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During 2005, trade unions representing workers at PGNiG, Poland's state-owned gas company, joined forces with the company's board of directors in calling on the government to stick to the timetable for PGNiG's stock exchange listing, which had been called into question. The unions organised demonstrations and held a two-hour warning strike over the issue. After intensive lobbying by the unions and directors, it was agreed that the listing would occur in September 2005.
The Polish Oil and Gas Company (Polskie Górnictwo Naftowe i Gazownictwo SA, PGNiG) was incorporated in 1996 as a single-shareholder joint stock company of the Polish State Treasury. Its share capital was PLN 5 billion (EUR 1.25 billion), and its issue prospectus listed assets to the tune of PLN 15 billion (EUR 3.75 billion). The company maintains a nationwide network of affiliated entities, comprising - apart from the head office - six regional relay units, 30 gas switching stations, and 23 local gas companies (PL0411106S).
PGNiG is the only vertically integrated company in Poland’s natural gas industry, and it holds a dominant position in all areas of the gas sector. It supplies natural gas for industrial purposes as well as to retail users. In 2004, the various members of the PGNiG group sold a total of 13.1 billion m³ of gas to more than 6.5 million buyers. Group sales revenues for 2004 were PLN 10.9 billion (over EUR 2.7 billion), making for a net profit of PLN 1.11 billion (more than EUR 250 million).
PGNiG imports natural gas from Russia, several countries in Central Asia, Norway and Germany. It also extracts gas domestically; in 2004, it generated 4.3 billion m³ of such 'home-grown' gas, accounting for more than 30% of natural gas consumption in Poland. PGNiG also drills for oil in Polish territory, producing 644,000 tonnes in 2004.
Industrial relations at PGNiG
PGNiG is one of the largest employers in Poland, with a workforce of 30,550 persons in late 2004. There are three major union organisations representing PGNiG employees:
- the Oil Extraction and Gas Industry National Section of the Alliance of Trade Unions 'Kadra' (Porozumienie Związków Zawodowych Kadra, PZZ Kadra) (approximately 1,000 members);
- the Oil Extraction and Gas Industry National Section of the Independent and Self-Governing Trade Union Solidarity (Niezależny Samorządny Związek Zawodowy Solidarność, NSZZ Solidarność) (7,000 members); and
- the Federation of Oil Extraction and Gas Industry Unions (Federacja Związków Zawodowych Górnictwa Naftowego i Gazownictwa, FZZGNiG) (8,000 members).
Since 1999, these three union organisations have been pooling their resources in a 'union coordination commission' for PGNiG SA, which takes part in consultations with the group’s directors and with the company’s owner, the State Treasury. Such consultations are usually pursued on an ad hoc basis, in that there are no dedicated consultation institutions for the gas industry, though gas industry issues have recently been discussed by the Tripartite Commission for Social and Economic Affairs (Komisja Trójstronna do Spraw Społeczno-Gospodarczych) (PL0210106F).
There are 16 single-entity collective agreements within the PGNiG group, and such agreements have been concluded for the company headquarters and for the regional branches. However, there is no employer-side body bringing together all the companies in the group, and no broader collective agreement has thus been concluded to apply to all or some of these entities.
Government strategy
The government has issued two particularly important papers concerning the restructuring and privatisation of PGNiG, in August 2002 and October 2004 respectively. The main premises of the former document include separation into six independent gas companies with a 100% State Treasury stake. The various measures envisaged under this programme, including significant restructuring of employment, were subject to advance consultation with the governing bodies of PGNiG and with the unions, and no major controversies arose in this regard. The 2002 document also included guidelines concerning the listing of PGNiG shares on the stock exchange.
The main factor influencing adoption, in October 2004, of a revamped version of the 2002 programme was the adoption of EU Directive 2003/55/EC, which introduced significant changes in the organisation of the natural gas market in the EU. The Directive stipulated the establishment of 'relay system operators' (from July 2004) and of 'distribution system operators' (from July 2007). These measures were not included in the 2002 document; accordingly, the 2004 paper brought the Polish programme in line with the EU Directive while keeping its basic provisions - including the privatisation timetable - intact.
