig. 5. Business climate indicators in the industrial sector 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. 25% 20% 15% 17.0% 18.8% 17.6% 11.2% 3.5% -1.5% -3.4% -5.7% -6.1% -8.7% -11.5% -15.2% -20.9% -5% -15.3% 0% 0.2% 5% 2.3% 10% -10% -15% -20% -25% -30% 2010 2010 2010 2010 2010 2010 2010 2010 2010 2010 2010 2010 2011 2011 2011 2011 M1 M2 M3 M4 M5 M6 M7 M8 M9 M10 M11 M12 M1 M2 M3 M4 in cumulative terms in non-cumulative terms Source: Central Statistical Office (GUS) Fig. 6. Change in contruction output, Mt/Mt-12 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 spending on fixed assets were recorded in transport and warehousing, construction, manufacturing 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 vehicles, and real estate services. Source: Informacja o sytuacji społecznogospodarczej kraju. Kwiecień 2011; www. stat.gov.pl IV :: Polish Market :: 7–8/2011 The general business sentiment in the construction 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 remained in the range of pessimistic assessments. The assessment of construction and assembly output deteriorated compared to April but the indicator did not show a clear downward trend. The assessment of domestic order books improved slightly. The financial situation of the surveyed businesses did In 2011M4 retail sales in constant prices increased 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 2011M13. Wholesale sales in current prices rose in 2011M4 by 17.7% year on year against 18% in the previous month. Growth in wholesale sales had been slowing for three months. In 2011M1-4 the highest growth in sales in constant prices was recorded by retailers dealing with “other sales in non-specialised 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 textiles, 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, cosmetics and orthopaedic equipment, motor vehicles, motorcycles and parts, and “other” 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 “other 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, beverages 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 segments of the wholesale market, except for two of them. The highest increase – of as Economic Monitor 20 10 0 According to research conducted by the Central Statistical Office (GUS) and Ipsos, con- 2010 2010 2010 2010 2010 2010 2010 2010 2010 2010 2010 2010 2011 2011 2011 2011 2011 M1 M2 M3 M4 M5 M6 M7 M8 M9 M10 M11 M12 M1 M2 M3 M4 M5 general business climate output domestic orders (projection) Source: Central Statistical Office (GUS) Fig. 7. Business climate indicators in the construction sector 12% 10% 8% 6% 4% 2% 0.7 0.3 0.2 0.8 1.5 1.9 2.2 3.1 2.1 6.1 6.0 8.0 0% -2% -0.5 -1.1 -4% -0.1 -1.6 2010 2010 2010 2010 2010 2010 2010 2010 2010 2010 2010 2010 2011 2011 2011 2011 M1 M2 M3 M4 M5 M6 M7 M8 M9 M10 M11 M12 M1 M2 M3 M4 in cumulative terms Source: Central Statistical Office (GUS) in non-cumulative terms 10.6 7.2 6.3 2.1 food, beverages, tobacco products 12.7 newspapers, books and other sales in specialised stores 17.9 solid, liquid and gaseous fuels 21.8 furniture, radio and TV equipment, household appliances 30.7 motor vehicles, motorcycles and parts Fig. 8. Change in retail sales, Mt/Mt-12 other Consumer sentiment -30 pharmaceuticals, cosmetics, orthopaedic equipment In 2011M5 the seasonally adjusted business climate indicator amounted to -0.3 points and did not change much compared to the previous month. As in industry and construction, the assessment of the current situation in the sector improved in May while projections 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 surveyed businesses was still very pessimistic. But the assessment of sales had been improving consistently and was positive in May for the first time since the end of 2008, though the level of optimism was very low. The indicator of the situation of the sector as expected 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. Managers had pessimistic views of financial liabilities, demand and employment. The assessment of sales was much better. -20 textiles, clothing, footwear The assessment of the business climate in the trade and repair of motor vehicles had remained unchanged for three months – the climate is assessed as neither good nor bad. Projections for the next months are pessimistic. -10 other retail sales in non-specialised stores much as 72.5% - was in the sales of IT and communication tools, machines and equipment. But compared to the previous two months, the increase was slightly smaller. Growth in the wholesale sales of tobacco 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-products and waste had been slowing for two months after a sharp increase at the beginning of the year. Sales of radio and television equipment, household appliances and other household articles dropped by 3.1% year on year; sales from non-specialised stores went down by 10.9%. -2.3 Source: Central Statistical Office (GUS) Fig. 9. Change in retail sales of selected products in 2011M1–4, Mt/Mt-12 7–8 /2011 :: Polish Market :: V Economic Monitor sumer sentiment was improving in 2011M42011M5. But the two consumer sentiment indices are at low levels, indicating that consumers are pessimistic. The BIEC Economic Welfare Indicator, which is calculated on the basis of “hard” data, including data on unemployment and prices, is now at a relatively 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. However, 