“Purges and decision-making paralysis” have pummelled profits of state-owned enterprises, with numbers dropping PLN 7.9 billion (€1.8 billion) versus a year ago, writes news portal wpolityce.pl.
The site goes on to describe how government-friendly media have been cheering PM Donald Tusk’s personnel purges based on whether or not an employee was close to the previous boards and management (already all dismissed) under the former Law and Justice (PiS) rule.
Energy giant Orlen, for example, has already fired 450 people with the search for employees in any way connected with PiS still ongoing. The “witch hunts” have led to decision-making paralysis, with negative implications for future growth.
They have also involved some unfortunate endings. In one incident reported last spring, a technical director responsible for refinery and petrochemical production at Orlen had come under heavy pressure to criticize his predecessors and undermine the company’s merger with Lotos, a merger he was heavily involved with. He ultimately suffered a heart attack and died.
Employees unofficially reported that:
Orlen has become one big investigative, prosecutorial and auditing commission. The company is paralyzed, practically no business decisions are being made, foreign contractors are calling and asking what is going on, and no one has any answers. Everything is subordinated to ‘getting rid of Obajtek’ and punishing his people for the successful merger with Lotos.
No clear reasoning has come out regarding the issue with Lotos, which per last year’s numbers had been seen as a success.
In terms of the actual business impact of the current government’s strategy, for the first quarter of 2023, 19 state-owned companies present on the Warsaw Stock Exchange reported earnings that were 42 percent lower than in the same period last year. For comparison, the 19 largest non-state companies present on the exchange increased their profits by almost PLN 1 billion (€230 million) to PLN 6.4 billion (€1.5 billion) in the same period.
For the Orlen Group alone, Q1 revenues reported in May fell nearly 30 percent from PLN 115.8 billion (€27 billion) to PLN 82.3 billion (€19.2 billion) for the same period in 2023, and net profit fell more than 70 percent from PLN 9.5 billion (€2.2 billion) to PLN 2.8 billion (€650 million).
The news sank Orlen shares by 10 percent at the time. Some noted that the company had to deal with frozen electricity and gas prices until June 30 of this year, but this was the situation in the previous year as well.
Also at the end of May, the Ministry of Finance announced that tax revenues are significantly lower than planned and if nothing changes they could be facing a shortage of some PLN 35 billion (€8.2 billion) for VAT and around PLN 25 billion (€5.8 billion) for PIT. With a planned deficit of PLN 184 billion (€43 billion), wpolityce warns, this would be a budget disaster.
