BizPoland Magazine_July 2012

July 2012 vol. 4 no. 5(29)

The Next Level

US – Poland Business Summit to spark new initiatives and deepen economic cooperation Outsourcing:

Energy:

Events:

Poland’s outsourcing sector is growing up – and growing East

Poland’s Biogas Policy: Snare, Delusion or Both

British Week marks high point in BPCC 20th Anniversary

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Poland Outsourcing Awards 7 February 2013 Hotel Intercontinental, Warsaw

A Black-Tie Gala Awards and Forum Recognizing Excellence and Leadership in Poland’s BPO/Outsourcing/Shared Services Sectors in 2012

For more information about reservations, jury membership, or sponsorship, please contact Thom Barnhardt (tb@biznespolska.pl; 508-143-963), or Wiktor Glinski (wglinski@biznespolska.pl; 694-492-067)

www.PolandOutsourcingAwards.pl Media Partners:

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July 2012 vol. 4 no. 5(29)

Published by: BiznesPolska Media sp.z o.o. ul. Długa 44/50, bud. D, lok 704, 00-241 Warszawa tel.: 022 831 7062 General Manager and Editor: Thom Barnhardt (tb@bizpoland.pl) Publisher: Craig Smith (cs@bizpoland.pl) Editorial staff and writers: Leon Paczyński, Monika Tutak Research team coordinator: Magda Adamczyk Advertising Sales: tel.: 022 831 706 2 mobile 508-143-963 Graphic Design: Sławek Parfianowicz sparfianowicz.wordpress.com

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Cover Story The Next Level Equities Dealmakers at CEE IPO Summit

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Energy Poland’s Biogas Policy: Snare, Delusion or Both Green Certificate prices are still dropping Poland wielded a veto against the Energy Roadmap 2050 Storm clouds brewing over nuclear power plant construction?

Photovoltaics to become a major RES in Poland as well?

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21 21 22 Details at subs@bizpoland.pl or call +48-22-831-7062

Outsourcing/Business Services Poland’s outsourcing sector is growing up – and growing East

Foreign Investment FDI Investment News City and Voivod Investments Chamber of Commerce News British Week marks high point in BPCC 20th Anniversary

Events „Fashion Loves Football” Stars at Playboy’s 20th year Anniversary 65th Cannes Film Festival – Poland represented at the Second Annual Polish Gala – “Excellent Polish Night”

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Cover Story

The Next Level US – Poland Business Summit to spark new initiatives and deepen economic cooperation

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Three key business organizations are behind the recent US-Poland Business Summit, an initiative to deepen the already-strong economic ties between Poland and the United States. The American Chamber of Commerce in Poland, the US-Poland Business Council and PKPP Lewiatan combined forces to organize the June event, which had highest-level political support of both governments. Lee Feinstein, the U.S. Ambassador to Poland, said the high-level government support at the summit reflected the importance the U.S. places on strengthening the bilateral economic relations.

U.S.-government participation at a round-table included: Rebecca Blank, Acting U.S. Secretary of Commerce; Lee A.Feinstein, U.S. Ambassador to Poland; Francisco J. Sanchez, Under Secretary for International Trade at the U.S. Department of Commerce; Michael C. Camunez, Assistant Secretary of Commerce, and from the Polish government: Waldemar Pawlak, Deputy Prime Minister and Minister of Economy;Ilona Antoniszyn-Klik, Under Secretary of State at the Ministry of Economy and Michał Boni, Minister of Administration and Digitalization.

Other summit participants included Eric Stewart, President of the U.S.-Poland Business Council; Józef Wancer, President of the American Chamber of Commerce in Poland;Henryka Bochniarz, President of PKPP Lewiatan, as well as representatives of leading Polish and American companies.

The summit got tremendous media coverage. PAP, Rzeczpospolita, Puls Biznesu, Dziennik Gazeta Prawna, TVN CNBC, Polish Radio, Onet.pl, BiznesPolska.pl and numerous other business media covered the U.S.-Poland Business Summit. “The Americans are interested in developing cooperation with Poland and they encourage Polish companies to invest in the United States,” Rzeczpospolita wrote. The daily quoted Acting Secretary of Commerce Blank: “We are going to develop our involvement in Poland, in the energy and

IT sectors, and in aviation and nuclear technologies in particular.” In a story titled “The U.S. Wants to Invest in Poland,” Polish Radio said that “the U.S. has invested $30 billion since Polish transformation and quoted Under Secretary of Commerce Francisco Sanchez saying “Poland is a gem between Russia and Germany” and added “we believe in Poles, we believe in entrepreneurship, and we believe in your future.”

Puls Biznesu focused on the contracts signed at the summit. “The Americans Flooded Polish Companies with Agreements,” read a melodramatic headline in Puls Biznesu. The list of deals included Boeing, Sikorsky, Fluor, International Paper and Westinghouse. PAP wrote that “during the summit, Westinghouse signed an agreement with the National Center for Nuclear Research (NCBJ) to help deliver nuclear energy solutions for Poland. Local economic portals reported that the Polish Aviation Plant in Mielec and Sikorsky Aircraft Corporation signed an agreement worth $350 million during the summit for producing spare parts for Black Hawk helicopters.”

In a “white paper” accompanying the summit, the organizers laid out their

strategic economic priorities: Energy, E-Business, Innovation and Industry, including Business Services, Aviation, and Defense.

Energy The strategic match-up between the United States and Poland is ideal. The U.S. is the world’s innovator in the area of shale gas, practically the “discover” of the means of extracting natural gas from shale rock.

And the U.S. also operates by far the largest number of nuclear reactors:104. R&D expenditures related to nuclear technologies exceed 1 billion USD annually, and the U.S. is the “mother” of major nuclear technologies including BWR, PWR and CANDU (in association with Canadian firms). Poland is keen to develop energy alternatives such as shale and nuclear, but badly needs technology and capital to develop the resources. PGE estimates that total project cost of its first generation III nuclear power plant up to EUR 10.5 billion.

The summit also encouraged Poland to develop new sources of wood biomass, which would provide the Polish agricultural sector with new opportunities.

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According to the white paper, Poland underutilizes its forest-based resources by almost 45%.

Cover Story

technology competition. In TopCoder country rankings, Poland ranked number 3, just behind Russia and China.

E-Business and Innovation

Aviation

One of the critical measures of innovation capabilities is spending on research and development. Poland’s expenditures on R&D are among the smallest in the EU. The Summit participants said that Poland and US should share experiences and best practices on running organizations that support innovation, such as innovation centres, technology parks, and business incubators and clusters.

Industry

Poland’s Aviation Valley is one of Europe’s leading aerospace clusters. Thanks to local engineering potential and a large manufacturing base it has attracted world-class aerospace investment with 87 companies (10 of them American). The Summit suggested the government further support the global ambitions of the Aviation Valley by playing a more active role in promoting its achievements and capabilities in engineering excellence to the international aviation community.

The Summit highlighted several areas that offer the most compelling opportunities for cooperation between Poland and the U.S.: Business Services: Foreign investors, particularly American investors, are driving the business services sector. Also know as the BPO or Outsourcing or Shared Services sector, Poland has captured the lion’s share of business from across Europe from American firms. Services that are being set up in Poland include Finance&Accounting, Payroll processing, call centres, customer service centre, R&D, IT and software programming and more unusual, specialized activities such as animation work.

In terms of software programming, Poland excels. In 2011, a Polish team from Poznan once again won the Microsoft Imagine Cup, the world’s largest student

The Polish government is continuing to modernize its armed forces, which may reach 35 billion pln investments from 2013 to 2015. Planned long-term modernization programs include air defense systems, multi-task helicopters, command support systems, unmanned reconnaissance systems, training aircraft, and M28 transport aircraft.

The organizers also emphasized the need to bring together not just larger companies, but also SMEs from both countries to collaborate and communicate.

According to officials at the Summit, a follow-up Summit/Conference in the United States is being prepared, and although the final date and location is not set, it will likely be held in Washington in ■ October.

Defense

Agreement on nuclear energy Westinghouse Electric Company has signed an agreement with the National Center for Nuclear Research (NCBJ).

