January 18, 2017 / 2:27 PM / a year ago

Exclusive - EDF to start talks to sell Polish power plants to local consortium: sources

WARSAW/PARIS (Reuters) - French power group EDF (EDF.PA) has agreed to talks with a consortium of Polish state-run utilities about selling its local power plants after Poland blocked a sale to foreign investors, sources familiar with the situation said.

In December the Polish government prevented EDF from selling the plants to two private investors - Australia’s IFM Investors and Czech utility EPH, citing concerns for the long- term security of energy supplies.

On Wednesday EDF’s Polish subsidiary Kogeneracja said that EDF had formally ended the exclusive talks with IFM.

Poland’s ruling conservative Law and Justice party (PiS) has said it wants the country to rely on its own energy resources or at least not to be too dependent on foreign ownership. It has already sought to reduce its reliance on gas supplies from Russia.

Last month state-run utility Enea ENAE.WA agreed to buy the coal-fired power plant operator Polaniec from Engie, another French energy group. (ENGIE.PA).

EDF put its heat and electricity cogeneration plants up for sale at the start of last year, along with its 1.8 gigawatt capacity coal-fired power plant at Rybnik in southern Poland.

The cogeneration plants have a 15 percent share of the heating market in Poland while the Rybnik plant supplies about 7 percent of the country’s electricity needs.

In October the French firm entered exclusive talks with IFM over the heating plants and with EPH for the sale of the Rybnik plant.

A consortium of Polish state-run utilities PGE PGE.WA, Enea ENAE.WA, Energa ENGP.WA and PGNiG (PGN.WA) also submitted a joint bid for the assets and two sources familiar with the situation said EDF has now agreed to discuss a possible sale to the consortium.

“They have not agreed to sell yet, just to talk,” one of the sources said.

    EDF expects the consortium to offer at least as much as EPH and IFM were ready to pay for the assets, the other source said. According to local media EPH and IFM had offered a total of 1.5 to 2 billion zlotys ($366-488 million).

    EDF and PGE declined to comment. No one at Poland’s energy ministry was immediately available to comment.

    Several sources familiar with the matter said a final decision on a sale could be taken at a government level as part of a wider deal between Poland and France, whose relations are strained after Poland walked away from a preliminary deal to buy Airbus’s (AIR.PA) Caracal helicopters for 13.5 billion zlotys.

    However, EPH remains keen to buy the Rybnik plant, which is supplied with coal from its own mine, and is looking for ways to rejoin the sales process, one of the sources said.

    ($1 = 4.0976 zlotys)

    Addional reporting and writing by Agnieszka Barteczko; Editing by Greg Mahlich

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