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    Press conference: Marcin Nowacki elected the EU’s head of the EU-Ukraine Civil Society Platform

    Posted on by Weronika Marzec

    Warsaw, 29th May 2023

     

    Press conference:
    Marcin Nowacki elected the EU’s head of the EU-Ukraine Civil Society Platform

     

    On 29th May 2023 at 1 pm, at the Polish seat of the European Parliament and the European Commission, a press conference was held during which Marcin Nowacki, Vice-President of the Union of Entrepreneurs and Employers, was elected head of EU-Ukraine Civil Society Platform (EU-Ukraine CSP) representing the European Union. The platform operates within the framework of the European Economic and Social Committee (EESC) in Brussels, which is an EU advisory body.

    At the conference, Cezary Kaźmierczak, President of the Union of Entrepreneurs and Employers, pointed out during his opening address that the European Economic and Social Committee is a platform for dialogue between employers, trade unions, NGOs, and politicians: “We are truly happy that a Pole has become the plenipotentiary for Ukrainian affairs, even more so a member of our organisation. Marcin Nowacki took on his new duties already at the beginning of the month.”

    “The EU-Ukraine Civil Society Platform is the foundation of institutional cooperation between social partners from EU member states and Ukraine. I have been elected for a term of 2.5 years, and I hope that we will soon begin the accession negotiation process. This is what will motivate me the most in the months to come. After the negotiations start, the Civil Society Platform will become the EU-Ukraine Joint Consultative Committee,” – said Marcin Nowacki, the Union’s VP.

    The EU-Ukraine CSP integrates social partners from the EU and Ukraine. The body aims to supervise the process of Ukraine’s integration with the EU and to integrate the business community and employees between the parties. As part of the undertaken activities, reviews of the process of adapting Ukraine to EU requirements and support in the field of Ukrainian business entering the EU market are held.

    The EESC is an EU advisory body with a specific role in the EU’s decision-making process. Before being processed by the European Parliament, each regulation is subject to an opinion process at the EESC. It consists of 329 representatives of employers’ organisations, trade unions, and NGOs from all Member States.

    ZPP’s comment: Poland – a good place for Ukrainian entrepreneurship

    Posted on by Weronika Marzec

    Warsaw, June 14, 2023

     

    ZPP’s comment: Poland – a good place for Ukrainian entrepreneurship

     

    • According to data from Info Credit, Ukrainians established 17,457 business activities in Poland in 2022.
    • Only from the beginning of 2023 up to May 29 (inclusive), 13,117 business activities run by Ukrainian citizens were registered in Poland.
    • Since the beginning of Russia’s armed aggression against Ukraine, Ukrainians have established the largest number of business activities in Mazovia and Lower Silesia.
    • As of early 2022, Ukrainians were most likely to locate their companies in Warsaw, Krakow and Wrocław.
    • The number of companies established by Ukrainians in Poland has been significantly influenced by the Special Act on assistance to Ukrainian citizens.

    Border Guard estimates show that 12 million Ukrainian refugees have crossed the border with Poland since the beginning of Russia’s armed aggression against Ukraine. In the period of February 24–28, 2022 alone, it was 355,000 people. Migration peaked in March 2022, when approx. 2 million Ukrainians entered Poland. Between April 2022 and the end of May 2023, Polish-Ukrainian border crossings were crossed by 584,000 people in February 2023 to as many as 781,000 people in August 2022. Obviously, not all of these people remained in Poland, but the vast majority nevertheless decided to settle in our country. A significant group are those who have taken up legal permanent gainful employment in Poland or decided to establish a business activity. According to estimates by the Ministry of the Interior and Administration, approx. 97 percent of Ukrainian refugees are women (most men are banned from crossing the state border).

    Business activity of Ukrainians in Poland in 2022

    The definite influx of Ukrainians into Poland has translated into a huge increase in the dynamics of Ukrainians starting businesses. Data from Info Credit shows that in 2022 Ukrainians established 17,457 business activities in Poland, of which 14,258 companies were active at the end of the calendar year. 1,191 business activities were deleted and 1,781 suspended.

    Ukrainians were most active in the Mazowieckie Voivodeship, where they established 4,256 companies last year. The second place was taken by the Dolnośląskie Voivodeship, where 2,673 Ukrainian businesses were established. The following voivodeships were ranked next: Małopolskie – 2,285 companies, Pomorskie – 1828, Wielkopolskie – 1,361, Zachodniopomorskie – 1,029, Śląskie – 979, Łódzkie – 687, Lubuskie – 520, Kujawsko-Pomorskie – 417, Podkarpackie – 357, Opolskie – 296, Warmińsko-Mazurskie – 118, Świętokrzyskie – 114 and Podlaskie 91.

    Ukrainians registered the largest number of companies in 2022 in Warsaw – 3,289. Many were also established in Krakow – 1,899, Wrocław – 1,873, Poznań – 840, Gdańsk – 835, Szczecin – 655 and Łódź – 484.

    Relatively constant over the years has been the group of major PKD codes indicated by Ukrainians within their business activities. Hairdressing and other beauty treatment led the way in 2022, with 2,144 indicated as the main PKD code. The second most frequently indicated type of activity was computer programming activities (1,995 companies), and the third was other building completion and finishing (1,243 companies). Significantly popular in 2022 were also (in parentheses the number of indications as the main PKD code): construction related to erection of residential and non-residential buildings (764), electrical installation (540), freight transport by road (533), mechanical working of metal elements (420), retail sale via mail order houses or via the Internet (383), restaurants and other eating places (376) and other specialized construction activities not elsewhere classified (372).

    Business activity of Ukrainian citizens in Poland in 2023

    A definite upturn in the establishment of companies by Ukrainian citizens came in 2023. Data from Info Credit shows that 13,117 such businesses were registered between January 1 and May 29, 2023 alone. Active during the indicated period remained 11,694 of them – 421 were suspended and 170 were deleted. There were 51 enterprises operating exclusively in the form of a company, and 3 with the end of the indicated period were waiting to start operations.

    The largest number of new business activities established by Ukrainian citizens between January 2023 and May 29, 2023 were registered in the Mazowieckie Voivodeship – 3,211, Dolnośląskie Voivodeship – 1,941 and Małopolskie Voivodeship – 1,793. The following voivodeships ranked next: Pomorskie – 1,285 companies, Wielkopolskie – 993 companies, Zachodniopomorskie and Śląskie – 772 companies, Lubuskie – 507, Łódzkie- 492, Kujawsko-Pomorskie – 333, Podkarpackie – 305, Lubelskie – 260, Opolskie – 182, Świętokrzyskie – 102, Warmińsko-Mazurskie – 98 and Podlaskie – 61.

    Also in 2023 (up to and including May 29), Ukrainians were eager to register their businesses within Poland’s largest metropolises. 2,500 companies were established in Warsaw, 1,549 in Krakow, 1,386 in Wrocław, 665 in Gdańsk, 591 in Poznań, 472 in Szczecin and 350 in Łódź.

    In the period from the beginning of 2023 to May 29, 2023 inclusive, the main PKD codes most frequently indicated by companies established by Ukrainian citizens were: computer programming activities (2,100 times), hairdressing and other beauty treatment (1,461), other building completion and finishing (817), construction related to erection of residential and non-residential buildings (549), freight transport by road (453), electrical installation (442), mechanical working of metal elements (365), restaurants and other eating places (335), retail sales via mail order houses or via the Internet (315) and other specialized construction activities not elsewhere classified (291).

    Poland is a natural migration destination for citizens from Ukraine plunged into war. Domestic legislation also favors the development of Ukrainian entrepreneurship in the Polish market. Of essential importance in this regard is the Special Act on assistance to Ukrainian citizens, which has contributed to a revival in the registration of sole proprietorships by Ukrainian men and women.

     

    See more: 14.06.2023 ZPP’s comment: Poland – a good place for Ukrainian entrepreneurship

     

    In order to ensure the development of SMR technology in Poland and Europe, we need fleet-oriented investments of regional coverage

    Posted on by Weronika Marzec

    Warsaw, 13 June 2023 

     

    In order to ensure the development of SMR technology in Poland and Europe, we need fleet-oriented investments of regional coverage

     

    That’s the conclusion of a discussion among industry experts, technology providers, investors and researchers who attended the “SMR – Modular Nuclear Energy for Business” conference on Monday, June 12, held in Warsaw by the Energy and Climate Forum of the Union of Entrepreneurs and Employers. PKN ORLEN was the Main Partner of the event, EDF was a Partner, and Honorary Patrons included three ministries – the Ministry of Climate and Environment, the Ministry of Development and Technology and the Ministry of State Assets, as well as the National Atomic Energy Agency, the National Center for Nuclear Research and the National Fund for Environmental Protection and Water Management.