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 confidence index, there was a slight improvement in the assessment of the financial situation of households. Also, pessimism in the assessment 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 consumer confidence index. Consumers’ views of their potential to buy were also negative. The Leading Consumer Confidence Index (WWUK), which describes trends in individual consumption expected in the next months, improved by 2.1 pct. points compared 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 situation. Consumers still expected that unemployment would increase, however not as much as they had thought in the first four months of the year. The assessment of households’ savings deteriorated. According to the latest Ipsos survey, consumer confidence strengthened again in May. It was a second month seeing an improvement in confidence after a sharp deterioration in March. The Ipsos Consumer Confidence 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 recorded this year was only 3 points. Source: www.ipsos.pl The BIEC Economic Welfare Indicator, which reflects the economic condition of the population, fell in 2011M5 by 0.3 points. May was a second month in a row to see a deterioration 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 buying power. Consequently, households felt the increase in inflation more than the increase in wages because the first affected all consumers while the latter concerned only some of them. Source: www.biec.org 10 5 0 -5 -10 -15 2010 2010 2010 2010 2010 2010 2010 2010 2010 2010 2010 2010 2011 2011 2011 2011 2011 M1 M2 M3 M4 M5 M6 M7 M8 M9 M10 M11 M12 M1 M2 M3 M4 M5 general business climate sales demand (projection) Fig. 10. Business climate indicators in the trade and repair of motor vehicles VI :: Polish Market :: 7–8/2011 Source: Central Statistical Office (GUS) Labour market April was another month in succession to see no major change in the seasonally adjusted unemployment rate in Poland. The number of newly registered unemployed dropped quite significantly but the number of unemployed taken off the official register at employment agencies also declined. The number 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 amounted 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 unemployment rate in the EU dropped by 0.1 pct. points to 9.4% at the end of 2011M4. The euro-zone unemployment rate showed a similar 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 increase in the unemployment rate – by 0.3 pct. points – was in Cyprus. Despite an economic revival, unemployment 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 unemployment at that time and resulted in some overemployment. Now, these factors see adjustments, 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 employers and employees, which eases the impact of positive cyclical impulses. It should be noted that in recent years the labour market has reacted to changes in economic conditions 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. Mounting long-term unemployment is another problem 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 wellqualified workers. The highest long-term un- 9.4% 13.9% 9.0% European Union Croatia United States Netherlands 9.9% 4.5% 4.2% Luxembourg 4.2% 6.1% Austria 6.2% Malta Germany Euro Area 7.2% 6.8% 7.6% 7.4% Cyprus Sweden Denmark 7.7% Czech Republic 8.0% 8.1% Italy Finland 8.2% Slovenia Belgium 9.4% Bulgaria 9.3% 11.6% 11.4% Hungary France 12.6% Portugal Poland 14.7% 13.9% Slovakia 20.7% Spain 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, Luxembourg, Austria, Romania and the United Kingdom. The adjustment of the unemployed people’s skills to the changed needs of businesses will determine the scale and durability of the drop in EU unemployment in coming 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 beginning of the year, with no clear upward or downward trend noticeable. In 2011M4 the number of unemployed registered with employment agencies amounted 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 unemployed 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 number of newly registered unemployed dropped for a second month in succession after a longer period when it stayed at more or less the same level. However, the number of unemployed who were taken off the official register also decreased sharply year on year – it was down by 15.1% against 12.1% in 2010M32011M3. Around 121,600 people, or 6.1% less than a year earlier, were taken off the register 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 unemployment benefits and unemployed graduates 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 unemployed dropped by 0.7 pct. points to 79.9%, Ireland Economic Monitor Source: Eurostat Fig. 11. Harmonised Unemplyment Rate in selected countries in 2011M4, seasonally adjusted 13.5 13.0 12.5 12.0 11.5 11.0 10.5 2009 2009 2009 2009 2010 2010 2010 2010 2010 2010 2010 2010 2010 2010 2010 2011 2011 2011 2011 2011 M9 M10 M11 M12 M1 M2 M3 M4 M5 M6 M7 M8 M9 M10 M11 M12 M1 M2 M3 M4 non-seasonally adjusted seasonally adjusted Source:Central CentralStatistical StatisticalOffice Office(GUS) (GUS) Source: Fig. 12. Registered unemployment rate, % with people dismissed for reasons on the employer’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 employment agencies. The share of unemployed without job qualifications also increased (up by 