France's EDF Suez quits Polish power firm race: union

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"I have received the information that EDF has pulled out of the negotiations, because it was unable to accept the conditions set by the treasury ministry," Kazimierz Grajcarek, head of the energy-sector chapter of the Polish union Solidarity, told AFP.

He did not elaborate.

The treasury ministry declined to confirm the news, and no comment could be obtained immediately from EDF.

On Thursday, Poland's Economy Minister Waldemar Pawlak had said he opposed the sale of Enea to a foreign buyer.

"The Polish government can run its energy firms just as well as the French government," Pawlak, who is also deputy prime minister, said in a statement.

"If we can't get a good bid for Enea, we'd be better off leaving it in the hands of the treasury," he added.

In December, the treasury granted EDF exclusive rights to negotiate the purchase of the controlling stake in Enea, which ranks third on Poland's energy market.

Enea's privatisation has proven a complex saga.

The treasury attempted to sell it in 2009 but German power giant RWE withdrew its bid after having been the only candidate.

At the time, RWE said it had decided to drop its non-binding offer because it had decided the deal fell short of market expectations.

The treasury relaunched the process, with EDF, fellow-French group GDF Suez, Poland's Kulczyk Holding and the Czech Republic's EP Holding all stepping into the ring.

EDF pulled out out last October, arguing that it did not want to up its earlier offer, and Warsaw also nixed GDF Suez's bid.

In November, however, GDF Suez was invited back to the table in parallel with Kulczyk Holding, before talks fizzled out and EDF stepped in again.

On Thursday, Polish news agency PAP quoted a Kulczyk Holding spokeswoman as saying the group was still interested in Enea.

The treasury controls 60.43 per cent of Enea, after having floated a 16.05 per cent holding on the Warsaw Stock Exchange in 2010.

Swedish energy group Vattenfall owns 18.7 per cent, bought in 2008.

Enea claims 16 per cent of the country's power market, covering 2.3 million homes over a fifth of the territory of Poland, a nation of 38 million people.

The Enea sale is expected to make the state between 4.6 and 6.0 billion zloty (1.14-1.48 billion euros, 1.6-$2.1 billion).

Polish unions have contested plans to sell Enea to EDF on the grounds that the latter is controlled by the French state.

They argue that with EDF and GDF Suez already having investment in other parts of the Polish power sector, an Enea takeover would give France too much clout here.