RESTRICTED
WORLD TRADE G/STR/N/1/POL
5October 1995
ORGANIZATION(95-2951)
Original: English
STATE TRADING
Notification Pursuant toArticle XVII:4(a) oftheGATT 1994 and
Paragraph 1oftheUnderstanding ontheInterpretation ofArticle XVII
POLAND
Thefollowing communication, dated 21September 1995, hasbeenreceived fromthePermanent
Mission ofPoland.
_______________
I. Enumeration ofstatetrading enterprises
TheGovernment ofPoland wishes tonotify thefunctioning ofthefollowing enterprises, having
some features ofstatetrading entities within themeaning ofGATT Article XVII:
1. Agricultural Market Agency (AMA: Agencja Rynku Rolnego);
2. Polish OilandGasCompany (POGC: Polskie Górnictwo Naftowe iGazownictwo);
3. Polish Power GridCompany (PPGC: Polskie Sieci Elektroenergetyczne).
1. AGRICULTURAL MARKETING AGENCY: AMA
II. Reasons andpurpose forintroducing andmaintaining statetrading enterprises
Agricultural Market Agency (AMA: Agencja Rynku Rolnego) isapublic agency, which has
some features ofastatetrading entity within themeaning ofGATT Article XVII. TheAgency, created
inJune1990, isresponsible forintervention inthedomestic market foragricultural commodities in
ordertoencouragemorestablesupply/demandrelationshipsandconsequentlybringaboutgreaterstability
andpredictability ofprices. Indischarging itsstatutory functions, theAgency mayengage inpurchases,
salesandstock management. Itmayalsoextend credit guarantees todomestic producers andprocessors
offarmcommodities.
AMA 'sprincipal activities arefinanced through annual budgetary authorizations granted by
theParliament. Notwithstanding thefactthatthefinancing isrelatively modest andthatitsinflation-
adjusted value isdeclining, suchGovernment funding isnotavailable toother operators inthemarket.
Therefore itappears torepresent aspecial privilege within themeaning ofArticle XVII oftheGeneral
Agreement andmaythusqualify under thedisciplines provided forinthatArticle. Forthisreason
theGovernment ofPoland hasdecided tosubmit thepresent notification.
TheAMA wascreated on7June1990(Journal ofLaws, 1990, No.39,Item223). Inaddition
toitsprincipal functions indicated above, AMA conducts market research andanalysis andassists the
Government inelaboration ofpolicy guidelines fortheagricultural sector.G/STR/N/1/POL
Page2
Themain purpose ofAMA 'sactivities istolimitexcessive agricultural price fluctuations so
astoprovide domestic producers withmoresecurity intheirdecisions related toinvestment, production
andmarketing inthepresent free-market environment prevailing inPoland.
Theprincipal commodities dealtwithbytheAMA arethefollowing:
- wheat andrye;
- porkmeat;
- butter andskimmed milkpowder;
- sugar.
Occasional andrelatively small-scale operations involve alsopotato starch.
III. Description ofthefunctioning oftheAgency
There areseveral forms oftheAMA operations:
1. Forexample, inthecaseofcereals, theAgency actstoprevent domestic prices from falling
below theminimum reference price. Tothisend,theAMA conducts purchases andsalesofcereals
byauthorized state-owned andprivate agents. During theperiods ofincreased domestic supply, when
domesticpriceisfallingbelowtheinterventiontriggerprice,theAgencyundertakespurchasesofcereals.
Such stocks aresubsequently released ontothemarket intheperiods ofupward price movements.
Asimilar pattern isessentially followed asregards other principal commodities.
2. TheAgency provides upto45percentadvance payments toalimited number oflarge wheat
producers forkeeping theircropoffthemarket. These contracts areusually signed for6-7months.
3. TheAMA alsoextends credit guarantees tothose private andstate-owned operators whoare
engaged instock-building ofselected agricultural products.
Thestatebudget disbursements (inPolish zloty afterdenomination) forthewhole activity of
AMA totalled in:
1991: Zl187.7 million (about US$175 million ataverage 1991 exchange rates)
1992: Zl175.6 million (about US$128 million ataverage 1992 exchange rates)
1993: Zl190.7 million (about US$105 million ataverage 1993 exchange rates)
1994: Zl259.0 million (about US$115 million ataverage 1994 exchange rates)
andisestimated toreach in1995 thelevelofZl241.3 million.
Adecision whether toexport orimport isbased oncommodity market-equilibrium analysis.
In1991, duetogoodcrops ofcereals andresulting stock-building, partofthesurpluses wereexported
abroad atprevailing world prices. In1992/93, because ofsevere drought conditions inPoland, the
AMA engaged inimports ofcereals.