The agreement was initialed at the U.S. Poland Business Summit.

“Today’s agreement begins cooperation with Westinghouse and NCBJ. Its aim is to create a technology transfer program in the field of reactor safety analysis. The program will support NCBJ as it tries to build its position as a world class institute advising policy makers on the Polish nuclear program.

The scope of the program includes safety analysis and related training “, said Westinghouse President for Europe, Middle East and Africa Yves Brachet. He said that his company wants to pass on their knowledge of Polish scientific and technical community and thereby contribute to the development of nuclear industry in Poland. In addition, Westinghouse signed a letter of intent with Warsaw University of Technology. “The agreement between the Warsaw University of Technology and Westinghouse confirms our long-term commitment to the development of supporting staff needed to build the first nuclear power plant in Poland. Warsaw University of Technology has joined the global network of universities, with which Westinghouse works in research and ■ education”, said Brachet.

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Equities

Dealmakers at CEE IPO Summit The second annual CEE IPO Summit brought together an audience of over 450 brokers, bankers, lawyers, business entrepreneurs, and top Polish politicians to highlight Warsaw’s growing role as the “go-to” place for capital for CEE companies.

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The event is particularly useful for international institutional investors, who can personally meet top management at WSElisted companies, as well the policy-makers who shape the exchange’s regulatory framework.

This year’s summit was opened by Prime Minister Donald Tusk, who acknowledged the interest of the international investor community in Poland and the CEE region.

Treasury Minister Mikolaj Budzanowski lauded the Warsaw Stock Exchange’s role in both broadening the investor base among individual investors and playing a key role in Poland’s ongoing privatization efforts.

And the Exchange’s president Ludwik Sobolewski emphasized that the WSE is attracting increasing interest from both listings from CEE and global investors, who give Warsaw high-marks for its rigorous regulatory oversight of the exchange.

The occasion was used to launch the Central and East European companies index - WIG-CEE – comprising a list of 25 companies from the Czech Republic, Ukraine, Hungary, Estonia, Bulgaria and Lithuania. Among the biggest listings in the index are Czech energy giant ČEZ, Ukranian food company Kernel and Hungarian oil refinery MOL. “Our goal was to create an index that is representative for the economies of the whole region of Central and Eastern Europe,” WSE President and CEO Ludwik Sobolewski said. He aims to expand the number of non-Polish firms listed in Poland.

The WSE had 31 new listings in 2011, worth 2 billion euros, making it second in Europe for new listings after the London Stock Exchange.

And the smaller New Connect market, an arm of the WSE geared toward smaller businesses, added 172 new listings, more than half of all new listings in the European Union for the year.

But as hungry as the WSE might be to dominate trading in the region, Sobolewski has signaled in recent weeks the exchange will “raise the bar” for new companies in order to prevent hastily prepared listings that might scare off investors.

Tatra Mountain Resorts (TMR), a Slovak tourism company owned by J&T Banka,

is already traded on the Bratislava Stock Exchange and may soon come to Warsaw.

Last year, TMR netted 9.2 million euros in the fiscal year ending Oct. 31, up 60 percent year on year. The company plans to invest 44 million euros in its resorts by the end of 2012.

“Warsaw has the largest stock exchange in Central Europe, and it is the plan of the

July 2012

www.bizpoland.pl company to make acquisitions in Poland,” said Dominika Nemčovičová, an investment banking consultant for TMR, in reference to the upcoming sale of state transportation company Polskie Koleje Linowe.

“We would like to establish a presence on the Polish capital markets because they have access to institutional investors, as

Equities opposed to Slovakia, which is passive in terms of institutional investors in equity.”

One investment banker from Prague said that “the serious companies on the hunt for institutional investors will go to Warsaw.

Poland has four times as many inhabitants and everybody wants to be in Poland. If you want to enter Europe as an American investor, you have to go to Poland”.

“They also have different legislation in terms of IPO regulations, and a different pension system. The pensions have to invest somewhere, so they invest in new ■ stocks.”

Treasury suspends PHN IPO, float likely in second half 2012 In late June, Poland suspended its plans to float real estate holding PHN on the Warsaw Stock Exchange, citing the unstable situation on the capital markets, but believes the debut could be possible in the second half of 2012, according to the Treasury. Earlier Poland expected PHN to debut on the WSE in July, Treasury Minister Mikolaj Budzanowski told reporters on May 24.

PHN owns some 180 real estate properties, mostly in the Warsaw agglomeration.

It operates in the office, logistics and commercial segments of the real estate business. PHN officials earlier estimated the value of firm’s real estate portfolio at PLN ■ 3 billion.

Outsourcing/Business Services

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Poland’s outsourcing sector is growing up – and growing East “Never waste a good crisis”

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For the 111 American-owned outsourcing centers in Poland, the recent weakness of the Polish zloty is like manna from heaven.

“The crisis will probably bring new business to outsourcing companies,” said Marcin Tchórzewski, vice president for Poland of US financial servic es provider State Street.

Employment costs in Poland have decreased significantly since the beginning of the year, as the zloty/usd exchange rate has dropped nearly 20% in favor of the Americans.

Indeed, the world’s crises seem to be a boon to Poland’s outsourcing businesses.

While the industry employed less than 50,000 people in 2008, the sector’s rapid growth in recent years means that employment may exceed 100,000 by year-end 2012.

And as the world takes notice of Poland’s potential and performance, the quality of jobs are moving upscale, and the distribution of jobs is spreading throughout the country, particularly north and east.

According to research by ABSL (Association of Business Services Leaders), 38 new service centres and over 20 new investors came to Poland in 2011, with American investors leading the pack.

“The global crisis has worked to our benefit by giving us the prospect of further growth in our industry and the creation of new jobs in Poland”, said Marek Grodzinski, Vice-President BPO, Capgemini Poland.

While the “American” crisis rattled the world in 2008-2009, the “European” crisis is now centre-stage, unsettling capital markets and threatening the very existence of the European Union. Yet as Poland’s outsourcing sector benefited from the American crisis by boosting its employment numbers, it looks set to benefit from the European crisis as well.

Certainly not immune to the troubles of its western European neighbors and major trading partners, Poland’s exclusion from the Eurozone - once a source of shame - has now become a source of safety.

American firms were forefront in the period 2009-2011 in their quest to reduce costs. Scouring the globe, many chose to outsource jobs to traditional locations such as India. Yet those with a major European presence have found that Poland’s proximity to western Europe –geographically and culturally – provides an advantage that non-European locations can not provide.

Poland has reached a point where it is able to offer both competitive labor rates and highly-skilled staff capable of carrying out more complex services.

“Major interest in Poland is now coming not just from the Global 500, but the Global 10,000”, said Andrew Hallam, founder of ASPIRE, the association of outsourcing/ shared services investors, based in Krakow.

He said that while the growth in recent years has been spectacular, the best is yet to come.

“HQs are no longer asking if it can be done in Poland, but rather they are asking their managers why it can’t be done in Poland”, said one shared services executive at ASPIRE’s May Outsourcing conference in Krakow. “The shift in perception of Poland is significant as more multinationals open centres here.”

Pressure valve of Eastern Poland As the traditionally-strong outsourcing cities such as Krakow and Wroclaw continue to attract new investment and higher valueadded jobs, such as financial analysis and mobile technology R&D, smaller Polish cities are keenly aware of the financial and political advantages of landing new business services investors. Comparable to a pressure valve, cities like Kielce and Lublin are keen to attract jobs that cities like Krakow might now eschew, such as call centres and rote business processes. And Eastern Poland, a fabricated construction of Poland’s poorest

five voivods, is tapping into substantial subsidies from the European Union, whose Regional Development Programme aims to narrow the gap between less-developed regions and their wealthier neighbors. (See related story: Subsidies) Mayors of cities in eastern Poland such as Kielce, Bialystok, Rzeszow, Lublin and Olsztyn are aware of the need to support spec office development, build the city’s brand and trumpet the potential of their young, well-educated workforce.