3.1 pct. points to 30.3%) as did the percentage 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 under (up by 0.3 pct. points to 21.4%), the percentage of unemployed university graduates 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 categories mentioned above rose in year-on-year terms, with the highest increase recorded in the number of university graduates aged under 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 społecznogospodarczej 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 7–8 /2011 :: Polish Market :: VII Economic Monitor Table 1. Selected labour market data 2010M3 Average employment in the corporate sector, in thousands Change in average employment, year on year, % Average nominal monthly wage in the corporate sector, in PLN Change in real wages, year on year, % Registered unemployment rate 2010M6 2010M9 2010M12 2011M3 2011M4 5 294 5 336 5 364 5 379 5 509 5 514 -0.6% 1.1% 1.9% 2.4% 4.1% 3.9% 3 493.42 3 403.65 3 403.68 3 847.91 3 633.54 3 597.84 2.1% 1.3% 1.3% 2.3% -0.1% 1.5% 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 a simultaneous drop in the number of unemployed (down by 3.7%). The economic activity 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 społecznogospodarczej kraju. Kwiecień 2011; www. stat.gov.pl Source: GUS and authors’ calculations In April growth in real wages was higher than in the previous two months. However, average employment in the corporate sector is growing at a slightly slower pace. earlier and much smaller than a year earlier – respectively by 1.6% and 41.9%. In the private sector, trends in the number of job offers 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 longer 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 slightly higher than in March and lower than in April last year, with 385 workplaces declaring they planned to make 36,200 workers redundant, including 25,800 persons employed in the public sector. At the end of March 355 workplaces planned to lay off 35,900 workers, including 25,100 in the public sector while at the end of April last year the respective figures were as follows: 325 workplaces, 40,800 workers, including 24,600 in the public sector. Source: Informacja o sytuacji społecznogospodarczej kraju. Kwiecień 2011; www. stat.gov.pl In 2011M4 year-on-year growth in average employment in the corporate sector slowed for a second month in succession. The number 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 employed 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 earlier. Offers from the public sector accounted 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 In 2011M5 the number of job offers posted on the Internet increased again. The pace of growth in these offers remained stable. Demand 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 construction, 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, managers and students also rose. Demand for geologists 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 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 VIII :: Polish Market :: 7–8/2011 The drops in offers did not change the general upward trend in the number of job offers in the national economy. They seem to have largely resulted from a temporary saturation 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 highest increase since the beginning of the year. After seasonal adjustments, nominal wages did not change much compared to the previous month. Real wages rose in April by 1.5% year on year. Their growth accelerated compared to the previous two months. Prices In 2011M4 inflation rose again both in Poland 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 inflation, excluding food and energy, was much lower – 2.1%. In 2011M4 the harmonised index of consumer prices (HICP) for Poland increased again. It reached 4.1% against 4% in March, and was higher than the EU average, which – according to preliminary estimates - amounted to 2.8%. The European Commission projects 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 markets. However, in recent months these dif- Economic Monitor 3,650 4% 3,600 3% 3,550 2% 3,500 3,450 1% 3,400 0% 3,350 -1% 3,300 -2% 3,250 3,200 -3% 3,150 -4% 2010 2010 2010 2010 2010 2010 2010 2010 2010 2010 2010 2010 2011 2011 2011 2011 M1 M2 M3 M4 M5 M6 M7 M8 M9 M10 M11 M12 M1 M2 M3 M4 average nominal wages (seasonally adjusted, left axis) Source:Central CentralStatistical StatisticalOffice Office(GUS) (GUS) real wage change, Mt/Mt-12 (non-seasonally adjusted, right axis) Source: Fig. 13. Wages in the corporate sector ferences have been diminishing. In April the highest increase in inflation was in Lithuania (by 0.7 pct. points). It was slightly smaller in Austria, Sweden, Romania and Germany (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 remaining EU countries changes in consumer prices 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 fastest – by 7.6% and 7.2% respectively. Additionally, growth in these prices accelerated compared to March. Prices of clothing and footwear, and prices of communications decreased year on year by respectively 1.1% and 0.8%. Year-on-year growth in prices of alcoholic beverages and tobacco products, and in prices of household articles and services was slower than in March. The inflationary expectations of private individuals increased in 2011M5. The inflation rate expected in the next 12 months was 4.3% versus 4% a month