EIB in Talks to Lend $500 mln to PGE

The European Investment Bank (EIB) is in advanced talks to lend more than 2 billion zlotys ($526 million) to Poland's biggest power producer PGE  to help finance its investments, the head of the EIB's Warsaw office told Reuters.

PGE plans to spend around 50 billion zlotys by 2020 on new capacity and upgrading existing power generation capabilities.

The EIB, which is owned by the European Union and represents the interests of member states including Poland, provided 1.7 billion zlotys of loans to the country's power producers from 2010 to 2014.

"We are ready to maintain and even increase the loan volumes for the energy sector in Poland. Looking at the power firms investment programs it seems that the trend will be continued," Piotr Michalowski told Reuters.

"We are having very advanced talks on financing investment with PGE. We are talking about a total financing amount exceeding 2 billion zlotys," he said.

Michalowski said the talks related to two projects, one in electricity distribution, and another in gas-based power generation.

The EIB is also considering a loan of around 190 million euros ($209 million) for Poland's second-biggest power firm Tauron to help its 1.5 billion zlotys project to build a new gas-fuelled unit at its Lagisza power plant.

"These are initial talks, I assume we will finish them this year," Michalowski said.

The EIB, whose priority is supporting renewable sources of energy, hopes Poland's new law regulating support for renewables -- expected to come into force at the start of next year -- will lead to new investments in this area.

"If, in accordance with the latest draft, it turns out that the projects will have support granted for the next 15 years, then it will for sure make it easier for us to decide on financing new investment," Michalowski said.

The EIB, which last year provided financing for Polish gas grid operator to construct part of the so-called north-south gas corridor, is also ready to help with other gas infrastructure projects in the country, he added.

Overall, Michalowski said the EIB planned to keep its volume of loans in Poland this year at a minimum of 5.5 billion euros.

(By Agnieszka Barteczko and Anna Koper, Writing by Agnieszka Barteczko)