Different models and shifting sands Firms such as EDF, with a strong presence in Poland with multiple energy-related subsidiaries, have chosen to outsource “with a twist”. Instead of the traditional establishment of a shared-services centre serving western Europe or the world, EDF has set up a shared services centre for only its Polish subsidiaries, deftly dodging the potential political fallout of “outsourcing” jobs from France. The emphasis in this model is on operating efficiencies, not labor cost savings.

Polish firms are also increasingly aware of the advantages and efficiencies to be gained through consolidation and bundling of jobs in one location. While the labor cost advantages may be minor, the operating efficiencies and reduction of office costs can be significant value drivers. The recent opening in Pila, a relatively small town north of Poznan, of an outsourcing centre for a Polish energy utility is another sign of

July 2012

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the growing awareness of the advantages of outsourcing for Polish firms.

And much like Poland is “east” for western Europe, east for Polish firms is eastern Poland and Ukraine, where wages are substantially lower than in major Polish cities.

Accounting Plaza, recently acquired, last year set up operations in the Ukrainian city of Lwow, which is attractive to Polish firms since a large percentage of the population speaks Polish. And Impel, the Wroclawbased outsourcing firm, recently announced expansion plans for Ukraine and Russia.

Public-sector outsourcing is virtually non-existent, and presents another opportunity for growth, as state-owned enterprises are squeezed between budgetary constraints and a growing awareness that they must improve their return on assets. While the US and UK governments are a major force in outsourcing (everything from real estate management, cleaning, document management and storage, finance and accounting, and HR/personnel), the Polish government and its various ministries and departments are just now waking from a long slumber and being forced to consider outsourcing more services.

Indians coming Another emerging player in Poland’s outsourcing sector are the Indians. While the Americans’ expansion has been largely

Outsourcing/Business Services driven by cost-reduction and smoother interaction with the European market, Indian firms are coming from the other direction – being driven by their clients to offer services for their European operations. Wipro, a pioneer in the Tricity market, has blazed the trail for Indian firms, having set up operations several years ago with a focus on IT. Gdansk recently landed WNS, a large Indian client which has plans to set up a F&A centre serving western Europe in multiple European languages, a task nearly impossible to do from Bangalore.

“Many more Indian firms are looking at setting up operations in Poland”, said J.J. Singh, founder of the Indo-Polish Chamber of Commerce, which organizes bilateral trade conferences and events between Poland and India each year.

Another advantage for Poland, according to Singh, is that Poles do not need visas to travel around the EU, they are in the same time-zone as western Europe, and share legal, linguistic and cultural characteristics with their customers. Indians, for example, still need visas to enter the Schengen zone, an annoyance that continues to rile the Indians who are working and traveling frequently to Poland.

to open a new Global Delivery Centre in Wrocław, where staff will work in the areas of fund accounting and investment operations. “Poland is a central location within Europe, offering high-quality staff and infrastructure,” said Martin Ring, who is leading the development of BNY Mellon’s operations in Wroclaw.

Another global financial institution, State Street, opened a new office in Kraków in May, adding to the two locations it already has in the region. It plans to launch its Investment Analytics service later in 2012, and by 2015, the company will recruit nearly 600 professionals, to support its various financial services.

“Poland has become a key European location for fund accounting, securities valuation, exchange traded derivatives and hedge fund administration,” said Joseph Antonellis, who is vice chairman of State Street and leads all Europe and Asia-Pacific ■ Global Services and Global Markets.

From single services to multi-functional As Poland’s outsourcing sector grows up and matures, global firms are increasingly using Poland as a base for multi-functional business services. Instead of only providing basic accounting services, for examples, firms are shifting more work to Poland, including HR/compliance, procurement, and real estate asset management.

“Many of the centers are the headquarters of outsourcing organizations for Europe or the EMEA region”, said Andrew Hallam of ASPIRE. Indeed in early spring, BNY Mellon, a provider of investment management and investment services, announced plans

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2012 July

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Energy

Poland’s Biogas Policy: Snare, Delusion or Both While support for wind farms is waning and the latest proposals portend a reduction in biomass co-firing, the biggest expected contributors to meeting Poland’s EU renewable energy mandate by 2020 seem in less favor with the government.

By Randy M. Mott, CEO of CEERES

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Uniformly, government officials seem eager to promote biogas plants and actually are counting on a staggering 980 MW of capacity by 2020 (from the low 20 MW range now). The devil is always in the details, however, and there is abundant evidence that many in government still do not understand the economics of the sector. This can be a continuing problem as the rules are written and interpreted by these officials, sometimes without due regard for the reality on the ground. Where specifically are they going awry and how should it be fixed?

The Polish Government made a dramatic announcement some years ago of a plan to have 2,500 biogas plants in Poland by 2020. This has been continued by successive governments and is enshrined as national policy. Since biogas development has been woefully slower than needed to come even close to this goal, the government has decided on enhanced subsidies for biogas, elevating their green certificate values by 1.8 for plants under 1 MW and 1.4 for plants over 1 MW. All this is good news for the biogas sector, but there are still issues.

The government still likes to call these facilities “agricultural biogas plants,” although that name implies that they will be based on farms. The legal definition is broad enough to cover use of “by-products or a residue of agro-food industry” which allows use of commercial organic waste across a wide range of industries. However, the Ministry of Agriculture still envisions that the 980 MW goal will be achieved by construction of hundreds of farm-based biogas plants in the German template with

capacities around 250 kW. This approach is completely unrealistic in Poland and threatens to create many legal and regulatory determinations that could actually impede biogas development.

The basic problem is quite simple. The European Biogas Association tabulated the cost per kW hour to produce electricity at various sizes of biogas plants. All the plants were assumed to be on the German model of using farm manure and crops residues (which must be purchased since they otherwise have feed value). Their cost ranged from 26 Euro cents/kWhr to 18 Euro cents/kWhr. Right now the Polish green certificate and grid price will yield about 11.5 Euro cents/kWhr. The changes now proposed would raise this to about 13-15 Euro cents kW/hr. The Agriculture Ministry is using a figure of 10.4 Euro cents for its putative cost of biogas per kW hour (which is totally inconsistent with the experience in the real market according to EBA, cited above). About 30 to 40% of the cost for biogas electricity using the German approach is from purchasing substrates, i.e. the material used to generate methane that is consumed as a fuel to make electricity. This basically means that Polish farms cannot hope to achieve what has been done in biogas in Germany with this level of support. German subsidies range between two and three times higher than Polish supports. Experts at the recent Biogas Poland 2012 conference in Warsaw, including a co-founder of the German Biogas Association, agreed that it is not possible in Poland with the levels of support in place or proposed to use paid substrates for a significant part of the energy output.

This reality means several things to biogas development here. First, the Ministry of Agriculture’s farm model cannot be the principal means to achieve 980 MW in biogas capacity by 2020. Some farmers may wish to make the investment based on manure storage requirements, fertilizer savings or other factors but normal circumstance will be to avoid the risk of the investment in this climate. Most of the farm projects being discussed have failed to obtain equity investment and debt financing for the obvious reasons.

Second, all biogas plants will have to rely to a significant extent on organic waste, which is available without payment. This

waste will have to include things other than swine and cattle manure, which are very low in energy value. Third, revenue streams other than electricity will be important to make the plants attractive enough to get investment from the private sector.

The broad definition of agricultural and food by-products and residues covers a lot, but does not cover sewage sludge. The proposals going through the mill right now contemplate that waste water treatment plants would qualify for reduced green certificates, but do not clarify if sewage sludge taken to co-digestion is covered or if it might even disqualify such a facility from eligibility for green certificates. Primary sewage sludge partially dewatered has an energy value about 4-6 times animal manure. It is very effectively sterilized in thermophilic biogas plants (using higher temperatures than normal farm plants). It is normally used for biogas co-digestion in Scandinavia and offers smaller local jurisdictions a very effective way to meet newly applicable EU waste water requirements in Poland. CEERES has several projects where we hope to take local sewage sludge with no fee to add to other substrates comprising the bulk of the energy output.