earlier. In May the percentage 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 service prices several months in advance, fell in 2011M5 by 0.7 pct. points. It was its second major drop in six months, which creates a chance for a slightly slower growth in prices in the second half of the year. However, it should be noted that there is still a great uncertainty both in the economy itself and in its environment. An unstable situation on glob- al markets for raw materials, mounting demands for wage rises and uncertainty as to this year’s harvests are the greatest risk factors 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 accelerating. Telecommunications prices dropped. In 2011M3, the pace of growth in producer 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 reclamation sector prices also grew at a slightly slower 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 tobacco products. In 2011M3 average construction and assembly 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 specialist 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 February. In the telecommunications sector, prices decreased year on year by 1.2 pct. points. The decrease was slightly lower than in the previous month. Turkey 4.3% Croatia 2.3% Switzerland 0.1% Iceland 3.1% Norway 1.3% European Union 3.2% Ireland 1.5% Euro area 2.8% Sweden 1.8% Czech Republic 1.6% Slovenia 2.0% Netherlands 2.2% Malta 2.4% France 2.2% Germany 2.7% Italy 2.9% Denmark 2.8% Bulgaria 3.3% Finland 3.4% Belgium 3.3% Spain 3.5% Cyprus 3.5% Greece 3.7% Austria 3.7% Slovakia 3.9% Portugal 4.0% Luxembourg 4.0% Latvia 4.3% Poland 4.1% Hungary 4.4% Estonia 5.4% Lithuania 4.4% Romania 8.4% Central bank and monetary policy Source: Eurostat Fig. 14. Harmonised Index of Consumer Prices in selected countries, 2011M4, Mt/Mt-12 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 Lombard 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 7–8 /2011 :: Polish Market :: IX 5.8% 4.3% 3.7% 3.3% 2.8% 2.7% 1.7% 0.8% food and non-alcoholic beverages cost of housing (rent and utilities) restaurants and hotels health other goods and services alcoholic beverages and tobacco products education home furnishings recreation and culture clothing and footwear 7.2% communications 7.6% transport Economic Monitor -0.8% -1.1% Source: Central Statistical Office (GUS) Fig. 15. Changes in prices of selected consumer goods and services in 2011M4, Mt/Mt-12 materials and oil on global markets. So far the rise has not been neutralised to any significant extent by changes in the exchange rate of the zloty. Source: www.nbp.pl 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 The decision to raise the central bank interest rates means the continuation of the Council’s policy to restrict lending activity for businesses. The Council points to the continued relatively fast increase in mortgage loans for households 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-onyear terms. In 2011M4 the M3 money supply was higher by 9.1% than a year earlier versus 10.9% a month earlier (non-seasonally 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 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 increase 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. WIGBUDOWNICTWO dropped in year-on-year and month-on-month terms by respectively 23.81% and 1.89%. The WIG-Ukraine index is the first and only index outside Ukraine composed exclusively of Ukrainian companies. The decision to launch the index was a consequence of the rising number of Ukrainian issuers on WSE. Source: www.gpw.pl At the end of 2011M5 the WIBOR interest rates were 4.45% (WIBORM3) and 4.36% (WIBORM1). Source: wibor.money.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. Trends on the Warsaw Stock Exchange Balance of payments 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. Preliminary data from the National Bank of Poland (NBP) indicate that in 2011M3 there were drops on the balance of payments current account, capital account and financial account. X :: Polish Market :: 7–8/2011 In 2011M3 the current account balance was negative at EUR-1,376 million, which represented 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 million 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 amounted to EUR386 million, which represented a rise by 21.4% compared to 2010M3 when it stood at EUR318 million. The balance on services was positive thanks to a positive balance on transport services (EUR211 million), foreign travel (EUR135 million) and other services (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 negative at EUR-1,327 million, with a positive balance on employee wages (EUR98 million) 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 securities (EUR278 million) and from interest on credit (EUR191 million). Source: www.nbp.pl There was a drop on the capital account balance 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 million, 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 amounted to EUR-838 million. Foreign direct investment in Poland amounted in 2011M3 to EUR1,458 million, against EUR1,280 million Economic Monitor the business operations account totalled PLN27.2 billion in 2011Q1 versus PLN22.8 billion in 2010Q1, which represented a decrease 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 return 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 liquidity ratio rose from 105.0% to 106.4%. Source: