POLAND IN-DEPTH REVieW of the Investment Climate and Market Structure in the Energy Sector Energy Charter Secretariat ENERGY CHARTER ENERGY 2011 Disclaimer Information contained in this work has been obtained from sources believed to be reliable. However, neither the Energy Charter Secretariat nor its authors guarantee the accuracy or completeness of any information published herein, and neither the Energy Charter Secretariat nor its authors shall be responsible for any losses or damages arising from the use of this information or from any errors or omissions therein. This work is published with the understanding that the Energy Charter Secretariat and its authors are supplying the information, but are not attempting to render legal or other professional services. © Energy Charter Secretariat, 2011 Boulevard de la Woluwe, 56 B-1200 Brussels, Belgium ISBN: 978-905948-106-0 (English, PDF) Reproduction of this work, save where otherwise stated, is authorised, provided the source is acknowledged. All rights otherwise reserved. Table of Contents 1. Introduction ........................................................................................................................ 6 2. Policy Conclusions Adopted by the Energy Charter Conference .................................. 7 3. Main Findings of the Secretariat ............................................................................................ 9 3.1. Investment climate and legislation.................................................................................. 9 3.2. Energy Market Structure ............................................................................................... 10 4. General information ......................................................................................................... 14 4.1. Information on the country....................................................................................... 14 4.2. Political system........................................................................................................ 15 4.3. Macro-economic developments ............................................................................... 16 4.3.1. Foreign trade.................................................................................................... 17 4.3.2. Inflation ............................................................................................................ 19 4.3.3. Unemployment................................................................................................. 20 5. FDIs.................................................................................................................................. 22 5.1. Investment related legislation................................................................................... 22 5.1.1. Investment protection and promotion .............................................................. 22 5.1.2. Foreigners wishing to buy land ........................................................................ 22 5.1.3. Foreigners wishing to conduct business activities ........................................... 22 5.1.4. Investment incentives....................................................................................... 23 5.1.5. Investment support........................................................................................... 24 5.2. FDIs.......................................................................................................................... 25 5.2.1. Entities with foreign capital in Poland ............................................................. 28 5.3. Tax regulations......................................................................................................... 30 5.4. Privatisation.............................................................................................................. 37 5.4.1. Legal framework for privatisation.................................................................... 37 5.4.2. Privatisation process......................................................................................... 40 6. Legislation relevant to investment in the energy sector in Poland................................... 41 6.1. Current situation....................................................................................................... 41 6.2. Planned changes....................................................................................................... 46 7. Energy market in Poland.................................................................................................. 47 7.1. Energy policy........................................................................................................... 47 7.1.1. Institutional structure........................................................................................48 7.1.2. Primary energy production............................................................................... 49 7.1.3. Primary energy consumption ........................................................................... 49 7.1.4. Supply and demand .......................................................................................... 50 7.2. Electricity ................................................................................................................. 53 7.2.1. Transmission and distribution .......................................................................... 54 7.2.2. Interconnection, import/export......................................................................... 56 7.2.3. Market reforms and privatisation ..................................................................... 57 7.2.4. Renewable energy............................................................................................ 60 7.3. Gas sector................................................................................................................. 63 7.3.1. Gas security policy........................................................................................... 65 7.3.2. Import contracts................................................................................................ 65 7.3.3. Structure of the natural gas market .................................................................. 66 7.3.4. Natural gas exploitation and the level of recoverable resources...................... 71 7.3.5. Prospects for and exploiting unconventional natural gas deposits outside Poland 73 3 7.3.6. Natural gas supply diversification.................................................................... 73 7.3.7. Expected demand for natural gas ..................................................................... 75 7.4. Oil sector.................................................................................................................. 75 7.4.1. Supply............................................................................................................... 75 7.4.2. Demand ............................................................................................................ 77 7.4.3. Prices and taxes................................................................................................ 77 7.4.4. Infrastructure .................................................................................................... 78 7.5. Coal sector..................................................................................................................... 81 7.5.1. Resources and energy balance of Poland ......................................................... 81 7.5.2. Structure of the hard coal sector in Poland from 2006-2010 ........................... 82 7.5.3. Reform of the hard coal industry in Poland – current stage and effects .......... 83 7.5.4. Hard coal sales and sales by customers............................................................ 85 7.5.5. Distribution channels........................................................................................86 7.5.6. Hard coal pricing mechanism........................................................................... 86 7.6. Nuclear sector........................................................................................................... 86 7.6.1. Nuclear Power Programme .................................................................................... 87 7.6.2. Legislative framework............................................................................................ 87 7.7. District heating......................................................................................................... 88 7.7.1. Supply and demand .......................................................................................... 88 7.7.2. Regulation in the sector.................................................................................... 90 7.7.3. District heating and renewables ....................................................................... 91 7.7.4. Combined heat and power................................................................................ 91 7.7.5. Tariff and methodology.................................................................................... 92 8. Summary of participation in international organisations, conventions, treaties and agreements................................................................................................................................ 94 8.1. List of BITs on the protection and promotion of foreign investments................. 95 8.2. Membership in international economic and environmental organisations..........