Sewage sludge is one example and there are possibly others. The issue is whether it makes sense for Poland to have a more narrow definition of acceptable substrates than the European Union. Most of these materials are waste and are important to make the energy output of biogas plants economically viable. Instead of narrowly construing what can be used in biogas, the Polish definition should be as broad as the EU standard. See EU Directive 2001/77/EC, Article 2(b).

The other revenues that can make biogas more profitable than just electricity sales include gate fees for waste (a major source of revenue for biogas plants in Western Europe). This is yet another reason to broadly allow organic waste to be used in biogas in Poland. Given other new legal restrictions of the disposal of organic waste, encouraging the infrastructure to handle these materials in biogas plants also makes imminent good sense.

The biogas byproduct called digestate contains virtually all of the nutrients that were in the original feedstock material.

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Energy

Green Certificate prices are still dropping The prices of green certificates dropped on the Polish Power Exchange for the tenth session in a row; however, the price drop seems to be losing momentum. Can this trend be reversed after the effective entry into force of the new quotation regulation probably at the end of the next quarter?

The average stock exchange price of green certificates dropped in mid-June to 264 PLN/MWh - compared to more than 286 PLN/MWh compensation fee/opłata zastępcza in 2012. Yet, the recent declines are relatively minor in comparison to those observed at the end of May with losses of up to 2% per session. Nevertheless, the slower drop in prices does not minimize the concerns among the producers of energy from renewable sources: especially given that we observed a similar trend on the red certificates market.

Over six months of last year, the certificates supporting cogeneration sources of energy lost close to 60 percent of their price, on average 2 percent per session, to arrive at approx. 9 PLN/MWh (from over 23 PLN/MWh). In that case, accumulation of certificates and their sudden introduction to trading was to blame.

On the other hand, when it comes to green certificates, the overproduction of green energy – as forecast by certain analysts mainly due to co-firing – may be the

case. The situation is uncertain since the official data on the performance of obligations in the scope of production of energy from renewable energy sources last year has not yet been published. However, according to certain institutions’ estimates, the share of consumed green energy is claimed to be close to the obligatory level of 10.4 percent. This year, this ratio will not change and hence connection of a greater number of new renewable sources may trigger the threat of overproduction.

This threat should, however, disappear next year. Starting from January 1, 2013, the threshold of mandatory share of green energy will increase from 10.4 percent to 12 percent and during the years to come it is going to increase by 1 percent annually.

A potential period of six months during which green certificates will be traded at lower prices does not necessarily have to be as painful as it might appear. The renewable energy producers usually sell their certificates of origin at a fixed price based on long-term contracts, which is a requirement of bank financing. Even though these contracts do not cover 100 percent of the certificates “produced”, they still stabilize the revenues of producers. More harmful is the situation for traders of green certificates on the stock exchange. In the event of minor price reductions of the market price, one should not expect that certificate purchase agreement will be terminated. Even if the stock exchange prices drop below the contract prices, when it comes to termination of contracts, potential contractual penalties, the market risk to be handled by the purchaser, and last but not least a perspective of another increase of demand for the certificates from 2013 should con■ stitute a discouraging factor.

It is an excellent fertilizer that actually has demonstrated higher plant uptake of the nutrients than the original material.

Biogas digestate contains about 10 Euro worth of plant nutrients per cubic meter.

Use and potential sale of this material should be encouraged and might allow for another future revenue stream for biogas plants (both farm and non-farm). Some technical rules in Poland and their interpretation impede this development and need to be changed.

The Polish Government goal of 2,500 biogas plants in just the next eight years with 980 MW of output is remains ambitious. Achieving anything like that objective will require a major change in the market. The enhanced green certificate values obviously help, but officials must be careful to look at the actual type of plants that can economically develop in this market and make sure that the rules are written and interpreted in a way to ■ promote this result.

2012 July

Poland wielded a veto against the Energy Roadmap 2050 One of the proposals made during the work on the conclusions concerning the European Energy Roadmap 2050 was to set another target related to an increase of consumption of renewable energy by 2050, including a specific threshold of 30 percent of energy from renewable energy sources by 2030. Nevertheless, another milestone supported by the majority failed to win the support of all states. Therefore, the target was proposed to be non-binding. Even such a soft formulation was unsatisfactory for the Polish government. Finally, Polish negotiators succeeded in persuading the European ministers to remove this provision from the conclusions.

Irrespective of this fact, Poland vetoed the Energy Roadmap 2050 due to the attempts to eliminate carbon dioxide emissions from Polish energy sector, which is based almost 90 percent on carbon.

The government intends to reject this target also during further works on the Energy Roadmap. In the near future the European Energy Ministers will deal with the document entitled “Renewable energy – a major player in the European Energy Market”. Even though the very draft does not contain the target of 30 percent of energy from renewable sources by 2030, the Commission still noted that support in the form of binding targets will be necessary.

The European Renewable Energy Council (EREC), the umbrella group for Europe’s renewable energy industry, has proposed a binding target to ensure renewables make up 45% of the energy mix by 2030.

According to European officials, failure to prolong the obligations after 2020 will bring about a drop in the speed of development of renewable energy sources in the European Union from 6 to 1 percent annually.

Other options include new goals for emissions cuts, but no goals for renewable energy, which would leave the Emissions Trading Scheme (ETS) as the main instrument to cut carbon emissions and encourage renewable energy. Britain, for instance, wants an emphasis on the carbon goal and argues that a renewable goal might be a disadvantage to other low carbon energy generation, such as nuclear or gas. But many in the renewable industry say the collapse of the ETS to less than €7, far below the €20-€50 level which analysts believe is necessary to spur investment, ■ demonstrates the value of targets.

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Energy

Storm clouds brewing over nuclear power plant construction?

A tender for the nuclear technology to be used in the first nuclear power plant in Poland, according to the earlier announcements of the Polish Energy Group, was to be announced in the second quarter of this year, but there are signals that it will not be the case. Financing decisions need to be made first, and these are still missing.

Due to the fiasco of the acquisition deal of Energa, it might be hard for the group to find a financing model.

According to the last McKinsey report for the Ministry of Economy, nuclear energy is not the most cost-efficient form of reducing CO2 emissions. It follows from the report that Poland will reduce CO2 emissions by 7 percent by 2050 thanks to nuclear program, while the cost of avoiding a ton of CO2 thanks to nuclear technology was set at EUR 30. The daily Rzeczpospolita notes that it is less than in the event of renewable energy (44

EUR/t CO2) and CCS (80 EUR/t CO2), but higher than it could be achieved by boosting the energy efficiency (4 EUR/t CO2).

At the same time, it should not be forgotten that the efficiency of the remaining technologies is materially higher.

Renewable energy sources – quoting the report – allow for emission reduction at a level of 23 percent, the energy efficiency increase at a level of 21 percent, and CCS ■ at a level of 18 percent.

Photovoltaics to become a major RES in Poland as well?

40 percent production of an average wind power plant - and varies at the whole country only by more or less 3 percent.

The investment process for PV power plants is far shorter than with wind farms and includes obtaining a feasible site with a long-term lease contract, obtaining the planning permit (WZ), a simplified environmental permit, and a building permit.

(The process avoids some of the complications and time delays related to wind farms, such as noise emissions studies, wind studies, and bird and bat studies.)

The Achilles’ heal is the grid connection, as applications for wind farms are queuing in many areas in Poland. Nevertheless the investment process to reach a ready-to-build status lasts approximately one and a half years instead of three to five years as with ■ wind farms.

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Due to a planned “correction coefficient” increasing from 2.0 according to the first draft of the new RES act published end of 2011 to 2.85 announced at the last press conference organized by the Ministry of the Economy at the end of May, business plans for PV power plants are becoming far more realistic. The first correction coefficient to start with will amount to 2.85 and decreases to 2.4 in 2017. Taking into account the current exchange rate, the price for a kw/h will be from 22 to 24

Eurocents, which is at a similar level to Germany’s current support level with 24 GW installed capacity - and which is half of Europe’s installed capacity with 51 GW in total. Therefore, first investors have already started to lease potential sites for PV power plants.