Itshould bestressed thatAMA doesnotdirectly conduct foreign trade operations ofitsown.
Allsuchdeals aremade onitsbehalf bytrading firms. Foreign trade operations undertaken onbehalf
oftheAgency conform tostandard commercial terms, conditions andpractices, including price, profit
margins, quality, availability, marketability andother regulations ofcommerce. Consequently, other
traders remain freetoexport andimport oncompetitive terms andunder normal market conditions
andtheirrights inthisrespect arenotaffected byAMA 'sactivities. Innoneoftheproducts traded
doestheAgency havemonopolistic orexclusive position. Thisapplies alsototheadministration ofG/STR/N/1/POL
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quantitative trade measures, including access topreferential import quotas which areopen forall
registered companies onthefirst-come first-served basis.
IV. Statistical information
Themainoperations oftheAMA intheperiod of1990-1994 wereconcentrated inthefollowing
commodity markets:
Table 1
Main operations oftheAMA in1990-94
(Thousand tons)
Years Commodities Production Total
exportsAMA 's
exportsTotal
importsAMA 's
imports
1990/91
1991/92
1992/93
1993/94
1994/95Cereals22,971
27,772
19,928
23,368
21,734480
1,885
93
38
21330
970
-
-
-768
330
3,183
804
1,5001-
-
900
1001
1990
1991
1992
1993
1994Sugar1,971
1,636
1,468
1,982
1,444343
332
139
112
184224
320
35
-
-11
-
46
15-
-
-
-
-
1990
1991
1992
1993
1994Potato starch146
59
62
76
43141.6
51.8
15.4
12.1
14.815
43
15
6
88.3
4.0
58.1
37.3
20.9-
-
-
-
-
1990
1991
1992
1993
1994Porkmeat21,841
2,011
2,069
1,975
1,747149
32
20
20
33-
0.5
-
-
-32
72
44
55
115-
-
-
-
-
1990
1991
1992
1993
1994Butter272
192
155
146
11730.0
5.4
1.3
18.5
8.0-
-
1.3
4.7
4.94.2
4.9
38.2
19.7
3.0-
4.1
4.8
-
-
1990
1991
1992
1993
1994Skimmed
milkpowder174
153
139
156
11371.5
85.0
122.8
125.3
97.0-
-
10.5
10.7
21.5-
2.6
2.4
2.2
3.7-
-
-
-
-
1 Estimates. 2 Foreign trade includes offalandprocessed products.G/STR/N/1/POL
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2. POLISH OILAND GAS COMPANY (POGC)
I. Reasons andpurpose forintroducing andmaintaining statetrading enterprises
Thecurrent organizational structure ofthePolish OilandGasCompany (POGC) asapublic
utility wasestablished on1September 1982, byvirtue ofArticle 6.1oftheState Enterprise Lawof
25September 1981, applicable tostateowned entities having particular significance forthenational
economy.
POGCasapublicutilitywasestablishedbytheMinistryofIndustryandTradewiththefollowing
description ofstatutory activities: "...continuous, uninterrupted supply ofgaseous fuelsforindustrial
andpublic use,from domestic andforeign sources".
POGC operates within fullproduction cycle, including feasibility studies ofhydrocarbons '
resources, exploration, fielddevelopment andoilandgasproduction. Withrespect tonatural gasPOGC
isalsoactive inimports, transmission anddistribution ofgastoindustrial andhousehold consumers.
TheCompany consists of46enterprises (including headquarters).
POGC, asanoperator ofthenational energy sub-system, hasplayed acrucial roleinproviding
continuous gassupplies fromdomestic sources andimports toindustrial, commercial andhousehold
consumers.
II. Description offunctioning ofenterprise
POGC imports high-methane natural gasfrom sources situated EastofPoland, through the
gastransmission system. Sofar,supplies arebased onshort-term agreements, most ofthem being
oneyearcontracts. Firstlong-term agreement fortwenty years iscurrently negotiated. POGC, as
owner andoperator ofthePolish gassystem, isthesoleimporter ofhighmethane natural gas.
ThePOGC hasalsoproduced natural gasfrom domestic fields, inaccordance withalicence
issued bytheMinistry ofEnvironmental Protection andNatural Resources.
POGC, which owns thePolish gasnetwork, distributes thisfueltoclients intheentire territory
ofPoland. TheCompany reports onitsactivities totheMinistry ofIndustry andTrade. Thewholesale
prices ofgasareregulated bytheMinistry ofFinance.