    The event brought together both nuclear lawmakers, the regulator, several US and European SMR manufacturers, recipients declaring interest in small reactors of various capacities and nuclear experts, who sought to take prepare an inventory of the state of the art of modular nuclear reactors to date and outline the outlook for the development of such investments in our country and region.

    In the opinion of Adam Guibourgé-Czetwertyński, Undersecretary of State at the Ministry of Climate and Environment, the Polish nuclear special-purpose act and nuclear law are sufficient for SMR investments to be developed on their basis, with technology neutrality and a desire to streamline the processes involved in obtaining the necessary permits at the core of the national legislation. Nonetheless, seeing the growing interest in small nuclear reactors, work is currently underway at the ministry to detail regulations for smaller modular nuclear reactors. The minister also encouraged a concerted international effort to bring nuclear technologies from a background player to the front lines of energy transition efforts – as complementary solutions to RES and hydrogen investments.

    According to Kamila Król, Undersecretary of State at the Ministry of Development and Technology, small nuclear reactors have the potential to become a lever of the Polish economy in the coming decades. SMRs can be a remedy for the rising cost of CO2 allowances and ensure Poland has the right composition of the low-carbon energy mix on the one hand, and guarantee a stable and secure energy supply on the other.

    As noted by Jarosław Dybowski, Executive Director of Energy PKN ORLEN and Vice Chairman of the Board of ORLEN Synthos Green Energy: “We cannot think of nuclear reactors today as classically understood power plants, which in the past were only meant to provide electricity. The use of SMRs in domestic conditions is naturally the replacement of depleted coal-fired units, but the modular reactors will also work in the combined heat and power economy and find application in numerous industrial processes.” District heating and energy-intensive industries are identified as the main beneficiaries of SMR technologies, and the number of entities declaring interest in these solutions is growing.

    The main challenge appears to be not so much the technology of light-water nuclear reactors themselves, of which there are about 150 in operation worldwide and only their power and size need to be scaled up; it is the cost that may be a barrier. Experts agree that two aspects can help investors in this regard. On the one hand, suitable government guarantees and a refined financial model, so that involvement in SMRs for banks entails acceptable risks. On the other, the economies of scale brought about by a fleet-oriented investment campaign of regional range, which will reduce unit costs and build locally the competence, service facilities and structures necessary for the new sector.

    “After listening to the participants of the discussion, several recommendations come to mind, such as the involvement of Polish regulators in work on harmonizing nuclear regulations and standardizing certification of SMRs in Europe, the need to consider establishing a TSO (Technical Support Organization) within the structures of the National Center for Nuclear Research and, finally, opening a debate on the future of the nuclear energy in the EU taxonomy, which assumes support for nuclear investments only until 2045, at the European forum.” – concluded Jakub Bińkowski, Board Member of the Union of Entrepreneurs and Employers.

    The conference also touched upon many other aspects of SMR projects, such as safety considerations and the important role of the PPA, which will evaluate small nuclear on the same basis as full-scale nuclear investments. According to experts – despite the already clear support for nuclear in Poland – an extremely important aspect determining the success of SMR investments will be properly conducted communication due to the particular public perception of risk from nuclear facilities. As experts point out, there is no shortage of ideas for small nuclear reactors in the world today, as there are already about 80 projects at the “early design” stage, including also high-temperature reactors using other types of fuel and cooled by gas, HTRs (including a Polish one!) or nuclear batteries that can operate for 20 years without human intervention and the need for fuel supply. Another thread raised by the participants in the discussion was the possibility of involving Polish companies in the development of the European SMR sector, in which experts see significant potential given the pace of development of SMR projects in our country.

    The event was attended by over 150 participants. The Union of Entrepreneurs and Employers will soon make a full recording of the conference available on its YouTube channel.

    Link to the event page: https://zpp.net.pl/en/events/event/conference-smr-small-reactors-for-business-is-poland-the-smr-technology-incubator-in-europe/

     

    “Network fees” proposed by telecommunications operators – will consumers pay twice for infrastructure maintenance?

    Posted on by Weronika Marzec

    Warsaw, 15 May 2023

     

     

    “Network fees” proposed by telecommunications operators – will consumers pay twice for infrastructure maintenance?

     

    1. Recommendations

    Over the past months there has been an increased discussion regarding ETNO’s (European Telecommunications Network Operators’ Association – representing the biggest telecommunications companies) demands to charge content and application providers for the traffic that is generated by the use of their services. Telecoms believe that because of them they are being forced to bear the costs of infrastructure maintenance, and call content providers “stowaways” who do not contribute to the maintenance of European infrastructure. The truth, however, is quite different, and this is not a fight between telecoms and the big Internet giants, but a fight for the Internet as we know it. The concept of “fairshare payments,” as telecoms call them, is opposed by virtually all circles, except the largest Internet providers. Their introduction will certainly also be felt by Polish digital companies, which employ thousands of people and contribute greatly to the economy. 

    In this paper, we will present where the idea of introducing “fair share payments” came from and how it is argued. We will also present what effects the implementation of this solution will have on consumers and entrepreneurs, and we will present individual national circumstances.

    In view of the ongoing debate on the introduction of “fair share payments” we note the following:

    • Not even the telecoms themselves agree on the cost of handling Internet traffic. The Fédération Française des Télécoms presented an estimate according to which handling network traffic generates €2 billion in costs in France, or €27 for each resident of the country. That’s a third of the amount of €80 per EU resident calculated by ETNO, and it’s still significantly inflated.
    • The research indicates that South Korea is so far the only country that has responded to the concerns of telecoms and introduced the legal billing rule of Spending Party Network Pays (SPNP). Under the rules, Internet content and application providers have been required to pay fees to telecoms. The report’s conclusions are clear. All of these regulations have led to a reduction in the quality and variety of content on the Internet. It is also expected to increase costs for the end user of content and reduce investment in local infrastructure
    • Fair share payments can lead to a deterioration in the quality of online content offered by providers. Additional fees mean a reduction in budgets for creating quality services offered to consumers.
    • The introduction of additional fees will lead to a competitive imbalance in the telecom market itself favoring the largest players. They will lead in practice to the strengthening of oligopolies in the market.
    • Fair share payments are widely criticized by almost all circles except the largest telecoms. Experts point out that among the numerous disadvantages of this solution, the most noteworthy is the violation of the principle of Internet neutrality.
    • In Poland, the expansion of Internet infrastructure is carried out with massive public funding. This means that this purpose is financed by all taxpayers. One can point, among others, to the information contained in the “Broadband Access Plan for Poland,” according to which in the Digital Poland Operational Program for 2014-2020, out of the total funds amounting to 2.57 billion euros, over a billion was allocated to the expansion of broadband networks.

    In view of the above, we urge to reject the idea of introducing “fair share payments” within the European Union.

    1. Proposals to introduce so-called “fair share payments”.

    For nearly a year there has been a discussion on the idea of introducing so-called “fair share payments”. This idea was presented by Commissioner Vestager on May 2, 2022[1]. Unfortunately, all indications are that the European Commission is seriously considering the introduction of fair share payments for Internet content and application providers. The issue is being highlighted as a dispute between two big industries, Internet access providers (telecoms) and big Internet corporations. The issue has come to the fore through ETNO’sactivities , which is extensively lobbying for the introduction of fees for “extraordinary growth in Internet traffic that generates challenges for sustainable investment in the European network.” This position is supported among others by Deutsche Telecom, Orange, Telefonica and Telecom Italia, claiming that the six largest Internet content providers account for more than half of Internet traffic[2]. The argument, in a nutshell, is that large US corporations generate heavy network loads by offering their content, and this leads to the need for large infrastructure expenditures. This traffic is generated by the popularization of streaming, teleconferencing, remote learning, social media, and cloud services. Telecoms assume that since annual network maintenance in 2020 cost €52.5 billion, and service and application providers account for 60-70% of Internet traffic, they should pay €36 billion (€80 per EU resident) to telecoms. Moreover, this amount should increase every year due to the growth of network traffic[3].