For a larger plant, usually a site of 50 to 100 ha is needed. The sun’s intensity in Poland is comparable to Northern Germany and leads to a capacity of approximately 1000 MWh per year – which is

Excerpted from Renewable Energy Newsletter of Dr Christian Schnell (DeBenedetti, Majewski, Szczesniak law firm)

July 2012

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FDI Investment News

Poland ranked second most attractive European country for investment According to Ernst & Young, Poland is the second most attractive destination for foreign direct investment (FDI) in Europe for the coming three years, according to a survey of 840 executives for Ernst&Young’s European attractiveness survey 2012, released in late June.

Poland received 10% of investors’ votes, only behind Germany at 35%. Poland is seen as “a beacon of hope in the CEE region, thanks to its strong domestic demand and robust growth through 2011. Poland won kudos among the executives for its wellqualified and productive workers, a probusiness environment and transparent tax and legal systems, the report notes, adding that Warsaw has emerged as a leading financial centre in the region, while Krakow has been rated as a leading emerging city worldwide for BPO projects.

And FDI inflows into Poland, once dominated by labour-intensive industries, are increasingly knowledge-centred. The results of the survey indicate that investors reckon Poland is on a path of sustainable attractiveness, which means FDI to the country is likely to progress, the study concludes.

The European attractiveness survey 2012 ranks Poland 8th in Europe for the number of FDI projects in 2011, the only Central and Eastern Europe country except Russia to make the top 10. It attracted 121 new FDI projects last year, down by 15% compared with 2010, sending it one notch lower from 7th in the 2011 survey. The automotive sector accounted for 11% of all FDI projects in Poland in 2011, followed by business services (9%), electronics (9%), machinery (9%) and food processing (6%).

US companies accounted for 20% of the new FDI projects, followed by firms from Germany (15%), the UK (14%), France (6%), and South Korea (6%).

Fast Facade to open in “Starachowice” Special Economic Zone In the subzone Starachowice Fast Facade plans to start production of advanced ceramic products for the construction industry as insulating and elevating panels. The company will invest at least 4 million pln.

Last year the SEZ "Starachowice" issued 12 business licenses for total investment of 440 million pln, which will create nearly 400 new jobs.

Cargotec plans for further investments in its multi-assembly unit Cargotec has decided to proceed with investment plans

2012 July

in its multi-assembly unit in Stargard Szczecinski in northern Poland. The value of the investment for the new painting and assembly area will be close to EUR 20 million. The planned new area is estimated to be completed in 2014. Cargotec's multiassembly unit in Poland started operations in 2010 and it has delivered a wide range of Cargotec equipment to customers globally. The planned new painting and assembly area would improve the capabilities and efficiency in assembling load handling equipment.

Electrolux to invest 42 million pln

Electrolux Poland Sp. z o.o. has received business authorization in the subzone Żarów, where the company will operate in manufacturing of household appliances.

The company said it will invest at least 42.6 million pln.

United Oilfield Services choose Łódź Special Economic Zone for shale-gas relate project UOS, with headquarters in Warsaw, operates in the mining oil and gas industry.

The new investment will be located in the subzone Łowicz. UOS purchased land (over 12 ha) to build a logistics and warehousing centre with administrative facilities. Professional equipment will be stored there, as well as providing the services of installation, montage, repair and maintenance of seismic equipment, drilling equipment, equipment used for geophysical researches, monitoring and hydraulic fracturing. The Company intends to invest in the Zone at least 35 million pln and hire more than 120 employees.

FedEx officially takes over Opek FedEx Corp. has completed the acquisition of the Polish courier company Opek Sp. z o.o. as the latest step in the company´s growth strategy in Europe. The addition of the Opek business to the FedEx Express network will extenf the serviced portfolio of both companies and will provide customers with more comprehensive international and domestic service options. With this transaction, FedEx Express gains access to a nationwide domestic ground network with an estimated $70 million in annual revenue and 12.5 million shipments annually. In return, Opek customers get direct access to the global FedEx network.

“With Poland being one of the leading economies in CEE, the Polish market offers tremendous opportunities for customers wishing to explore new markets and increase their business. The strong position of the Polish economy and tremendous popularity of e-commerce have both contributed to increasing demand for shipping services. We view Poland as a key market for investment and growth,” said Michael L. Ducker, chief operating officer, FedEx Express. ” Our customers will benefit from direct access to the worldwide FedEx network and our team members will become part of one of the world´s most admired companies. With this transaction, a new era of our company history begins,” said Marek Opinski, general director, Opek.

continued on page 14

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FDI Investment News

the unsuccessful tests. A government report in March slashed estimates of Poland's shale gas reserves to 346 billion to 768 billion cubic meters, or about one-tenth of previous estimates, denting hopes for an energy source that could play a key role in weaning Europe off Russian gas.

Boeing collaborates on Air Traffic Management research with LOT Polish Airlines

continued from page 13

Hines continues global blitz with new funds in Russia and Poland Fresh from a speculated multi-milliondollar fund closing in Brazil, Houston-based Hines has announced it has closed its Hines Russia and Poland Fund. This is the fourth Hines fund formed to invest in Russia and Poland.

Based in Luxembourg, the Russia-Poland fund is capitalized with $490 million in equity for more than $1.1 billion of total leveraged capacity. The fund plans to invest about 80 percent of its capital in Russia and 20 percent in Poland. The money is coming to the fund from financial institutions, sovereign wealth funds, pensions, trusts and other institutional investors from Europe, Asia and the United States.

The fund has already allocated equity to three new retail projects in Russia: outlet mall developments in St. Petersburg and Moscow, and a big-box retail development in Moscow. The fund will also consider investing in office, industrial and residential properties.

Hines has operated in the Russian and Polish markets since 1992 and 1996, respectively. The company has 250 employees in Russia and 42 in Poland.

Puls Biznesu reported. During their last visit in March, the company's representatives visited several locations, including Lublin, Kraków and Chełm.

Two years ago, the company opened a €25 million plant in Kobyłce, on the outskirts of the capital. The plant currently employs 30 people. Nuctech's next investment in Poland will be much bigger, as the Chinese company is hoping to employ 200-300 workers in the new plant.

Exxon’s exit casts shadow over Poland’s shale plans Exxon Mobil Corp has decided not to go ahead with its shale gas exploration projects in Poland because its test wells failed to produce commercial quantities of gas. A spokesman for the U.S. company's Polish arm as saying that Exxon made the decision after testing two of its wells in Poland, which is being closely watched as a potential of natural gas from shale. The spokesman was not immediately available to comment further. Exxon, which holds six exploration licenses in Poland, said in January it would evaluate its options after

Boeing Co. announced that it will collaborate on air traffic management or ATM research with LOT Polish Airlines, Polish government agencies and academic institutions to make safer commercial aviation in Poland.

The company noted that the project will establish a Boeing research and development presence in Poland that will pursue other opportunities to work with Polish R&D institutions.

In addition to LOT Polish Airlines and Boeing, the ATM project consortium includes Boeing subsidiary Jeppesen Poland, Polish Airports State Enterprise, Enter Air, Polish Air Navigation Services Agency, and the University of Warsaw Interdisciplinary Center for Mathematical and Computational Modeling.

Boeing Research & Technology-Europe or BR&T-Europe will oversee the company's research activity in Poland. BR&TEurope is focused on developing future aerospace solutions and improving the cycle time, cost, quality and performance of current aerospace systems.

The consortium will begin by studying ways to make aircraft descents more efficient in dense air traffic, a process known as Optimized Profile Descent. When implemented, this can reduce fuel consumption for airlines, make landings and takeoffs more efficient and reduce noise at ■ airports, the company said.

Chinese firm banks on nuclear business

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Chinese firm Nuctech, a leading manufacturer of security inspection products and radiation imaging technology, has sent representatives to Poland to discuss plans to build a new production plant.

The representatives met with Deputy Prime Minister Waldemar Pawlak to discuss a location for the planned plant,

July 2012

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Łódź: Łódź invites tenders for regional network The Governor’s Office of Lodz sent out invitations to tender for development and operation of the provincial backbone network project, the Lodz Regional Telecommunications Network (LRST).

