Amendments to the energy law spark controversy

On Friday, the Sejm [lower chamber of Polish parliament] accepted two amendments made in the Senate to the bill amending the energy law act. Now, the bill will be referred to the President for signature. The amendments’ aim is mainly to limit the grey area in the fuel market, boost market competition and increase the country’s energy security.

One of the amendments made in the Senate prolongs the deadline for the companies active in the LPG market to provide a licence by three months, the other one fine-tunes the regulations. Among the key changes to the act there is a provision saying that all companies trading in gas will be under obligation to keep gas stocks. Another novelty is a liquid fuel infrastructure database and new reporting duties imposed on energy companies and companies transferring such fuels to Poland. Moreover, control over the system of intervention stocks of crude oil and liquid fuels is to be increased, licencing system is to be tightened, obligation to have licence for trade in aviation gasoline is to be brought back. The amendments also introduce a new type of licence – for handling of liquid fuels. The role of the President of the Energy Regulatory Office will be enhanced as well.

The authors of the amendments are a group of PiS MPs who argue the new solutions will curb functioning of the grey area in the liquid fuel market thanks to which the budget will receive from several hundred million to even several billion PLN more. What is more, apart from increasing Poland’s energy security, this will allow to reorganize the liquid fuel and gas market, fair competition will be restored there and state control over the stocks of crude oil and gas will increase.

What sparks disapproval among the opposition are the provisions connected with keeping mandatory gas stocks and the new regulations on the collateral for the companies applying for LPG trade and production licences. This concerns provisions obliging all those trading in gas in Poland to keep mandatory stocks. Those who do not have warehouses may use warehouses of other entities on the basis of the so-called ticket agreement.

According to the opposition, the goal behind liberalizing the gas market during the coalition PO-PSL was to strengthen the competitiveness of small and medium companies, so stepping away from the present solutions brings back the monopoly of Polish Oil and Gas Company (PGNiG), destroys competition, and – as they argued – may lead to price increases for the end users.

Another controversial – in the opposition’s view – provision concerns enterprises producing liquid fuels and LPG and trading in them abroad, that will be obligated to put up asset collateral in the amount of 10 million PLN. According to the opposition and industry representatives, most of the entities do not have assets that would allow to cover collateral that is so high. At most, there are 5 to 7 companies active in the market that may afford that. For the remaining around 90 small and medium, often family-owned, businesses, imposing collateral that is so high means bankruptcy, which in turn may result in laying off around 40 thousand people.