    However, the telecoms’ argument is fraught with a number of significant problems. First of all, telecoms charge consumers themselves for internet use. Their demands on service and application providers are nothing more than a demand for a second fee for the same service.

    This relationship is illustrated by the graph below:

    Telecoms make their infrastructure available to consumers. Consumers use internet content offered by service providers and applications, and this generates traffic on the network. As the use of content available on the Internet generates traffic, telecoms have decided to demand an additional fee from service and application providers called “fair share payment.”.

    What is also worth noting is that telecoms argue for their demands with the need to maintain the network due to increased traffic (load). Meanwhile, telecoms’ investments consist of relay stations, fiber optics, modems, and data centers, among other things. A large cost is, for example, the construction of masts and fiber-optic networks. Nevertheless, 70-80% of the total telecom costs are spent precisely on infrastructure, which lasts and can be successfully used for at least 30 years. The remainder relates outdated equipment, which should be upgraded every 5-10 years. The cost of “network maintenance” due to high traffic is therefore not high, and this is explicitly admitted by some telecoms. The Fédération Française des Télécoms presented an estimate according to which handling network traffic generates 2 billion euros in costs in France, or 27 euros for each resident of the country. That’s a third of the amount of €80 per EU resident calculated by ETNO, and it’s still significantly inflated.  In France, you can easily find consumer offers of 10 gigabit-per-second connections along with phone and TV at prices around 30-49 euros per month[4]. These package offers are also a great example of existing interrelations and co-dependencies between telecommunications operators and service providers. In Poland, Orange offers fiber optics with 1 Gbps download speeds for 17.5 euros per month[5]. It is also worth citing an example in which one German student accommodation organization wanted to provide students with Internet access at a speed of at least 1 Gbps at all times in 2020. The offer for such access was made by 8 German telecoms, of which 5 offered the amount of 11 euros per month per student[6]. These examples indicate market prices for Internet access, no Internet provider would bid below its costs. Hence, the calculations of both ETNO and the Fédération Française des Télécoms are clearly inflated.  It is also difficult to argue that internet platforms are “free riders” because they have invested billions in the construction and development of internet infrastructure over the last decade.

    1. Effects of “fair share” fees on citizens and businesses.

    A fee similar to “fair share payments” has been introduced in South Korea, and this is basically the only case where we can find similarities with existing solutions. The Korean example has been studied by BEUC (The European Consumer Organization), among others. It cited a study commissioned by the German Federal Internet Agency. The research indicates that South Korea is so far the only country that has responded to the concerns of telecoms and introduced the legal billing rule of Sending Party Network Pays (SPNP). Under the rules, Internet content and application providers have been required to pay fees to telecoms. The report’s conclusions are clear. All of these regulations have led to a reduction in the quality and variety of content on the Internet. It is also expected to increase costs for the end user of content and reduce investment in local infrastructure[7].

    A similar view is held by the European Internet Exchange Association, which, analyzing, among other things, the situation in South Korea, points out that “fair share payments” are detrimental to the proper functioning of the Internet communications and peering market and distort competition in this market. In addition, they will negatively affect the experience of citizens in basic business operations, data sharing, access to cloud services and the development of research projects[8] .

    Paradoxically, therefore, “fair share” fees in Korea have had exactly the opposite effect of the one that telecoms claim they were intended to serve. It should be pointed out that the introduction of additional fees on Internet content providers could force them to introduce at least partial payment for their services, which were previously free. This could reduce access to online content and lead to digital exclusion of less affluent Internet users. This straightforwardly violates the principle of Internet neutrality, which, however, by definition says that it is the ability of all Internet users to access selected content and applications.

    Another issue is the reduction in the quality of content available online. Clearly, many companies offering, for example, streaming services, access to online TV or other video content will be affected by such fees. Prices for access to content can be introduced here or raised only up to a certain level, above which consumers will not be able to accept additional fees. In practice, it will be impossible to pass on the entire cost to content consumers. This means a smaller budget for the creation of quality online content. Similar concerns are presented, among others, by the European Association of Commercial Television and VoD Services, which has issued an open letter expressing concern on the introduction of network fees and its’ effects on the European creative industry[9]

    Crucially, the dispute over “fair share payments” should not be viewed as a conflict between big telecom companies and big Internet corporations. These fees have the potential to very seriously undermine competition on the Internet and threaten the smallest entrepreneurs. Such concerns are presented by the French Association of Alternative Telecom Operators, among others, which notes that fees of this kind will be fatal to the survival of small and medium-sized digital companies[10]. Small companies offering content on the Internet will be put in a very difficult position, as on the one hand they will be charged for Internet traffic, and on the other hand it will be difficult for them to pass this cost on to consumers. The introduction of fees to offset the cost of “fair share” fees will make them lose their competitiveness with larger players in the market. 

    What’s more, smaller telecom service companies are also openly criticizing the idea of fees. Such threats are pointed out by both MVNO Europe and the EU Competitive Telecommunications Association (ECTA). They point out that the fees will cause serious damage to competition in the telecom market, will directly affect smaller operators, and will negatively impact both individual consumers and telecom customer companies. The fees will only benefit the largest players in the market by strengthening their oligopolies[11] .

    “Fair share payments” are also criticized by academics. In October 2022, they sent a letter to the European Commission signed by 29 market experts, PhDs and professors who know the market very well. They pointed out that the proposal to charge Internet service providers and applications is not new and has always been rejected as harmful. They point out that for the past decade the idea has been unequivocally criticized by experts, business and NGOs. The experts point out in their letter that in 2015[12], the EU granted internet users the right to freely access information and content, use and deliver applications and services of their choice. EU standards require broadband service providers to treat data in a non-discriminatory manner, regardless of what it contains, what application transmits the data, where it comes from and to whom it is directed. Even if fair share payments were directed only to the largest Internet content providers, this would still directly violate open Internet access standards.

    Experts also point out that broadband networks are an important part of the value chain just as Internet content providers are driving demand from Europeans for access to the Web. Broadband providers gain significant benefits from the fact that service providers generate demand for broadband access. In doing so, telecoms pay nothing for the efforts of Internet content and application providers in creating that demand. Without the demand generated by Internet content providers, telecoms would not have many customers for high-speed Internet access services. Customers who, after all, pay telecoms for that access. Moreover, governments, universities, government offices and other public entities are also Internet content providers. All of these entities are already paying for the development of Internet networks. The researchers also explicitly point out that history and economic theory indicate that similar fees will not increase investment in Internet infrastructure by telecoms[13].

    The European Video on Demand Coalition is also opposed to “fair share payments,” pointing out that the introduction of this fee will harm the development of innovation in Europe and the digitization process. They also express concern that proposals of this kind are being put forward without adequate public consultation and analysis of the impact of such solutions[14]. Germany’s VAUNET argues that fees threaten media pluralism and the quality of content[15], while the Association of Commercial Television points out that Internet access fees for content providers mean less money for content creation. Which will ultimately lead to less or lower quality content[16].

    Finally, it should be noted that on June 8, 2022. 34 social organizations from 17 countries sent an open letter to Commissioners Vestager and Breton pointing out the problems cited above and opposing the introduction of “fair share payments.” The authors of the letter emphasize that the Commissioner’s statement about players generating a lot of Internet traffic who should be charged a fair fee to telecoms shows a fundamental misunderstanding of how the Internet works[17].

    So it turns out that both businesses (including smaller telecoms), social organizations, industry organizations and academia speak with one voice and strongly oppose the idea of “fair share payments” stressing that it is harmful to the entire market. The only entities that will gain from it are the largest telecoms, which are actively lobbying the solution at the European Commission.

    1. Polish market

    The value of the Polish telecommunications market is 40.8 billion Polish zlotys (approximately 8.73 billion euros). Telecommunications investments in 2020 amounted to 8.9 billion Polish zlotys (approximately 1.95 billion euros). As many as 66.6% of broadband internet users have a connection with a bandwidth of at least 100 Mbps, and estimates indicate that by 2026, over 80% of mobile internet users will have access to 5G technology[18].