They were directed to four entities: Telefonia Dialog, TK Telekom, AlcatelLucent, as well as contractors jointly applying for the award of the contract: Integrated Solutions and Telekomunikacja Polska (Orange group). LRST is a project designed to provide universal access to broadband in the province of Lodz. The network will comprise over 300km of backbone and over 460km of distribution network. The coverage will be 630 municipalities and more than 131,000 households.

The total investment is PLN 71 million, of which over PLN 50 million will come from the EU funds under the Regional Operational Programme.

City and Voivod Investments

to Łódź, which is Poland’s third-largest city. Some 1.2 million people live in the Łódź metropolitan area.

“Poland is an extremely important market to us, considering its proximity to Copenhagen,” says Joakim Landholm, chief commercial officer of SAS. “We can offer a quick direct flight or an easy transfer to all our Polish destinations,” adds Landholm. “Earlier this year, SAS opened Copenhagen-Katowice and last fall also Stockholm-Gdansk. SAS will now fly to six destinations in Poland, offering eight direct routes from Scandinavia.”

Poznań:

2012 July

Szczecin: First factory in Szczecin SEZ has started On May 16th 2012, at the SEZ EURO-PARK Mielec in Szczecin the Swedish investor operating in electrical sector has started the construction of the plant.

Swedish electric charging company expands GARO, a leader on Scandinavian market in the distribution of electrical installation equipment is to start new business in autumn. The company will invest 6.4 million pln and build a factory producing recharging stations for electric vehicles, auxiliary heating plants and power distribution panels. Garo will hire 120 people.

Wrocław:

SAS launches direct flights to Lodz Scandinavian Airlines (SAS) is continuing its expansion in Poland by launching a new service on October 29 between Copenhagen and Łódź.

When the new Copenhagen-Łódź route goes into operation, SAS will be offering more than 70 direct flights a week between Scandinavia and Poland, on eight routes.

The carrier offers connections from Poland to its flights to the rest of Europe via its hub airports. According to SAS, it will be the first network carrier to operate flights

TriGranit was chosen by PKP to revitalise and renew Poznan’s main railway station in 2007 following a competitive tender process with several other real estate development companies. In February 2012, Europa became TriGranit’s joint venture partner for this Public Private Partnership project where PKP contributed the land and the Europa / TriGranit joint venture contributed the necessary financial capital and expertise to see this phase through to completion.

The train station is the first phase of a project totaling 164,000 sq m of GBA that will become Poznan City Center, an integrated transport hub and shopping centre, which will include 250 retail units, a PKS coach terminal with 19 bus platforms as well as a park & ride car park facility for public transport commuters accommodating 1,500 parking spaces. The planned completion of the second phase, the retail, PKS bus station, park & ride facilities and public infrastructure elements is November 2013. In addition to this a future third phase is planned on the site of the existing train station which will include conference, office and hotel facilities.

Polish Champions New train station open After only ten months of construction, the new Poznan Glówny train station was officially inaugurated in June by President Bronislaw Komorowski, who also earned the distinction of becoming the first passenger to use the new facilities.

Poznan Glówny was developed by joint venture partners Europa Fund III and TriGranit Holding Ltd and was officially handed over to PKP on 24 May 2012.

Representatives of 6 voivodeships, 6 cities, PAIiIZ, PwC and ARAW have signed a declaration supporting Polish companies expansion abroad.

The declaration is a result of Polish Champion Programme which has been initiated by the city of Wrocław and the Wrocław Agglomeration Development Agency (ARAW). The program is developed continued on page 16

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City and Voivod Investments continued from page 15

and coordinated across Poland by PwC in association with Polish Information and Foreign Investment Agency (PAIiIZ).

In the framework of the project the companies will receive support from local governments consisting primarily on the promotion of their international activity and help in relations with local science institutions. “PAIiIZ was established to assist foreign investors in Poland, now we also support Polish investors abroad”, said PAIiIZ;s Sławomir Majman, adding that already 18% of large Polish companies are present abroad (in terms of production), of which almost 61% intend to further expand.

“At present, the image of Polish products is worse than the products. Polish companies, especially on western markets, do not sell their products under their own brands”, noted Ryszard Petru, Partner at PwC. Dariusz Ostrowski, the President of ARAW, said that “so far we have managed to get 11 companies to join the program: Impel, Selena, Kruk, Clarena, Hasco-Lek, Xantus, AB, Global ECR, Koelner, Toya, and TelForceOne.” Supporters of the program include: ARAW, PwC, PAIiIZ, Voivods of Lubelskie, Łódzkie, Małopolskie, Mazowieckie, Pomorskie and Zachodniopomorskie, and the cities of Gdańsk, Katowice, Olsztyn, Poznań, Szczecin and Rzeszow.

- changes are such that I sometimes think I might get lost.”

Surprisingly, with the buzz around the whole of the country for the footballing side of things, the former leader isn’t one of the many millions tuning in to see all the action. Despite the fact that football stadiums were a major recruitment hotspot for the Solidarity movement and the fight against communism, he never really took to the game. “I used to play football but my legs are rather short. That affected my running. As a result I usually ended up as a goalkeeper. I could jump very well and had quick reflexes.

But to be honest I was always amazed that an event which includes 22 people chasing the ball can be perceived as a national fes-

build common foundations uniting different nations and religions. From these foundations universal judicature, science and laws could be derived. That did not happen, so we have to focus on other solutions.

Walesa also had very strong views on the violence between Russian and Polish fans before their game in Warsaw. Like many others Mr Walesa believes that the violence seen was not for footballing reasons, but due to the deep underlying history between the two nations.

“Democratic rules allow for such a march. Still, right from the beginning it was meant as a kind of provocation.

Probably those people wanted to stir up

tival, as it is the case with many football games. I always thought that there were far more interesting things in the world.”

The 69-year old also had strong thoughts on the problem that has surrounded the country since the BBC Panorama programme suggested that racism and antiSemitism was rife in Poland and Ukraine.

When asked how these problems could be solved, Mr Walesa had a clear idea of his ideal solution: “Of course we need to punish all those people. But it would have been better to

all the anger which is present between our nations because of our difficult past. The question is: Is it good that we have finally seen it? There are still some issues between Poland and Russia that need to be resolved.

For example they still did not fully admit that Stalin murdered Polish officers in the forest near Katyn. This annoys many people. That is the reason why some people reacted in such a way. As long as such issues remain and Russians don’t want to confess, it is difficult to achieve a better ■ atmosphere.”

Gdańsk: Walesa: Euro2012 accelerated development by decades

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Poland’s former leader discusses the economic impact co-hosting this summer’s tournament, and reaffirms his belief that the country’s co-hosting of Euro 2012 has been a massive benefit off the field, if not such a big success on the field.

Speaking of his feelings about the European Championships being staged in Poland: “Euro has sparked off many investments. New things have been built, others were tidied up. It is this aspect of the tournament that interested me the most.”

Further confirming the importance of added investments, Mr Walesa made his feelings clear on how something as politically trivial as a football tournament can benefit a whole nation – also praising the developments in his home town. “Gdansk has changed dramatically. I sometimes wonder whether to leave my house or not

July 2012

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Chamber of Commerce News transparency of public procurement, legal instability, unpredictability of the economic policies and poor access to public funding and the EU. The study involved a total of 1323 companies with foreign capital in 15 countries in CEE, including the most in Slovakia (212), Hungary (199), Poland (186) and the Czech Republic (148). The study was conducted in February and March 2012 by 16 bilateral German Chambers of Commerce and Industry (AHK), operating from the Baltic to the Black Sea.

Belgium The Belgian Chamber of Commerce held a Business Mixer at the Residence of the Ambassador of the Kingdom of Belgium, His Excellency Raoul Delcorde in late June.