TheCompany helps toachieve some objectives within thedomain ofpublic social policy, such
asforexample subsidized regional gasification programmes.
III. Statistical information
Economic performance ofPOGC/year 1992 1993 1994
Total sales(Zlbillion1) 18,009 23,377 27,377
-resulting from gaseous fuelsales(Zlbillion) 14,529 19,534 24,716
Gassales(million cubic metres) 8,809 8,578 8,783
Gasproduction (million cubic metres) 2,935 3,790 3,720
Gasimports (million cubic metres) 6,247 5,486 5,505G/STR/N/1/POL
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Economic performance ofPOGC/year 1992 1993 1994
-imports from Russian Federation 6,224 5,460 5,473
-imports from other countries 3 26 27
Gasexports (million cubic metres) 3 16 25
Number ofgasconsumers (thousand) 6,702 6,227 6,358
Number oftowns supplied withgas 3,200 3,250 3,300
1 Average exchange rates ofPolish zloty (before denomination) tooneUS$were as
follows: 1992: 13,600 Zl/$; 1993: 18,100 Zl/$; 1994: 22,600 Zl/$.
3. POLISH POWER GRID COMPANY (PPGC)
I. Reasons andpurpose forintroducing andmaintaining statetrading enterprises
Themajor responsibility ofPPGC istodispatch electric power within thenational power system
inorder toensure continuous supply andreliable service, while keeping thecostsataminimum level.
Thisfunction involves improvements intheoperation ofthenational power system inorder toimprove
generation andtransmission performance andtoachieve international quality standards inelectricity
supplies toconsumers.
PPGC isalsoresponsible forforecasting andinitiation ofdevelopment ofthenational power
system andforresearch activities. Themajor taskconsists ofpreparation ofanintegrated system
development plan, which relates tosupply anddemand with dueconsideration toreduction of
environmental risksassociated withthepower industry.
II. Description offunctioning ofenterprise
PPGC isresponsible forelectricity transmission viaextra-high grid,toensure forallcustomers
equal conditions ofaccess tothetransmission system. Thistaskincludes operation, maintenance and
development ofthenetwork inorder tosecure efficient andreliable operation ofthenational power
system.
Thecompany playsamajor roleindeveloping theelectricity market inPoland. PPGC purchases
electricity fromgenerators andsellsittodistribution companies. Inaddition PPGC imports andexports
electricity.
Distributors maypurchase electricity directly fromindustrial power plants andfromsmall hydro
power station plants. Thissegment ofthemarket isfullyliberalized andiseffectively outside PPGC 's
control. Electricity generating facilities mayalsosellelectricity directly todistributors forsupplies
tolarge localindustrial customers.
Trade inelectricity issubject toagreement between electricity producers, PPGC anddistribution
companies andisbased onrules ofthemarket.
Thetariffs forendusers areuniform forthewhole country andareregulated bytheMinistry
ofFinance. Inrecent years theyhavebeenincreased several times (twice ayearsince 1993) toadjust
them toactual factor costandtoinflation rates.G/STR/N/1/POL
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PPGC imports andexports electricity onthebasisofspot,short-term andlong-term contracts.
Export prices correspond normally tofreeEuropean energy prices andarefreeofanyadditional charges.
Thepriceofenergy imported toPoland issubject to5percentimport duty, 5percentimport surcharge
and7percentofvalue added tax(VAT).
Polish andforeign companies arefreetoengage intrade inelectricity within thetechnical
capacities oftheexisting power network. Inaddition tocontractual exchange ofenergy PPGC may
linkupwithenergy systems across theboard toparticipate inmanagement ofreserves, peakdemand
supplies, inter-system power transit services, auxiliary services etc.
TheconnectionofthePolishpowersystemtoUCPTEwhichgroupspowersystemsofamajority
ofWestern European countries isanimportant steptowards future integration ofPoland withthe
European Communities. Theintegration ofpower systems isoneofthecrucial objectives ofthePPGC.
III. Statistical information
Economic performance ofPPGC/year
(alldatainGWh)1992 1993 1994 1sthalf
of1995
Foreign trade inelectricity
-Imports 168 125 0 0
-Exports 3,984 2,634 2,491 1,284
Gross production ofelectricity 132,703 133,663 135,187 69,927
-Industrial generators only 8,150 8,525 8,289 4,368
Direct salesbygenerators tothe
customers- 433 1,033 555
Electricity bought byPPGC from
generators109,951 110,558 111,086 57,394
Electricity bought bydistributors from
PPGC105,233 107,508 106,569 55,333
Electricity bought bydistributors from
other sources2,357 2,018 2,152 1,055