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Poland Coal
In 1992 coal continued to play a central role in the
Polish
economy, both in support of domestic industry and as an
export
commodity. In 1990 about 90 percent of the country's
energy
production was based on hard coal and lignite. The two
largest
mines extracted over six million tons each in 1991, but
the
average mine produced between one million and three
million tons.
Compared with coal mines in Western Europe, Polish mining
was
quite inefficient because of isolation from technical
advances
made in the 1980s and, more recently, lack of investment
funds
for modernization.
Because the communist regimes ignored profitability in
establishing quantitative output targets, coal output was
expanded irrespective of costs, and inefficient mines were
heavily subsidized. At the same time, the extensive type
of
mineral exploitation called for by central planning caused
a very
high ratio of waste (about 24 percent of output) as well
as heavy
environmental damage. Under the new planning system, a
lower
annual output is expected, but production operations are
to be
justified by profitability.
At the end of the 1980s, some eighty-four shaft mines
and
four large open-cast lignite mines were in operation.
Plans for
the 1990s call for closing many of those mines. In 1991
annual
coal output declined from the 193 million tons mined in
1988 to
140 million tons, and output was expected to remain at the
lower
level in 1992. During the same period, extraction of
lignite
declined from 73 million tons to 69 million, with 70
million tons
the maximum annual output expected for the next few years.
In
1989 about 16 percent of Poland's coal and 19 percent of
its coke
were exported. In 1990 these shares increased to 19
percent and
26.6 percent, respectively, because a recession reduced
domestic
demand for coal.
The postcommunist governments abolished centralized
allocation of coal and partially liberalized prices. By
1992 a
relatively free coal market had been created, and
subsidies were
gradually reduced. This process also abolished the central
administrations for coal mining and for electricity
generation
that had ensured state monopoly of those industries and
perpetuated wasteful resource management. The reform
program made
both coal mines and power generation plants autonomous
state
enterprises fully competitive among themselves. To offset
the
loss of subsidies, price increases of as much as 13
percent were
contemplated, although the planned rise of 5 percent had
already
aroused strong objections from industrial customers. The
1991
economic restructuring program of the Bielecki government
envisaged establishment of ten independent and competing
coalmining companies, several wholesalers, and one export
agency.
Following the World Bank's advice, a holding company for
lignite
mines was also considered.
By the end of 1991, however, the Polish coal industry
was in
serious economic trouble. Fifty-six of sixty-seven mines
ended
1991 showing losses, and only seven showed profits
sufficient to
cover all obligations. In 1991 government subsidies
dropped from
their 1990 total of 9.1 billion zloty to 5.9 billion
zloty, but
individual mines still received as much as 2.2 billion.
Liquidation, already accomplished at six mines by 1992,
cost
between 0.6 and 1.5 billion zloty per mine, not counting
the
economic cost of added unemployment (coal mining in Poland
is
much more labor intensive than in the West). An
alternative
solution, combining individual mines into complexes, had
been
attempted in the 1970s efficiency campaign but did not
have the
expected impact. In mid-1992, mines and power plants had
large
coal surpluses that seemingly could not be alleviated by
domestic
consumption. At that point, the disparity between low
domestic
demand and continuing supply threatened to raise
unemployment by
forcing more mines to close.
Data as of October 1992
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