Some 500 Belgian companies are currently

France (CCIFP) EDF and Sii awarded as best French investors The Grand Prix of the French Chamber of Commerce in Poland awarded the companies that over the past three years have made major investments in Poland. EDF was recognized for its high-efficiency power plant construction project in Rybnik (a Euro 2 billion investment) and staff development programs, while the company Sii for its unprecedented growth of employment and revenues. The competition aims to show the success achieved by French companies on the Polish market as well as promote their achievements to their employees, communities and the entire Polish economy – with one from the SME sector and one from the large-company sector, according to Monika Constant, Director General CCIFP. EDF Group was recognized also for its research and development activities, including a center for the study of combustion of coal and biomass, to improve the efficiency of Polish power plants and CHP plants.

Sii is a company offering IT outsourcing services and manufacturing engineering, present in Poland since 2006. Over the last three years the company has grown by over 300 percent. Every year, the firm has opened a new branch in another Polish city (in Lodz in 2012, in Krakow in 2011, in Poznan in 2010 and in Wroclaw in 2009), and all profits generated are reinvested into the company and its employees. In 2009, Sii employed 200 people, and by 2012 total employees are 900. The company was also recognized for a number of initiatives aimed

2012 July

at improving workers' skills, as well as the consistent introduction of innovative solutions to improve the work in the company, the IT infrastructure and services offered to customers.

The jury consisted of: Thomas Siemieniec, editor of Puls Biznesu, Daniel Maitre, Regional Head of Economic Department of the Embassy of France in Poland, Iwona Surdykowska-Huk, Managing Director InfoCredit and Robert Jędrzejczyk InfoCredit, Vice President of the French Chamber of Commerce in Poland and Partner in law firm Gide Loyrette Nouel.

Germany (AHK)

active in Poland, including a large number in the construction, energy and environment cluster, and also dredging companies, soil sanitation firms, architects and engineering offices, investors and providers of supporting services on the legal and administrative front.

Canada (PCCC) Germany investment survey ranks Poland number 1 81 percent of foreign investors in CEE are satisfied with the choice of location for investments, according to a recently prepared report from PAIZ and the German Chamber (AHK). The highest percentage of positive answers to the question "Would you invest again in the host country?” falls on Poland (95 percent). After Poland, followed Slovakia and Romania (89 percent positive), Czech Republic (85 percent), Hungary (71 percent) and Bulgaria (65 percent). "The study shows, therefore, that the expectations of foreign investors in CEE with respect to their involvement in the region are met" says Director General of the Polish-German Chamber of Industry and Commerce (AHK Poland), Michael Kern.

The worst evaluation for the CEE region were given for: a low effectiveness in fighting corruption and crime, low

Vac Aero opens new plant in Rzeszów Vac Aero, a PCCC Patron and founding member, opened a new plant in Rzeszów in May. The greenfield is Vac Aero's second plant in Poland and its eighth in the world. The new facility offers high temperature components treatment and is a part of the Podkarpackie Aviation Valley cluster, a leading hub in Central Europe for aerospace projects, both manufacturing and servicing. "We had no doubt that we should bring our business to Rzeszów.

Recently Poland has become one of the most dynamically developing aviation centers in the world and Rzeszów is at the forefront of this growing potential," commented Michael Miasek, President of Vac Aero Poland. continued on page 20

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Chamber of Commerce News

British Week marks high point in BPCC 20th Anniversary

Business and pleasure, networking and market insight – the British Week proved to be a mixture of the useful and the thoroughly enjoyable. The Week began with a seminar focused on bilateral investment.

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DAY ONE: Opened by British Ambassador Robin Barnett and BPCC chairman Alan Jarman, the aim of the Investment Conference was to look at Poland through the eyes of Britain’s largest investors and also to promote Britain’s attractiveness to Polish corporates as they begin to globalise.

Speakers included David Green from PwC; Martin Oxley and Ian Fox from the British Embassy; Bogdan Kucharski the

CEO of BP Polska; Jerzy Toczyski, the CEO of GlaxoSmithKline in Poland; Steve Novis, managing director of WS Atkins Polska; and on behalf of the Polish government, Ilona Antoniszyn-Klik, undersecretary of state at the Ministry of Economy and Rafał Szajewski, head of projects at PAIiIZ, the Polish inward investment agency.

Mr Toczyski said that GlaxoSmithKline’s business was going well in terms of manufacturing, warehousing and shared services including IT – serving 100 markets around the world – and yet because of the lack of transparency in a reimbursement policy that favours generics over innovative drugs, Poland is a tough market for selling pharmaceutical products.

Areas holding Poland back included public procurement and the bureaucracy surrounding the bidding process, said Mr Novis. For Atkins, this makes Poland a far more difficult market, and a greater drain on management time, than North America or the Middle East.

Mr Kucharski, spoke of BP’s 21 years in Poland as being a period of continuous growth, ever-increasing transparency and market stability. Today, BP has 440 retail sites around Poland. Although he was critical of the fact that 100% of Poland’s refining capacity remains in state hands, Mr Kucharski said the fuels sector would continue to grow rapidly as domestic demand is boosted by rapidly improving road infrastructure.

Investors spoke positively about human resources in Poland – they did not have any problem with recruiting and retaining skilled and motivated employees. But while Mr Novis found ready access to deep technical skills in Poland, Atkins found it more difficult to find managers with strong leadership ability. Mr Kucharski noted that Poles were mobile internationally but immobile nationally. He agreed that there were no problems with finding people with technical skills bit siad that management skills were improving,

July 2012

www.bizpoland.pl and that a more professional attitude among managers was clearly emerging.

Management teams, once composed of expats, now comprise almost exclusively local hires, and these form the nascent middle class on which Poland’s economy depends.

There was a consensus that despite the business uncertainty caused by wild currency fluctuations, Poland should not be in any hurry to join the eurozone until the PIIGS crisis subsides.

Speakers also stressed the need for Poland – like any other country wishing to attract inward investment – must offer a sustainable, predictable business environment built on trust.

Given that automotive and food form the two largest sectors of trade between the UK and Poland, coupled with the emotional appeal of luxury cars and fine food, it was most appropriate that these two sectors should each have their own day as part of British Week.

DAY TWO: On Tuesday, the British Food Day saw a visit to Poland of a dozen British food companies, including market-leading brands such as Warburton’s and Thornton’s. After touring Warsaw shops and delicatessens, the UK firms

2012 July

Chamber of Commerce News met Polish distributors, wholesaler and retailers at the British Embassy, before the room was opened to BPCC members for a special Food Blender event – a chance to swap business cards, share market insight and tuck into some excellent British food and drink. Fine vin-

tage cheeses, iconic food brands, real ales, and organic Scottish cider made this.

Feedback from the event was positive, and it will be repeated in the future. The British food companies could deliver their samples directly to the Embassy in Warsaw from the UK thanks to Fresh Logistics part of the Raben Group, which delivered the produce free of charge.

DAY THREE: Wednesday saw an early start with a business breakfast looking back over the chamber’s 20 years. The guest of honour was Poland’s premier two decades ago – Jan Krzysztof Bielecki, who gave an often entertaining but ultimately insightful address. It was also clear that Mr Bielecki had read our 20th Anniversary publication in detail – a great compliment to us. HMA Robin Barnett then addressed the invited audience giving us an insight into his many years in Poland, again sometimes very

humorously. Nicholas Fielding (As one of the founding Board members of BPCC or BCCP as it was then known) then opened the discussion, together with Jan Kluk and Frank Jackson – all three fiiling us in on the history of the creation and early days of the Chamber. Many thanks to all of our speakers and presenters. In the evening, after a BPCC Board meeting, MaMaison Le Regina very kindly hosted the Board at a dinner, during which not only the past but future of the Chamber formed the main topic of discussion. Our thanks go to Marzanna Rutkowska and her team for providing us with such an enjoyable evening.

DAY FOUR: Thursday was the British Vintage Car Rally Challenge and Motor Show, in the splendid surroundings of Jabłonna Palace, just 12 miles north of Warsaw’s city centre. The event attracted 15 beautifully restored classic British cars (two Rolls-Royces, a Bentley, five Jaguars, four MGs, a Lotus, an AustinHealey and an utterly gorgeous 1953 Aston Martin DB2. Also showcased were vehicles representing the very best of the British motor industry today – from Jaguar, Land Rover, Lotus, Caterham and Aston Martin. The event proved an excellent get-together for Polish and British classic car enthusiasts, over 100 people turned up, and the food served by the palace was a sumptuous as the surroundings. Guest of honour was SLD politician Ryszard Kalisz, known for his love of fine cars. The event will be repeated next summer – on a weekend – as a British-themed motoring picnic.

