News round-up

27 July - 4 August 1997


Poland: PZU SA, the largest Polish insurer, estimates that compensation paid out for flood-related claims will amount to at least 486 million zlotys (US$141.3 million), according to PZU spokesperson Marek Maszek. This increase of 186 million zlotys on the initial estimate results mainly from claims for damage on the commercial entities that carry PZU policies. Despite not affecting liquidity, the compensation payments will certainly damage PZU's financial results and may delay privatisation of the company.

WARTA, the second largest Polish insurance company, expects flood claims totalling 160 million zlotys (US$46.51 million), according to company spokesperson Zbigniew Augustynowicz. Mr Augustynowicz emphasised that the company has nothing to fear from these compensation payments, as it is 80 per cent reinsured.


Albania: Professor Dr Rexhep Mejdani, the new President of Albania, approved his new cabinet on 25 July in Tirane. The cabinet will be headed by Prime Minister Fatos Nano.

Georgia: Members of the 'Friends of Georgia' group (US, Russia, France, Britain and Germany) met in Geneva last week with representatives of the Organisation for Security and Co-operation in Europe in an attempt to assist the UN in resolving the conflict in the province of Abkhaz, which forms a buffer zone between Georgia and Russia, and is currently occupied by Russian troops. Georgian President Eduard Shevardnadze recently visited Washington and the UN headquarters in New York to press for the deployment of an international force to replace the Russians, but appears to have made little headway. Renewed violence could jeopardise Georgia's recent economic recovery, and may delay plans to build a new oil pipeline across its territory.

Latvia: Following Friday's resignation of Latvian Prime Minister Andris Shkele, the Coalition Government agreed on Monday to appoint Economy Minister Guntar Krasts to the post. Mr Krasts, an economist and a member of the nationalist Fatherland and Freedom Party, is a supporter of Mr. Shkele's free market reforms.

Poland: Polish Government officials have confirmed that the Polish parliamentary elections due to take place on 21 September will go ahead as planned, despite the declared state of emergency due to recent flooding in the country.


Russia: Both Belarus and the Ukraine have agreed to pay nearly £300 million in overdue gas bills within days of having supplies interrupted by Russian gas company Gazprom, according to representatives of the company. Since the payment agreement was signed, gas supplies in both countries have returned to normal.

Poland: UK industrial group BOC has won a contract to construct and operate a £30 million air separation unit and liquefaction plant for Zaklady Azotowe Kedzierzyn in Poland. The new plant, to be constructed in mid-1999, will produce ammonia-based fertilisers, oxo-alcohols and adhesives, and will be the largest of its kind in the country.


Hungary: The Hungarian state is to sell its remaining 25 per cent stake in the National Savings and Commercial Bank (OTP), the country's largest commercial bank, through a private placement in September or October, with Schroeders as the international lead manager and Creditanstalt handling the domestic side. The sale is expected to raise about Ft45 billion (US$229 million). The state will retain a symbolic golden share in OTP for up to ten years.

Poland: Telekomunikacja Polska SA (TPSA), the state-owned Polish telecom company, is planning a 350 million zloty (US$10 million) commercial bond issue by the end of August, to be led by one of the biggest Polish Banks, Bank Handlowy, according to Cezary Stypulkowski, Bank Handlowy President. Capital raised from the issue will be invested in the forthcoming TPSA expansion, said TPSA President Jacek Gadomski.

Krakow is to be the second Polish town to receive a credit rating from Standard & Poor. The rating will be related to the city's plan to issue municipal bonds for placement on the international markets in 1998. According to City Treasurer Leslaw Fijal, Krakow will receive its rating before the bonds are issued. The first Polish city to receive a rating from Standard & Poor was Lodz, which received its rating earlier this year.

Poland's first credit rating agency, the Central European Rating Agency (CERA), established in 1996, will soon award its first rating to the Polish chemical company, EMA-Blachownia SA, according to CERA Vice President, Piotr Kowalski. No date has yet been set for the rating of the company, which is planning a 1.2 millon zloty (US$348,837) convertible bond issue.

Russia: Following controversy over the sale of telecommunications company Svyazinvest, the Russian Deputy Prime Minister Boris Namtsov said that the Government "would sell state properties honestly and at expensive, not giveaway, prices". He also reinforced the Kremlin's position that the entire stake of oil giant Roseneft will be sold. In a previous statement, the Government had expressed an intention to retain a controlling stake in the company.

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©1997 Kensington Publications Ltd