    According to a survey conducted by the Office of Electronic Communications on a sample of 2011 people aged 15 and over, 97.2% of people in our country use mobile phones, 54.9% use mobile internet, and 54.1% use stationary internet. Any kind of internet access was declared by 79.1% of the respondents. The average monthly bill for stationary internet is 59.17 zlotys (just under 13 euros), while for mobile internet it is 46.43 zlotys (approximately 10 euros)[19]. Poland ranks 30th in the Speedtest Global Index for broadband internet access speed, with an average speed of 106.40 Mbps, and 44th for mobile internet with a speed of 47.86 Mbps[20]. Therefore, the internet in Poland is relatively fast and inexpensive.

    Providing fast internet at a relatively low cost, of course, requires investment in infrastructure. However, in Poland, a number of such tasks are undertaken from public funds and do not cost telecom companies a penny. One can point, among others, to the information contained in the “Broadband Access Plan for Poland,” according to which in the Digital Poland Operational Program for 2014-2020, out of the total funds amounting to 2.57 billion euros, over a billion was allocated to the expansion of broadband networks[21]. Further expenditures are planned in the program for 2021-2027. The entire 2 billion euros is to be allocated, among other things, to ensure access to broadband internet with a speed of at least 100 Mbps in every household and business and with a speed of at least 1 Gbps in every place that is significant in terms of social and economic aspects, such as schools, hospitals, offices, and technological and business centers[22]. In addition, funds for the expansion of internet infrastructure have also been planned in the Broadband Fund, which will finance investment projects worth a total of 20 million zlotys in the first call[23]. Further financing has also been planned in the National Recovery Plan. Formally, 21% of the budget is allocated for digitization-related projects, although Minister Plenipotentiary Paweł Lewandowski suggests that even over 30% of the NRP budget may be allocated to this purpose. By 2026, 931 thousand households are planned to be connected to broadband networks[24].

    Taking into account the scale of public investments in expanding internet infrastructure, it is clear that the largest cost associated with the dissemination of fast internet in Poland has been to a large extent supported by public funding, mainly through funds from the EU. Similarly, in other countries, huge amounts of money from both the EU and national budgets are allocated for digital transformation. Therefore, telecom companies are not bearing these costs, but rather taxpayers. This means that big telecommunication companies are using infrastructure financed by all of us, burdening their customers with the costs of internet access, and now they are demanding “fair share payments” from content and internet application providers, which could result in significant changes to the internet as we know it, unfortunately only for the worse. Telecom companies will gain by receiving enormous amounts of money, while we will all lose.

    In addition, other instruments such as the Broadband Fund are being prepared or already launched, and the development of telecommunications infrastructure is included in the National Recovery Plan.

    Therefore, it is difficult to find rational reasons for additional funding of telecommunication operators’ budgets. Moreover, the adoption of the proposal on network fees may in practice lead to limiting access to certain platforms, which directly contradicts the principle of net neutrality.

    ***

    [1] https://www.reuters.com/business/media-telecom/eus-vestager-assessing-if-tech-giants-should-sharetelecoms-network-costs-2022-05-02/ (accessed April 27, 2023).

    [2] https://www.reuters.com/technology/eu-wants-details-big-tech-telcos-investment-plans-source-2023-01-10/ (accessed April 27, 2023).

    [3] https://www.project-disco.org/european-union/020123-fast-internet-doesnt-cost-eu-telecom-operatorsmuch-at-all/ (accessed April 27, 2023).

    [4] https://www.project-disco.org/european-union/020123-fast-internet-doesnt-cost-eu-telecom-operatorsmuch-at-all/ (accessed April 27, 2023).

    [5] https://oferty.orange.pl/swiatlowod2/ (accessed April 27, 2023).

    [6] https://www.project-disco.org/european-union/020123-fast-internet-doesnt-cost-eu-telecom-operatorsmuch-at-all/ (accessed April 27, 2023).

    [7] WIK-Consult report, Study for the Federal Network Agency Germany, Competitive conditions on transit and peering markets Implications for European digital sovereignty Final report.

    [8] https://www.euro-ix.net/media/filer_public/c7/72/c772acf6-b286-4edb-a3c5042090e513df/spnp_impact_on_ixps_-_signed.pdf (dostęp na dzień 27.04.2023 r.).

    [9] https://www.acte.be/publication/tv-vod-statement-on-network-fees/ (accessed April 27, 2023).

    [10] https://www.project-disco.org/european-union/020723-is-anyone-in-favour-of-taxing-internet-traffic/ (accessed April 27, 2023).

    [11] https://www.project-disco.org/european-union/020723-is-anyone-in-favour-of-taxing-internet-traffic/ (accessed April 27, 2023).

    [12] Regulation (EU) 2015/2120 of the European Parliament and of the Council of November 25, 2015, Official Journal of the European Union L 310.

    [13] https://www.komaitis.org/personal-blog/29-internet-experts-and-academics-send-a-letter-to-thecommission-urging-to-abandon-the-sending-party-network-pays-proposal (accessed April 27, 2023).

    [14] https://www.europeanvodcoalition.com/positions/position-paper-on-net-neutrality/ (accessed April 27, 2023).

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    [19] Office of Electronic Communications, Analysis of the functioning of the telecommunications services market in Poland and assessment of consumer preferences. 2022. Survey of individual customers.

    [20] https://www.speedtest.net/global-index (accessed April 27, 2023).

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    [22] https://www.gov.pl/web/funds-regional-policy/nearly-2-billion-euros-for-polands-digital-transformation (accessed April 27, 2023).

    [23] https://www.gov.pl/web/cyfryzacja/fundusz-szerokopasmowy–pierwszy-nabor-wnioskow (accessed April 27, 2023).

    [24] https://www.wirtualnemedia.pl/artykul/internet-szerokopasmowy-rozwoj-sieci-budzet-kpo ; https://www.gov.pl/web/planodbudowy/transformacja-cyfrowa (accessed April 27, 2023).

     

    See more: 15.05.2023 “Network fees” proposed by telecommunications – operators will consumers pay twice for infrastructure maintenance?

    The role of RES in the post-war reconstruction of Ukraine

    Posted on by Weronika Marzec

    Warsaw, 13 April 2023

    The role of RES in the post-war reconstruction of Ukraine

    The following is a Memorandum summarising the debate that took place during the 3rd roundtable of the Energy and Climate Forum of Union of Entrepreneurs and Employers, dedicated to the Ukrainian energy sector and implemented as part of the EUROPE-POLAND-UKRAINE REBUILD TOGETHER 2023 project, in cooperation with the Embassy of Ukraine in Poland.

    Renewable energy development in Ukraine:

    • Over the last five years (prior to the war), Ukraine was able to attract approx. EUR 10 billion in investment in the renewable energy industry.
    • According to a 2019 assessment by Bloomberg, Ukraine ranked 8th out of 140 countries in terms of attractiveness for renewable energy investment.
    • In terms of the pace of green energy development, Ukraine was among the top 10 economies in the world in 2019 and was in the top 5 European countries in terms of solar energy development in 2020.
    • In the structure of electricity production before the war, renewable energy accounted for 8% of the overall energy balance.
    • Solar power plants accounted for ca. 58% of renewable energy, wind power plants generated 32%, biomass about 3%, hydropower plants approx. 2%, and biogas close to 5%.
    • Currently, over 50% of Ukraine’s energy infrastructure is damaged.
    • As a result of the war, wind power has suffered losses and damage to 90% of the entire infrastructure.
    • The share of renewable energy according to the “National Action Plan for Renewable Energy Development until 2030” and the “National Energy Strategy of Ukraine” should reach 25% by the year 2030.
    • Presently, Ukraine has surplus green energy production and is capable of energy exports.
    • The renewable energy industry in Ukraine is one of the few sectors that operated in a market-oriented and transparent manner even before the war.
    • The Polish Investment and Trade Agency (PAIH) operates programmes to rebuild Ukraine’s energy infrastructure, which Polish companies can participate in, and the funds can reach up to EUR 100-200 million.