www.stat.gov.pl Table 2. Selected components of the balance of payments, in PLN millions 2010M3 2011M2 2011M3 -821 -806 -1 376 -419 -331 -715 Current account Balance on goods Balance on services Balance on income 318 264 386 -1 241 -1 294 -1 327 521 555 280 396 1 397 213 1 583 4 435 3 434 -278 -320 -838 1 280 1 129 1 458 -262 -176 -223 Balance on current transfers Capital account Financial account Polish direct investment abroad Foreign direct investment in Poland Portfolio investment - assets Portfolio investment - liabilities 689 -357 1 785 Other investment - assets -1 229 7 -2 012 Other investment – liabilities 1 284 4 034 3 390 99 118 -126 -343 -4 678 -1 558 Derivative financial instruments Official reserve assets National budget Source: National Bank of Poland (NBP) in 2010M3, down by 13.9%. Portfolio investment assets increased by 14.9% to EUR-223 million from EUR-262 million. Portfolio investment liabilities increased by 159.1% to EUR1,785 million. The balance on the account 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 liabilities, 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 transfers 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 enterprises In 2011Q1 the non-financial enterprises surveyed by the Central Statistical Office (GUS) recorded better results than a year earlier for all types of activity except financial operations. In 2011Q1 revenues from overall business operations totalled PLN512.7 billion, which rep- resented a rise of 12.0% from PLN457.7 billion in 2010Q1. Business expenditures totalled PLN485.5 billion and were higher by 11.6% than a year earlier; in 2010Q1 they amounted to PLN434.9 billion. Revenues from the sale of products, merchandise and materials increased by 12.9% from PLN441.4 billion in 2010Q1 to PLN498.3 billion in 2011Q1. The cost of the products, merchandise and materials was PLN471.9 billion versus PLN420 billion 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 deteriorated significantly from PLN396 million in 2010Q1 to PLN-1,020.5 million. Non-recurring profits increased by 74.4% from PLN27.0 million to PLN47.1 million. The balance on At the end of 2011M4 the national budget deficit amounted to PLN21.6 billion, widening 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 amounted to PLN87.5 billion and expenditure amounted to PLN109.1 billion. Budget revenue reached 32% of the total amount planned for 2011 under the budget law (up from 23% a month earlier) while budget expenditure reached 34.8% of the total amount (up from 25.5%). Compared to a year earlier, the percentage for budget revenue was similar while that for budget expenditure was lower by 0.6 pct. points. In 2011M1-4 the year-on-year growth in revenue slowed while growth in expenditure 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 3. Government revenue and expenditure in 2011 according to preliminary data In PLN billions % of annual target 2011 budget law 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 7–8 /2011 :: Polish Market :: XI Economic Monitor 10% 8% 6% 4% 2% 0% -2% -4% 2010 2010 2010 2010 2010 2010 2010 2010 2010 2010 2010 2010 2011 2011 2011 2011 M1 M2 M3 M4 M5 M6 M7 M8 M9 M10 M11 M12 M1 M2 M3 M4 inflation industrial prices construction prices Source:Central CentralStatistical StatisticalOffice Office(GUS) (GUS) Source: Notes expenditure actual figure for 2011M1-3 revenue 273,144.4 313,344.4 62,715.5 80,036.9 87,453.0 109,068.4 Fig. 16. Producer and consumer prices in Poland actual figure for 2011M1-4 2011 budget law target Source: Ministry of Finance Fig. 17. Government revenue and expenditure, in PLN millions planned for the whole year to 53.8%. Compared 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 income from taxes was slower, except for income 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 important 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. XII :: Polish Market :: 7–8/2011 pared to the previous two months. Both medium-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. 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 increase 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 billion. 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 amounted to PLN199.5 billion and was higher by 13% than a year earlier. Its growth slowed com- It is always clearly stated in the text if the data given are seasonally adjusted or in cumulative terms. Otherwise, the data are nonseasonally adjusted and in non-cumulative terms. GUS and Eurostat use the TRAMOSEATS procedure for seasonal adjustment. Time series cleared from the impact of seasonal factors by the authors of the report have been adjusted using the ARIMA X-12 method. 2011M4 – April 2011 2011Q1 – first quarter of 2011 2010H2 – second half of 2010 2011M1-4 – cumulative data for the JanuaryMarch 2011 period 2010Q1-4 – cumulative data for the period from the 1st to the 4th quarter of 2010 Mt/Mt-12 – rate of change for a given month compared with the same month a year earlier Mt/Mt-1 – rate of change for a given month compared with the preceding month Qt/Qt-4 – rate of change for a given quarter compared with the same quarter a year earlier Qt/Qt-1 – rate of change for a given quarter compared with the preceding quarter Team of experts Robert Pater, PhD, Łukasz Cywiński in conjunction with Tomasz Soliński, PhD Institute of Economics University of Information Technology and Management in Rzeszów www.ig.wsiz.pl