Dispute over PGNiG’s stock exchange listing
In early 2005, all indications were that the initial public offering of PGNiG shares would take place as planned, in June 2005. In the spring, however, debate over the company’s privatisation was stepped up, and observers claimed that the discussion began to display overtones of partisan politics (PL0507101N). As a result, the government decided - in early June 2005 - to move the initial public offering (IPO) (ie the first sale of shares to investors) back to September, and the Minister of the State Treasury, Jacek Socha, expressed himself in favour of a political debate which, he maintained, should be held before the matter is resolved. The position of the centre-left government, supported by the 'post-communist' Democratic Left Alliance (Sojusz Lewicy Demokratycznej, SLD), was endorsed by Law and Justice (Prawo i Sprawiedliwość, PiS) and Civic Platform (Platforma Obywatelska, PO) centre-right opposition parties, in an unusual show of consensus. The leaders of PiS and PO expressed fears that the state might lose control over the natural gas supply infrastructure, rendering Poland more vulnerable to what they see as the vagaries of buying gas from Russia. For very similar reasons, PiS and PO wanted all further decisions concerning privatisation of PGNiG to be deferred until after the parliamentary election in September 2005. The opposition took issue with the entire current plan for PGNiG’s privatisation, criticising it as fundamentally flawed and blaming the company’s incumbent president who, they pointed out, has connections with SLD.
PGNiG’s board of directors, along with the three trade unions represented within the group, disagreed with the picture presented by the opposition. Representatives of the union coordination commission called on the government to adhere to the programme for restructuring and privatisation of PGNiG adopted in 2004 and to continue its implementation. Talks held at the Ministry of the State Treasury (Ministerstwo Skarbu Państwa, MSP) in late May 2005 were inconclusive. The unions displayed flags and placards on PGNiG’s headquarters, and they demonstrated outside the MSP building in early June. A union coordination commission delegation also took part in a joint session of the parliamentary commissions for the State Treasury and for the economy two weeks after the demonstration. Despite this, no progress was made towards any sort of agreement.
The unyielding position of the government led the unions to assemble a strike committee, which dispatched a letter to the Prime Minister, accusing the Minister of the State Treasury of neglect in his official duties on account of the fact that he was not following the government programme for restructuring and privatisation of PGNiG. At the same time, the unions began laying the groundwork for strike action, holding referenda among the employees of the group companies. On 29 July, there was a two-hour warning strike at PGNiG units around the country; the main demand was that the IPO be executed as soon as possible. Impatient at the lack of any conclusive response, the union coordination commission then published a list of 16 industrial entities with arrears of payments to PGNiG and threatened to withhold further gas supplies to them; these measures - along with an all-out strike - were to commence on 12 August.
The Ministry of the State Treasury viewed these steps as 'blackmail' and stated that it refused to be swayed. A breakthrough in the impasse came only when the PGNiG directors and unions relented somewhat in their insistence on strict adherence to the restructuring and privatisation plan, agreeing that the stock market debut of PGNiG shares should be held not in summer 2005 but in September - still before the general election. This position was endorsed by PGNiG’s general shareholders meeting. Even before the shareholders adopted their resolution, the Ministry sent out a positive signal, promising that the price range for PGNiG shares would be announced in early September and the issue price on 15 September, and that, most importantly, the first listing of PGNiG shares on the Warsaw Stock Exchange would take place on 23 September (two days before voting in the parliamentary election begins).
Commentary
The joint activities pursued by the directors of PGNiG and by the unions represented within the PGNiG group were motivated by a desire to maintain the schedule for the company’s privatisation. The concerns of the management and the unions appear to have been similar; apart from their shared concern for the company’s future, both groups were, according to observers, looking forward to receiving free shares in the privatised company. Further, the directors of PGNiG made no secret of their interest in buying additional shares; while union officials have been less forthcoming on this point, commentators argue that there is little to suggest that they would turn down an opportunity to acquire extra securities, along with the well-nigh guaranteed profit which their holders can look forward to. Consecutive letters addressed to the government by the unions suggest that the unions, and the management as well, would also expect to have more of a say on the ownership structure of the PGNiG group - this expectation is understandable enough, which is not to say that is will be accommodated. The politicians who have intervened in the dispute surrounding PGNiG’s privatisation were arguably also looking for profit of another kind - at the ballot box.
For critics, the PGNiG controversy presents an example of excessive politicisation of economic processes and of industrial relations (PL0507105F). When political rhetoric and 'social engineering' gain the upper hand in debates of this sort, this is very much to the detriment of substantive content. Neither the management of PGNiG nor the unions shrank from appealing to political emotion, critics state, and the public officials and the various political parties which involved themselves in the matter were not to be outdone. The entire issue assumed a new, broader aspect on 8 September, when it was definitively agreed that a new gas pipeline would be laid along the bottom of the Baltic Sea, connecting Russia and Germany (while bypassing Poland). While this project was still at the conceptual stage, the governments of Estonia, Lithuania, Latvia, and Poland expressed their opposition; what Polish officials actually did to prevent this development, though, is not clear. (Jacek Sroka, Institute of Public Affairs [Instytut spraw Publicznych, ISP] and Wrocław University [Uniwersytet Wrocławski, UWr])