Polish energy companies set to cut profits to near zero, PM says

WARSAW, Nov 7 (Reuters) – Polish energy companies are expected to make minimal profits in 2023, the prime minister said on Monday, calling on them to shoulder the burden of keeping household bills low after signaling changes to policies anti-inflationary government.

Polish daily Dziennik Gazeta Prawna reported on Monday that the European Commission has raised concerns over measures to reduce VAT on gas and fuels, which have been extended until the end of 2022.

With Warsaw already embroiled in a dispute with Brussels over the rule of law, Morawiecki said the government would change its anti-inflationary policies from 2023 to avoid another row and would expect energy companies to cover the cost of keeping bills low.

“I am in favor of companies in the energy sector seeing their investment costs covered next year, but their profit should be minimal (…) for it to be a net profit greater than zero,” he told a meeting of union leaders and employers.

Morawiecki did not detail any specific measures to force them to act, but Polish public services are state-controlled, giving the government the power to influence their profits.

At 10:17 GMT the PGE energy companies (PGE.WA)Aeneas (ENAE.WA) and Taurus (TPE.WA) were down 2.5-4.5% on the day, after trading higher earlier in the session.

Morawiecki said the government would try to keep VAT on major food items at zero.

A spokesperson for the European Commission did not immediately respond to a request for comment.

The measures to cut VAT on gas, fuel and fertilizers are against European Union regulations, but the bloc had not previously pushed for them to be scrapped.

Adam Antoniak, senior economist at ING, said removing them would generate “substantial savings” for the budget.

The current measures were previously extended until the end of the year. Central banker Ludwik Kotecki said earlier in November that inflation could reach 23-24% in 2023 if the measures were not extended.

Inflation was 17.9% in October according to a rapid estimate from the statistics office.

Morawiecki said earlier on Monday that inflation should start falling at the end of the first quarter of 2023 or in the second quarter.

Reporting by Alan Charlish, Pawel Florkiewicz, Marek Strzelecki; edited by David Evans

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