    The following esteemed guests attended the debate:

    Prof. Alicja Chybicka – Senator of the Republic of Poland

    Ivan Grygoruk – Vice President, Energy Club

    Janusz Gajowiecki – President of the Polish Wind Energy Association

    Igor Krechkevych – Technical Director of the Energy Efficiency Fund

    Karol Kubica – Head of the Foreign Trade Office in Kyiv, Polish Investment and Trade Agency (PAIH)

    Konstantin Magaletskyi – Green Recovery Fund Ukraine

    Olexander Podprugin – Member of the Board, Ukrainian Wind Energy Association and President of Elementum Energy

    Anastasiia Vereshchynska – International Development Manager at Energy Act for Ukraine Foundation

    Serhij Zasowienko – First Secretary of the Embassy of Ukraine in Poland

    Moderators:

    Dominika Taranko – Director of the Energy and Climate Forum, Union of Entrepreneurs and Employers

    Hennadii Radchenko – Advisor, Ukraine Business Center, Union of Entrepreneurs and Employers

    Current state of affairs of energy generation from renewable sources

    The first person to be asked to speak was Ivan Hryhoruk, who discussed the current situation and pointed out that as of now more than 50% of Ukraine’s entire energy infrastructure has been damaged. Unfortunately, this also applies to renewable energy sources (RES), mainly photovoltaic and wind power. These were mostly located in areas where current or past military operations are taking place, as the largest number of solar and wind power plants were installed in the Zaporizhia, Kharkiv, Dnipropetrovsk, Mykolaiv, Kherson and Odesa regions. Some solar power plants survived and are still operational in certain locations, but most facilities were destroyed during military operations or were vandalised and looted. Wind energy production infrastructure was damaged by 90% compared to its per-war capacity. Power plants in central and western Ukraine are operating normally if the distribution network allows it. However, power sources in southern and eastern parts of Ukraine are severely limited. Overall, out of the installed capacity of 13 GW, only approx. 40% is currently in operation, and are experiencing serious limitations.

    Plans regarding renewable energy production

    In post-war conditions, the structure of energy production will change. Ukraine has opted for integration with the EU, and the national energy grid is being synchronised with the European one. The synchronisation processes are ongoing, and Ukraine is fulfilling all the commitments it has made regarding the development of RES in the energy balance structure. This trend will continue to develop. However, it will develop according to a slightly different concept, as significant relocation of production potential from the so-called “grey zone” to the western and central regions of Ukraine is taking place due to the war.

    Structure of pre-war electricity production

    Renewables accounted for 8% of the overall energy balance in electricity generation prior to the war. These were mainly large industrial power plants. Photovoltaic power plants accounted for around 58% of all energy produced from RES, wind power plants – 32%, biomass – approx. 3%, hydroelectric power plants – 2%, and biogas – ca. 5%. Total installed solar capacity amounted to almost 7 GW, while installed wind capacity reached 3.5 GW. Industrial installations required large areas of land. When solar energy began to develop in Ukraine, 2 ha of land corresponded to 1 kW of power. Over time, technologies became more advanced, surfaces decreased, in some cases rotating mechanisms were implemented, and to produce 2 MW, only 1.4 ha of land could be used. Due to the upcoming post-war relocation of many types of economic activity as well as the population’s “change of address” to western and central parts of Ukraine, such significant free land areas where large industrial power plants could be developed will likely no longer be available. The map of solar activity in western Ukraine practically corresponds to the southern part of the country, hence the potential for PV installations is still considerable. As for the wind energy, it is a little trickier, with winds of 6-8 m/s characteristic only of the Zakarpattia and Prykarpattia regions. There, thanks to the mountainous landscape, aerodynamic currents are created. In other regions, according to experts, it will not be possible to construct large wind power plants, since generators with a capacity of 5 MW or more require higher wind speeds. Therefore, large industrial power plants will not be built in western Ukraine. As for distributed generation, these are power plants up to 20 MW, and they should dynamically develop in the post-war structure of electricity production as distributed generation will be necessary for the future stability of the energy system and can provide electricity to both industry and infrastructure.

    Ukrainian Energy Transformation

    Currently, the Ukrainian energy sector is going through a difficult period of transformation. After the war will have ended, the situation should improve, but Ukraine is currently dependent on fossil fuel imports, whereas many thermal power plants are damaged and non-operational. Thus, it is necessary to urgently develop RES, such as photovoltaic and wind energy, to replace the consumed fossil fuels and reduce dependence on imports.

    Nonetheless, one of the problems that arise from the production of energy from RES is their instability. Therefore, conventional energy and heat generation systems were used to oversee peak loads. Currently, most of them are damaged to a degree exceeding 50% and cannot play the same role in the post-war period. It seems that in spite of all that, they will be rebuilt, assuming that the energy consumption structure will change, and industry will start to develop again. Power plants will gain new importance and will play a crucial role in ensuring the reliability of local infrastructure and industry. Furthermore, actions will be taken to create energy communities and local distribution centres that will ensure the stability of the energy system at the local level. The aim is to create one distribution centre for every 1 to 3 regions, which could connect renewables, heat generation, and hydroelectric power plants. This way, such cooperatives will balance the power in the local energy system and also operate in all market segments: daily operations, next day, balancing, and ancillary services.

    Settlements between market participants would take place within a day, so there would be no deficits in settlements for renewable sources, as was the case before the war. For effective use of small distributed power plants, distribution network operators will be appointed. Ukrainians are already switching to a higher voltage level of 20 kV to reduce electric energy losses during transmission. As a result, the quality of electricity supply services to customers will improve.

    Legal changes to attract investment

    Serhij Zasowienko, the First Secretary of the Ukrainian Embassy in Poland, pointed out that in recent years, thanks to the introduction of the green tariff model in Ukraine, there had been an increase in installed RES capacity. At the beginning of 2022, the installed RES capacity reached 9.5 GW, with investments in the industry exceeding USD 12 billion. Currently, about one quarter of the installed RES capacity is located in occupied territories. The situation is particularly difficult for wind power plants, with about 80% of installed capacity located in the occupied areas of the Kherson and Zaporizhia regions. About 20% of the power plants are completely damaged, many destroyed or looted by the occupying forces. Despite these circumstances, even during the war, Ukraine ensures the fulfilment of its obligations to investors in the field of renewable energy. This is one of the priorities of the Ukrainian Ministry of Energy. Regarding the future of the country, like the rest of Europe, the creation of future energy balances will be based on RES. According to the “National Action Plan for the Development of Renewable Energy until 2030” and the “National Energy Strategy of Ukraine”, the share of renewable energy should reach 25% by 2030. Currently, the parliament has submitted a package of laws to the government for consideration, such as “On Stimulating Local Production of Electricity from Alternative Energy Sources” and “On Improving the Conditions for Supporting the Production of Electricity from Alternative Sources” as well as further legislation related to energy projects. The Ukrainian Ministry of Energy is working on market solutions and facilitation for investors regarding the development of energy. The government is already inviting investors to become active players on the Ukrainian market, because with the end of the war, the physical reconstruction must begin, rather than just the administrative process.

    The situation in wind energy

    Olexander Podprugin pointed out that there are currently about 35 wind farms connected to the transmission grid in Ukraine with a total capacity of 1.7 GW. Energy is one of the most aggressive military frontlines. An energy war is being waged, with atomic blackmail and attacks on nuclear power plants. It is difficult to estimate the losses in infrastructure in a credible way, as many installations, including wind turbines, are located in hostile territory and are thus inaccessible. Only 20% of the turbines are located in the unoccupied territories of Ukraine. Ukrainian wind energy, which was operational last winter, made a significant contribution to the survival of Ukrainians, providing them with the basic minimum of energy and often being the only available source.

    Despite the ongoing war, the construction and installation processes of wind power plants continue in a few locations. There are currently two projects in the pipeline, in Mykolaiv and in Odesa regions, with a total capacity of ca. 150 MW, expected to be launched in the spring. Unfortunately, for most projects, work is not being carried out due to occupied ports and blocked logistics.

    The reconstruction of the Ukrainian energy system should be based on clean energy sources, primarily wind generation. The Ukrainian government’s recovery and development plan provides for a significant increase in wind and solar plants to at least 10 GW. As for green energy generation, over 30 GW of RES are planned for hydrogen production. Research conducted in various regions of Ukraine shows that many large power plants and fairly large wind farms using the best and most powerful turbines currently available can be built in Ukraine. We are talking here about both onshore and offshore wind farms. The potential for Ukrainian offshore wind power is immense and could theoretically be as high as 250 GW in installations located in the Black and Azov Seas, of course, after de-occupation and opening up investment opportunities. However, much still needs to be done to give this momentum, including regulatory changes such as reducing barriers to connecting new power plants, simplifying permit systems, and simplifying procedures for obtaining both environmental and construction decisions. Separately, many changes need to be developed in legislation concerning land and sea use, including connecting new wind power plants to the grid. From a technical standpoint, efforts should be made to increase the flexibility of Ukraine’s energy system so that it can accommodate more renewable energy.

