Deconsolidation of the Azoty Group? The Ministry of State Assets took a stand

Luc Williams

Deputy Minister of State Assets, Jacek Bartmiński, said in an interview with PAP that the new management of Grupa Azoty will be obliged to prepare projects for further actions. He pointed out that it was a “recovery plan because the results of the entire group could be better.”

“We are waiting for the opening report of the new management board of Grupa Azoty”

When asked whether the current shape of the Azoty Group should be maintained, the deputy minister replied that, in his opinion, there are no market indications as to the possible deconsolidation of the Azoty Group. “It seems that this action would go against certain global trends, which are to consolidate rather than divide businesses,” he said.

“So far, consolidation (of the PAP group) has been planned and the announcements (…) of the acting president show that this consolidation will continue. We will wait for the formation of the new management board and I think that this management board will quickly present some projections of further actions” – added.

He noted, however, that the State Treasury is one of many owners of Grupa Azoty. “Our task is to monitor the situation. We expect results to improve and be optimized. We are not authorized to present our tips or recommendations to the management board or the supervisory board,” Bartmiński noted. The State Treasury owns 33 percent. shares of Grupa Azoty.

PAP also asked whether there are any threats to Grupa Azoty that would require an urgent response from the State Treasury as its shareholder in connection with the situation of Grupa Azoty Police and Azoty Puławy.

“We are waiting for the opening report of the new management board of Grupa Azoty, perhaps for some investigative reports regarding polyolefins – as well as – the famous, last coal-fired power plant in Europe, in Puławy. Then we will take some actions, but these will be ownership actions, we have no authority to issuing (…) decisions to a company that is a listed company,” Bartmiński emphasized.

In May 2023, the general meeting of shareholders of Azoty Puławy from Grupa Azoty agreed to increase the budget of the coal block construction project in Puławy from PLN 1.2 billion to PLN 1.230 billion and extend the implementation period by 223 days.

The company's management board then explained that the reason for the application was the claims of the company's partner in the project – the general contractor Polimex Mostostal – to change the contract in terms of its value and completion date. Ultimately, the investment is scheduled to be completed in October 2024.

The largest industrial plants producing propylene and polypropylene

Polimery Police, in turn, is to be the largest industrial plant producing propylene and polypropylene (polyolefins – PAP) in Central and Eastern Europe.

The investment is being carried out by Grupa Azoty Polyolefins, a special purpose vehicle of Grupa Azoty. It is intended to enable the diversification of the Azoty Group's business activities, as well as to have a positive impact on Poland's position in the plastics segment and to strengthen the country's energy and raw material independence.

Grupa Azoty informed that on February 6 this year Hyundai Engineering, the general contractor of the Polimery Police project, submitted another proposal to amend the EPC contract. “It concerns an increase in the remuneration for the general contractor by the amount of EUR 5,841,629, which, according to the general contractor, is the sum of interest for late payments due for achieving the milestones specified in the EPC contract,” Grupa Azoty reported at the time. “According to the content of the general contractor's proposal, if the subsidiary (Grupa Azoty Polyolefins – PAP) rejects the change proposal, the general contractor calls on the subsidiary to pay the amount of EUR 5,841,629 as interest or compensation for breach of the provisions of the EPC Agreement, within 14 days of date of receipt of this letter,” Azoty said then.

On February 9, Grupa Azoty announced in a press release that analyzes showed that the impairment loss of PLN 300 million was justified due to the impairment of the assets of GA Polyolefins, which is implementing the Polimery Police project. The reason is delays and the prospects of the polypropylene market.

February 29 this year Grupa Azoty Polyolefins announced that it had signed an agreement amending the stabilization agreement of December 15, 2023, regarding the financing of the Polimery Police project. . This agreement was signed with 15 financing institutions. The parties agreed on the conditions under which banks will finance the project in the next period of validity of the stabilization agreement, i.e. until March 27 this year.

Grupa Azoty is the largest producer of fertilizers and chemicals in Poland and one of the key capital groups in the fertilizer and chemical industry in Europe. The group includes, among others: Grupa Azoty SA (parent company based in Tarnów), Grupa Azoty Zakłady Azotowe “Puławy” SA, Grupa Azoty Zakłady Chemiczne “Police” SA, Grupa Azoty Zakłady Azotowe Kędzierzyn SA The company reports that the total employment is approx. 15,000. employees. (PAP)

author: Anna Bytniewska


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