Page 11 - Sample PRO weekly report Poland

Poland’s PGNiG reportedly set to buy Fortum's gas infrastructure
no plans to cut defence spending, Tass reported at the time. The Kremlin is currently developing a modernisation programme for the defence industry for 2018-2025
The strong increase in spending within the region was in contrast to an increase in global military expenditure of just 0.4% to $1.686 trillion, equivalent to 2.2% of global GDP. This was still the first annual increase since 2011, when spending peaked at $1.699 trillion. Globally, the sharpest increase in spending was seen in Asia and Oceania, where five of the top 15 global spenders in 2016 – China, India, Japan, South Korea and Australia – are located.
“There are many ongoing tensions in the region: in the Korean Peninsula, between North Korea and South Korea; between China and Japan, over claims in the East China Sea; between China and several South East Asian countries, over claims in the South China Sea; between India and Pakistan; and between India and China,” the report said.
“Such tensions help governments to continue to justify the need to modernise their military capabilities, and to drive military spending upwards. On the other hand, economic growth in the region has generally continued, even if sometimes at a lower rate than in previous years, which makes it possible to increase military spending without increasing the military burden on the economy.”
Meanwhile, low oil prices also dragged down military spending in most oil exporting countries, with notable exceptions such as Russia and Iran. The largest declines in spending among oil exporters were seen in Venezuela (- 56%), South Sudan (-54%) and Azerbaijan (-36%), with a reduction also noted in Kazakhstan.
Spending also fell in Latin America and sub-Saharan Africa. A drop was also reported in the Middle East (as far as there is available data) but reductions of spending in Iraq and Saudi Arabia were offset by “substantial increases” in Iran and Kuwait.
Polish state-controlled gas utility PGNiG is finalising the details of a deal to buy the local gas distribution infrastructure of Finland's Fortum, local media reported on April 25.
The value of the transaction is around PLN200mn (€47.3mn), newspaper Puls Biznesu reported. PGNiG and Fortum declined to comment. The deal is just the latest in a push by the Polish government to increase its role in energy, amongst other sectors of the economy.
Warsaw insists on raising its control of the sector to ensure energy security. However, according to unconfirmed information, an unnamed European private equity fund could also be party to the deal.
The speculation on the deal has been making rounds for months. Fortum’s strategy assumes offloading distribution assets in order to focus on power and heat generation, as well as services. In recent years, Fortum has sold distribution networks in Sweden, Norway, and Finland.
The Finnish company is selling its distribution network in Poland just a year after having acquired it as part of a deal to take over local company Duon. PGNiG is looking to strengthen its distribution business in Poland. Distribution is regulated and therefore less risky than exploration and production.
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