    Existing barriers that can be eliminated

    According to our interviewees, administrative deadlines are also barriers to RES development, as power plants whose construction has been halted due to the war have missed their deadlines for commissioning. They will not be built on time and could be connected to the grid in the near future. Investors in Ukraine should be able to rely on promises being fulfilled, and capital and assets being protected. Therefore, a law should be adopted to extend the deadline for commissioning the planned power plants (on the same terms as in 2022). This may enable the execution of planned projects. Ambitious goals and a strategy according to which RES development will be based should be documented. Administrative decisions should have a validity period of 5-10 years and provide for conditional extension of the investment execution deadline. At the same time, the issuance of environmental documentation and construction permits should be expedited. It would also be worthwhile to implement regulations that allow investors to receive additional benefits for green energy.

    Energy efficiency in the reconstruction of Ukraine

    Igor Krechkevich, the technical director of the Ukrainian Energy Efficiency Fund, discussed the Fund, which is the only state organisation established by the Ukrainian government to stimulate energy efficiency and energy savings, mainly in the multi-family sector. Before the war, the fund successfully implemented the “Energodom” programme, which aimed to introduce energy-saving measures in the private and communal housing sectors. The organisation worked and is still working with residents’ self-government organisations, even during the war. Innovative programmes were implemented both from the state budget and with support from the EU, in particular Germany. After 24th February 2022, the war forced changes in the fund’s activities, and thus began the search for possible ways to provide additional support to the people of Ukraine. The “Rebuild Your Home” programme was developed, which to some extent can also be called energy efficiency activities, as many apartments and multi-family residential buildings were damaged and continue to suffer from air strikes, missile fire, explosions, leading to broken windows, roof and façade damage etc. “Rebuild Your Home” is also co-funded by the European Union. The programme helps residents’ self-government organisations rebuild damaged homes, repair windows, façades and roofs. Fortunately, it is now spring, and the enemy’s plans to prevent Ukraine from surviving the winter failed to succeed. The energy network survived, and the process of stabilising it continues. Therefore, there is a developed programme that allows families without a roof over their heads to return to their homes. The energy modernisation programme, which also operated during the previous year of the war, did not stop and paid out over UAH 1 billion (Ukrainian hryvnias) for modernisation purposes. An example is the city of Mykolaiv, which continued modernisation efforts even during shelling.

    The development potential of Ukraine

    According to Bloomberg, Ukraine ranked 8th out of 140 countries in 2019 in terms of attractiveness for investing in renewable energy. Investments lead to business development, influx of money, and profits. In this model, investment opportunities and an attractive rate of return are crucial. The Ukrainian government has already developed certain mechanisms and steps, while projects and laws are being created, and there is an understanding that RES represent a vast space for development and huge investment opportunities. Earlier in the text, offshore perspectives for wind energy were mentioned, which can only be developed with access to the Black Sea. Nevertheless, its potential is indeed enormous and has great significance in the European energy strategy, where Ukraine is a possible electricity supplier (especially to Germany, from which 75% of equipment imports originate).

    The private residential sector is also active in the field of distributed energy, where small solar power plants are installed – not so much for business purposes as for powering homes. The war has shown that distributed generation and the development of energy cooperatives are necessary. They can develop basing on both multi-family residential buildings and private estates. There are already opportunities to work with the private sector in Ukraine, and after Ukraine’s victory over Russia, there will be an opportunity to enter a completely new market with new, investor-friendly rules. It seems that the scale of the planned investments will be sufficient to support Ukraine’s economy and help it transition to green energy. In western Ukraine, where there is less enemy shelling, preparations for the implementation of residential renewable energy are already underway. Ukraine has already been systemically integrated with the European market and had supplied energy to the EU market before the war broke out.

    RES as a source of primary energy

    Anastasia Vereshchynska, the Development Manager of the Energy Act for Ukraine Foundation, emphasised that the projects of the Energy Act for Ukraine Foundation are gaining attention not only in Ukraine, but also abroad. The foundation was established in response to the full-scale war in Ukraine and focuses on providing energy assistance primarily to Ukrainian civilian facilities, schools, and hospitals. The Energy Act for Ukraine Foundation focuses on a long-term, large, and very ambitious project to equip 100 schools and 50 hospitals in the country with hybrid solar power plants. The foundation is constantly looking for sponsors. The latest completed project was in a school in Irpin, where the installation had a capacity of 25 kW, satisfying a third of the school’s energy needs. The energy generated by the installed power plant also provides power for street lighting, so that children can safely return home from school, which is particularly important during winter.

    On the other hand, the Energy Act for Ukraine Foundation installs hybrid power plants in hospitals to ensure the functioning of surgical theatres, maternity wards, and ICUs. Schools and hospitals participating in the programme are selected in cooperation with the Ministry of Education and Ministry of Health, which recommend institutions covered by the programme. These are chosen at a safe distance from the frontline and the Belarusian border. Investors do not want newly installed PV panels to attract the attention of the enemy, which could further endanger these facilities. One of the criteria for allocating investments is also having a bomb shelter at the school. Children and patients must be provided with safety.

    The Energy Act for Ukraine Foundation’s programme also includes lessons on renewable energy and green solutions installed in schools. The organisation also informs why the development of renewables and conscious energy consumption is critical.

    The third direction of the Foundation’s activities is the delivery of energy equipment to the civilian population. This is mobile equipment, mainly energy storage systems with PV panels that can be easily moved. It is important for hospitals located in strategic locations. Some of them have been delivered to field hospitals in the Donetsk and Zaporizhzhia regions. Polish and German donors were involved in the project. The Foundation also tries to draw attention to the fact that renewables can not only be a part of post-war reconstruction, but also an exceptionally effective way to provide immediate help. This need for help is urgent and desperate, and not as harmful to the environment as diesel generators. The organisation is not opposed to diesel generators, which it also buys when there is no alternative, but it draws attention to the existing proposals for energy storage systems that are a more forward-looking solution. The goal is to make energy consumers in Ukraine independent of fuels, so that people do not have to die due to a lack of access to electricity.

    Polish perspective on RES in Ukraine in the context of health and safety

    Senator Alicja Chybicka, Vice-Chair of the Health Committee, member of the Senate Committee on Climate and Vice-Chair of the Environmental Committee, noted that several laws related to RES are currently being processed in Poland, a national milestone. The entire world is striving to use renewable energy, which is currently the cheapest source of energy. We can use wind, water and sun. As we need wider access to the transmission grid today, we also need to learn how to store energy better. In the opinion of Senator Chybicka, it is important that children in Ukraine are taught about clean environment. Most diseases, not only cancer, have their origin in negative factors related to the climate and environment, not only universally understood, but also in what we eat and breathe. Cancer, which we now have a genetic accumulation of, needs an initiator to activate the gene – these can be found in the air, water or food.

    The war in Ukraine has caused numerous countries to focus on RES development. Nowadays, we provide Ukraine with many generators, because we need to provide electricity to residents right now, but assistance must be planned in such a way that these green solutions remain in Ukraine after the war.

    How does Polish business currently fare in Ukraine?

    Karol Kubica, Manager of the Foreign Trade Office in Kyiv at the Polish Investment and Trade Agency (PAIH), assures that the economic cooperation between Poland and Ukraine is constantly developing. Poland is one of Ukraine’s most important trading partners, and Ukraine is also climbing higher in the national trade balance. The PAIH office has been operating in Kyiv since 2018. For the last 5 years, interest in Polish products and services has been steadily increasing. Polish businesses are also increasingly interested in investing in Ukraine and seek cooperation with local entities. Over the past 20-30 years, Poland has undergone a transformation and has been one big construction site. Now, our experiences can be useful to Ukrainian companies.

