Poland expects EU to approve more public aid for coal mines

WARSAW (Reuters) - Poland expects the European Commission to approve a plan to gradually close mines owned by its biggest coal producer PGG and provide more public aid for the industry, although experts voiced doubts.

The spread of COVID-19 among miners has added to problems facing the country's mining industry as demand for coal falls and costs rise.

Ending weeks of negotiations on the restructuring of troubled PGG, Poland's government struck a deal with the company's trade unions on Friday to gradually close its coal mines by 2049.

The agreement is pending European Commission approval and Poland will ask the EU executive to allow public aid, "especially for financing ongoing production, to guarantee the stability of coal companies' operations."

"I would be surprised if the European Commission, considering the social approval for phasing out mining, said no," Deputy Assets Minister Artur Sobon tolf private radio TOK FM on Monday.

European Commission representatives did not immediately responded to an e-mailed request for comment.

Analysts and environmentalists have criticised the deal saying it is detached from the EU's climate neutrality goal and contradicts Poland's latest proposal to accelerate the phasing out of coal so that its share in power production falls to 11%-28% in 2040 from more than 70% now.

They said the European Commission is unlikely to approve more public aid for Polish coal mines having previously agreed to some help.

"There will be no such approval. Granting public aid for the operating of coal mines is prohibited according to the EU regulations," said Joanna Flisowska, head of climate and energy at Greenpeace Poland.

Polish daily Rzeczpospolita said that initially PGG would be receiving around 1 billion zlotys a year from the state budget, which would be repaid when it starts to generate a profit. PGG, which employs around 40,000 people, spends 300 million zlotys ($76.74 million) on salaries per month.

Following the agreement with the trade unions, shares in Polish utilities including PGE <PGE.WA>, Enea <ENAE.WA> and Tauron <TPE.WA> jumped on Friday and continued to rise on Monday.

($1 = 3.9093 zlotys)

(Reporting by Agnieszka Barteczko; Additional reporting by Foo Yun Chee in Brussels; Editing by Kirsten Donovan)

09/28/2020 9:49

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