DAY FIVE: After a quiet Friday, British Week action moved to the British School, Warsaw. Organised by The British School Friends, the Diamond Ball was a wonderful occasion and was privileged to be part of the BPCC’s British Week. Over 300 guests enjoyed the very best of British celebrations to commemorate.

Her Majesty the Queen’s 60 glorious years as the British Monarch. Ambassador Robin Barnett launched the evening with the Loyal Toast, and an unforgettable evening ensued. Inter-prandial entertainment was provided by young musicians and street dancers that added a unique zest to the proceedings. The Hilton Catering and Warsaw Hall venue were put to brilliant use and the icing on the cake at the end of such a memorable event was the news that over 28,500 złotys had been raised for the Vide Supra Foundation. BPPC was very proud to be the ■ main sponsor of the event.

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Chamber of Commerce News continued from page 17

Aviation Valley Expo a success in Poland and abroad A delegation of almost 20 persons representing the Quebec aviation technology and manufacturing cluster was present in Poland 7-11 May. The group's itinerary included the Rzeszów Aviation Valley Expo on 10 May as well as meetings with potential local partners. Companies in the Quebec delegation were Altitude Aerospace, CEL Aerospace Test Equipment, ICAM Technologies, Netur and Plafolift. "Concrete orders have already resulted for some of our Aviation Valley members indicating our success with this event," said Andrzej Rybka, Executive Director of the Aviation Valley Association.

Prime Minister Tusk visits KGHM mine in Sudbury Ontario Prime Minister Tusk toured Canada on an official three day visit. He met with Canadian Prime Minister Stephen Harper and confirmed intensified cooperation together on energy development including unconventional, nuclear and renewable energy sources and low-emission technologies. Also discussed during the official meetings were double taxation improvements and other initiatives to promote bilateral trade between the two countries.

Included in Prime Minister Tusk's itinerary was a stop at one of KGHM's recently acquired mines in Sudbury, Ontario, as well as a visit to Wilno, the site of Canada's first Polish settlement established in 1858.

Talisman Energy third exploration well in progress Talisman Energy holds three concessions in the Baltic Basin in Poland for shale gas exploration activity, comprising 627,130 gross acres. The company is currently drilling its third exploration well, at the Szymkowo-1 location on the Szczawno concession.

Talisman hopes to build a more accurate and detailed geological model of the Baltic Basin, which will allow identification of areas with the highest gas prospects.

In the course of 2012, the company plans to identify future drilling locations and to prepare them for potential activity in later years. This preparation includes detailed environmental studies.

Bombardier delivers first Q400 NextGen plane to Eurolot In a ceremony attended by Prime Minister Tusk and other invited guests at Warsaw’s Chopin airport, Bombardier Aerospace and Eurolot presented the first of eight stateof-the-art turboprops to serve Eurolot's passengers on domestic and international flights. "The Q400 NextGen aircraft is fast, quiet and comfortable. Thanks to this investment, we will have one of the most modern fleets in Europe. I am sure that passengers will very quickly appreciate the advantages of the new machine," said Mariusz Dąbrowski, President of Eurolot S.A.

PCCC welcomes new members PCCC are proud to introduce a new patron and new members of the chamber. This growth is a reflection of the desire of both Polish and Canadian companies to seek and capitalize on opportunities for mutual development.

KGHM is the PCCC’s newest patron and CEC

Government Relations, Chevron Polska and Summa Linguae are new members.

Canada Day Picnic The annual Canada Day Picnic will take place in Warsaw on Sunday, 1 July to celebrate Canada's 145th birthday. Contact e.gricuk@pccc.pl for further details.

Spain (PHIG) Family Picnic of Polish - Spanish Chamber of Commerce at Bemowo Airport.

The Polish-Spanish celebrated its first family Picnic - under the Honorary Patronage of the Mayor of Warsaw and the Patronage of the Mayor of Bemowo Mr.Jarosław Dąbrowski – with more than 800 guests. The company Heliseco Sp z o.o. which introduces an offer of “air taxis”, came to the meeting on their own helicopters. To amuse the children, there were a possibility to visit the helicopters from the inside. Sixty lottery winners participated in the helicopter flight over the airport.

Guests tasted Spanish cuisine, a typical Spanish paella, and tested member companies products, such as Iberian ham, wine and olive oil.

India (Indo Polish Chamber) Ambassador Monika Kapil Mohta hosted a summer garden party at India House to celebrate the treasured fruit of India, the mango. The Ambassador welcomed a range of small and large company executives, including executives in charge of the new launch in Poland of Tata’s new car Nano.

JJ Singh of the Indo Polish Chamber also spoke about recent initiatives between ■ Poland and India.

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July 2012

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Events

„Fashion Loves Football” Warsaw’s National Opera was host to the gala „Fashion Loves Fooball”, on the night of the Poland-Portugal match. Stars such as Alicja Bachleda-Curuś, Edyta Herbuś, Natasza Urbańska, Joanna Majstrzak and Magda Schejbal packed in for the match, mingling and fashion show. BizPoland Magazine was a media partner for the ■ event.

Stars at Playboy’s 20th year Anniversary Playboy’s 20th anniversary gala was a starstudded fest, filled with celebrities, models and VIP guests. Footballers Wojciech Szczęsny and Robert Lewandowski came with their girlfriends, and other stars included Sylwia Gliwa, Marina, Grzegorz Markowski and Magda Mołek.

The event was sponsored by Lexus and featured a Victoria’s Secret-style fashion show.

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2012 July

Events

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65th Cannes Film Festival – Poland represented at the Second Annual Polish Gala – “Excellent Polish Night”

The second edition of Gala Night - Poland “Polish Excellent Night”, held 23 May in Cannes, was organized

by Marius Pujszo along with Excellent Events.

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The Gala took place in the prestigious and elegant Carlton InterContinental at the 65th Cannes Film Festival, attended by over 800 people from around the world of movies and show business. Attendees at the gala included: Michel Adam founder of FashionTV), Milos Stehlik, Dean Bentley, Craig Smith, Rosana Golden, Michael Strauss, Tarak Ben Ammar, Donal C. Bailey, Alessandro Traversi, Tanguy Roelandts, Ralpho Borgos, Elizabeth de Beauregard, Gregoire Merlin,

July 2012

www.bizpoland.pl

Events Peter Knez, Cedric Bouchard, Francis Lapp, Ofer Nimrodi, Jerome Paillard, Igor Koniukow. Polish personalities included former tennis star Wojciech Fibak, Victor Markowicz, Katarzyna Glinka, Dariusz Michalczewski, Olivier Janiak, Piotr Wozniacki, Marcin Bortkiewicz, Jacek Borcuch, Margaret Zajączkowska, Dariusz Gajewski, Marcin Wrona, and Maciej Kaszycki. Polish film producers and distributors also attended.

Gala “Excellent Polish Night” was MC’d by actress Agata Załęcką, accompanied by a host of the evening - Mariusz Pujszo.

Guests enjoyed a rich artistic program, Mezzo-soprano Alice Eely, a singer residing in Poland - Nick Sinckler and Fashion TV star - Anne J. as well as some very attractive fashion shows. Sylwia Romaniuk,

Aneta Larysa Knap presented folklore clothing, and shoes used in the show Wojas. On the catwalk models appeared in the creations of the famous French designer Ylana Anoufy. Fashion show was honored with an unusual chocolate dress, designed by Ben Puyricard Brass. The Gala featured an animated mannequins’ installation by Katarzyna Czajka.

A notable distinction was the main sponsor of the Gala – the European Centre for Compensation. The Gala “Polish Excellent Nights” - held each year in Cannes - is to promote Poland and Polish culture and art.

The aim is to present the country’s best side, and to emphasize fashion in Poland.

Based on the huge turnout am ong foreign guests, it seems that Poland seems to be in ■ fashion.

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2012 July