    The issue of alternative energy sources is a topic that the entire world is currently facing, not just Ukraine. In Poland, there is quite a long investment process in RES, both due to legislation and investment schedules. For Polish businesses to enter into these investments in Ukraine, they must have guarantees, security, and prospects for adapting legislation for foreign investors provided by the government. The inquiries from the renewable energy industry received by PAIH represented a few percent per year, usually totalling about 700 inquiries. Despite the ongoing war, these trends are similar. PAIH educates and presents investment prospects, but representatives of the agency believe that education alone is not enough. So far, about 1,800 entities interested in rebuilding Ukraine have registered, of which 33% represent the construction and energy sectors. The renewables sector, which includes not only energy companies but also energy-efficient buildings, is a part of this sector.

    Developing business in Ukraine

    Polish companies may not be visible in the renewable energy sector on a daily basis in Ukraine, but they participate in the broadly understood RES supply chain. These are suppliers of equipment and technologies who offer their solutions. Both Polish state-owned companies such as Orlen, PGNiG or Unimot Energy, as well as other private sector companies operate in Ukraine. However, businesses also like stability and not always report to government agencies, implementing investment assumptions independently. PAIH often intervenes when there is a problem with the administration, such as when Polish factories operating in Ukraine face difficulties connecting additional power demand. An example of support from PAIH may be ensuring an increase in the capacity of power lines when, after investing, additional production lines are launched. Ukraine’s accession to the EU structures is still quite distant and will require, among other things, adapting legislation, which should in turn improve investment conditions. However, Polish sectors such as construction, food and energy are already present in Ukraine.

    Money for investments in Ukraine for Polish companies

    Tenders related to the reconstruction of critical infrastructure in which Polish companies can participate are announced on the website https://odbudowaukrainy.paih.gov.pl/ and on the website of the Ministry of Development and Technology. These are funds allocated for various purposes. The pool of funds can amount to EUR 100-200 million for a single grant.

    Currently, Ukraine is declaring what it needs and what needs to be rebuilt in order for it to function properly. Without energy, there is no business, without business there are no taxes or jobs, and then economic emigration increases. On 1st December 2022, PAIH held industry consultations for entrepreneurs, including those representing the energy industry. During such meetings, PAIH presents the scale of destruction and the possibilities of entering the market, but mainly emphasises that Polish businesses should cooperate with Ukrainian entrepreneurs, share their technology, use preferential loans offered by, among others, Bank Gospodarstwa Krajowego, and insure transactions with KUKE. We should not only be competitors on the Ukrainian market, but the best solution is to find a long-term partnership on the Ukrainian side. Poland and Ukraine together would be unbeatable in Europe. PAIH is already preparing domestic businesses for this.

    Cooperation with private and state-owned companies in Ukraine

    Konstantin Magaletskyi who represented the Green Recovery Fund Ukraine explained how a fund focused on investments in green energy in Ukraine operates. Its task is to rebuild damaged renewable energy installations and build new ones. From the perspective of Ukraine’s future, this is not only beneficial, because of the use of green energy, but also because of the possibilities of decentralising energy production. Ukraine has experience in this area from previous years, when it exported its green energy to European countries. According to Konstantin, it is best to invest in the private sector, because most of the funding currently goes through the public sector, which is more formalised. A good example may be the operation of a private port: while investment in a state-owned port is greater, the ROI is higher in a private port. The reconstruction of Ukraine will progress much faster with the involvement of the private sector than if only central administration were involved.

    Ukraine is already producing surplus green energy and is able to export it. The prospect of damage to a RES farm is now negligible. Furthermore, presently, energy production in Ukraine is stable and it does not need to be imported from abroad. The green energy market is developing steadily. Due to the fact that Ukraine is a large country, there is a need for collateral from large financial institutions for investments planned in this country.

    Polish experience in the RES industry vs. knowledge of the Ukrainian market

    Janusz Gajowiecki, President of the Polish Wind Energy Association, stressed that the industry is counting primarily on the development of RES in Poland, for instance through appropriate legal regulations. Onshore wind energy will develop all over Europe, and Poland should be a powerhouse in this respect. At the same time, companies from the Polish renewables industry have relations with investors from Ukraine. This sector is well developed in terms of substantive and project-related issues. Industry-specific knowhow is already available in Ukraine, which is why bilateral talks are incredibly detailed and at a high level.

    The issue of wind energy in the context of RES is critical. Its impact on the national energy system is enormous. The installed capacity of 10 GW often provides 30% or more energy to the system. Poland has become a kind of hub for foreign companies employing experts from Poland and abroad. The potential of wind power installations in Poland is the largest in the CEE region. Ukraine, Romania or Croatia have all a relatively smaller development potential than Poland, even though Ukraine to a certain degree also has this potential. All companies, private and state-owned alike, are looking at a package of laws that are to change the regulations and simplify investments on the Ukrainian market. They already have projects ready for implementation, the entire permitting is in place, including grid connection, along with analyses of the latest available technologies, which are both ground-breaking and can reach up to 50% of the achievable power. This means that a 6 MW turbine can produce 3 MW over a year.

    The UN will also support the development of wind energy. A model of cooperation is currently in the works, with such issues as who is to own farms that are going to be built with European funds among relevant topics. Nowadays, the RES industry is aware of the mission to create something extraordinary, to revolutionise the Ukrainian energy sector. PWEA, hand in hand with the Ukrainian association, are implementing the project “Work service for Ukraine” which helps find a job in the industry.

    Unless the 700-metres-rule for wind energy is liberalised, wind energy development will not reach its peak dynamics over the next 8 years. Then the solution for investors will be to engage their remaining capabilities in Ukraine. Possibilities of transmitting green energy from Ukraine to Polish companies are already being analysed. Soon, no foreign investment will stand a chance in Europe without green energy. Without 100% green energy, no Western company will think about opening a new factory in Poland or Ukraine.

    Procedures for obtaining permits for RES construction in Ukraine

    The issue of permitting in Ukraine is currently similar to how it functions in Europe. There are some good practices that have already been implemented. In Europe, there are presently efforts to simplify and shorten the entire process, as stated in the adopted Re-Power EU package published last year. The regulations indicate that processes related to, among others, spatial planning, duration, and the amount of documentation require to issue environmental decisions should be shortened. Time is of the essence here, because we will need green energy in the short term. This technology is already proven and environmentally safe, so certain procedures can be abandoned or proceeded in a template manner.

    Ukraine is prepared when it comes to environmental conditioning specialists and other requirements. The RES industry is one of the few sectors in the country that is corruption-free and transparent. The number of companies operating on the market is large enough to avoid centralisation or monopolising activity in the hands of the state or oligarchs. Therefore, it is a safe part of the market and economy.

    Poland has many companies that are not well-known, but produce equipment for wind farm construction. Practically every element of wind turbines in Poland involves Polish companies. They manage logistics, materials, and construction to a full extent. Despite the war, entities associated in PWEA receive many inquiries from Ukraine regarding the implementation of wind projects. These investments are carried out all the time, also with the help of Polish companies.

    The energy structure in Ukraine is very outdated and looks similar to the Polish one in the 1990s. By rebuilding the infrastructure, which has been destroyed by 40-50%, Ukraine can create the most modern energy system in Europe, adapted to the EU system. At the moment, however, there are no funds for this purpose and unless the world and foreign institutions help, Ukraine will not recover.

     

    See more: 13.04.2023 The role of RES in the post-war reconstruction of Ukraine

    Position of the Union of Entrepreneurs and Employers: regulatory changes announced by the Ministry of Health will affect the development of telemedicine companies in Poland

    Posted on by Weronika Marzec

    Warsaw, 25th April 2023

    Position of the Union of Entrepreneurs and Employers: regulatory changes announced
    by the Ministry of Health will affect the development of telemedicine companies in Poland

    • Telemedicine is one of the strongest trends in how the world develops nowadays, and Poles are valued specialists and programmers who create great tools in this field of innovation.
    • The Ministry of Health has announced that new regulations are to combat “prescription machines” – unfortunately, the solutions may in real life also affect companies offering remote medical consultations, whose purpose might be to provide a patient with an e-prescription.
    • Telemedicine companies in Poland contribute to greater access to healthcare for patients. Too restrictive regulations, especially in the light of the introduction of a harmonised, cross-border e-prescription within the EU, court the risk of pushing domestic companies out of the market and replacing them with entities registered outside the country.
    • The Union of Entrepreneurs and Employers appeals to the Ministry of Health to be open to dialogue and not to proceed with hasty amendments which are therefore imperfect, and additionally far-reaching and affecting the development of telemedicine in Poland.

    Telemedicine is the future of medicine around the world as it facilitates access to medical care for patients, primarily in the context of system overload and staff shortages. The possibility of obtaining a quick diagnosis (e-consultation) and appropriately selected therapy (e-prescription) is a solution for those patients who cannot wait in a long queue to see a doctor. These are people who are simply sick and require immediate treatment or suffer from a chronic condition and merely need to quickly purchase a prescription to ensure they continue to take their medication.

    During COVID-19, telemedical solutions were considerably promoted and widely used with the approval of the Ministry of Health. Some of them, such as the e-prescription, were ahead of their time and, having entered into force shortly before the outbreak of the pandemic, enabled patients to safely continue therapy. For some time, however, we have been observing a disturbing shift in the practice of the Ministry of Health by tightening the regulations in the direction of limiting or simply excluding the possibility of benefitting from telemedicine. Presently, solutions are being announced that are to be a blow to the so-called “prescription machines”. And one should stress in this context the fact that no court or administrative authority has confirmed the widespread occurrence of this type of phenomenon, and it only exists in press publications. In fact, most of this market consists of entities in which issuing (or not issuing) a prescription is always preceded by a remote medical consultation.

    Telemedical services do not work automatically and are not conducive to fraudulent prescriptions for an uncontrolled amount of drugs. Honest websites, before they decide to prescribe a specific pharmaceutical, collect medical history from patients using an IT system that supports their work. It is always the doctors’ task, thanks to which they can fully devote their time to their patients. The doctors during the teleconsultation are also fully responsible for the diagnosis and therapy prescribed to their patients on this basis. The fee applies to a medical visit, and it is a g cheaper than a visit to a stationary facility – therefore, these portals significantly increase the price availability of medical services.

    In addition to price, time is another principal factor. Due to staff shortages, access to doctors in Poland is limited. The problem concerns not only specialists, but also general practitioners, especially during periods of increased incidence (such as the flu season or a pandemic). This is a major obstacle both for working people, who often must change their professional plans to make it to a doctor’s appointment, as well as the elderly (who often require immediate advice), or for example those chronically ill who need to maintain the continuity of treatment. Telemedicine and similar solutions to an e-prescription following a remote consultation effectively remedy these problems. Now even in crisis situations – for instance, a sudden lack of constantly taken medications or an unforeseen trip abroad – patients can safely continue their therapy.

    An important fact in the context of the plans of the Ministry of Health is the work on the implementation of a cross-border e-prescription at the European Union level. The introduction of this solution will mean that an e-prescription issued in an EU member state can be filled in any other EU country. Under normal circumstances, these circumstances would be considered as an opportunity – Polish innovative companies could internationalise and conquer foreign markets. However, if proposed solutions are adopted in Poland, companies registered in the country will have much worse conditions for doing business than their foreign competitors. The latter, in turn, will be able to freely enter the Polish market. As a result, instead of expanding their operations and conquering European markets, Polish companies may be pushed out of the domestic market and replaced by foreign entities.

    If the scenario presented above comes true, taxes paid by reliable and honest telemedicine companies will not go to the Polish budget.

    Another extremely important thread is the question of entrepreneurs’ trust in the state. A whole series of regulatory initiatives, such as the introduction of e-prescription, were intended to foster the development of telemedicine. Companies operating ethically and caring for the well-being of their patient had the full support of key decision-makers in introducing products increasing the availability of medical services. Such a sharp turn undermines trust in the state and its laws alike, both of which are particularly important when doing business.

    To sum up, Telemedicine is one of the strongest trends in how the world develops nowadays. Creating digital services, supporting the work of doctors, building patient databases that have their treatment history built-in- this is the future of medical services. A future from which there should be no turning back – especially in Poland, where we suffer from an obvious shortage of practicing doctors, which results in gigantic queues for patients.

    See more: 25.04.2023 Position of the Union of Entrepreneurs and Employers: regulatory changes announced by the Ministry of Health will affect the development of telemedicine companies in Poland

    Position of the Union of Entrepreneurs and Employers: Let’s impose sanctions on exports of Russian food to the EU

    Posted on by Weronika Marzec

    Warsaw, 5th April 2023

    Position of the Union of Entrepreneurs and Employers: Let’s impose sanctions on exports of
    Russian food to the EU

    • EU sanctions against the Russian Federation specifically exclude the export of agri-food products (excluding seafood, alcohol and tobacco products) and fertilisers, while activities involving food and fertilisers from Russia are allowed, as are their procurement, transport, and delivery.
    • Russian producers bear much lower costs than Polish food producers. This makes Russian agri-food products a huge competition for Polish products.
    • Russia can still export food products to Poland. Meanwhile, our country has been subject to an embargo since 2014 that prevents the shipment of many product categories to Russia. The effects of the closure of this market are particularly acute in the horticultural production sector.
    • The Union of Entrepreneurs and Employers calls for the extension of EU sanctions imposed on Russia to include food products and, in the longer term, depending on the situation on the EU market, the export of fertilisers.

    Successive sanctions imposed on the Russian Federation since the beginning of the armed invasion of Ukraine are aimed at numerous key areas of the invader’s socio-economic life. They cover the following sectors: energy, finance, transport, defence, raw materials, and services. Also in place are a media embargo, visa, and diplomatic restrictions, as well as a number of measures regarding economic cooperation. However, there are still huge loopholes in the sanctions system that allow for a lively trade in many instances, such as food and fertilisers.

    According to the European Commission’s website, EU sanctions explicitly exclude the export of agri-food products (excluding seafood, alcohol, and tobacco products) and fertilisers, and activities involving food and fertilisers from Russia are allowed, as well as their purchase, transport, and delivery. The EU emphasises that the loophole has been left in order to ensure the continuity of supplies of these goods to countries most in need.

    In the case of food exports, many of the Russian “obligations” can be easily fulfilled by EU member states. However, from the national perspective, the influx of Russian (and Belarusian) agri-food products to Poland remains a problematic issue.

    Russian vegetables and fruit are still imported to Poland. This is a major problem for domestic producers who are in no way able to compete with regard to price with products coming from the aggressor abroad. Poles are not able to use cheap Russian coal, they incur significant costs of CO2 emissions – Russians do not, Poles have to face – unlike Russians – the restrictions of the European Green Deal etc. Also, labour, and natural gas costs in Poland are many times higher than in Russia. This puts Polish producers in an inconvenient situation. Whereas in peacetime, market competition is the desirable, during an economic crisis – to a substantial extent deliberately and meticulously planned by the Russian side (for instance: the price crisis on the gas market) – it can become a serious threat.

    Deliveries of fruit and vegetables from Russia to Poland may these days not reach record volumes – according to the Chief Inspectorate of Plant and Seed Health, close to 1666 tonnes of cucumbers have been delivered to Poland from Russia and Belarus since the beginning of the year until 7th March. Nevertheless, exports are still growing. According to data from the Ministry of Agriculture and Rural Development, the value of agri-food imports from the Russian Federation to Poland amounted in April 2022to EUR 178 million. This is an increase of 48% compared to the same period last year. While this is not a value that may undermine the stability of the agricultural production sector in Poland, it translates into difficulties in the functioning of specific Polish companies.

    The moral aspect of the aggression against Ukraine alone ought to prompt EU officials to impose sanctions on Russian food exports. Besides, should we consider the significant role that the Russian Federation plays on the global map of food producers, the threats related to the intensification of exports, which are fully allowed by EU regulations currently in force, should be given due consideration. Furthermore, there is a gross disproportion in trade relations between Poland and Russia. Let us recall that there is an embargo imposed by Russia since 2014 on certain Polish foods. For this reason, record losses were reported, for example, by fruit producers. Our country is an EU powerhouse it terms of apple production, but only one in four apples from Polish orchards remains in our country, while the rest is a surplus intended for exports. Until 2014, the most important recipient of Polish apples was Russia. The losses incurred by Polish fruit producers related to the closure of this market have already amounted to several billion euro.

    Finally, the issue of fertiliser supplies from Russia may also be controversial. While Europe is not self-sufficient in the production of agricultural fertilisers, one must not forget that not including this market in the sanctions system allows Russia to multiply export revenues. Sparked by Putin, the price crisis regarding gas, which is the most key component in the production of fertilisers, has multiplied the price of the product. As a result, revenue from fertiliser skyrocketed, which – despite a 10% decrease in volume – recorded a 70% increase in revenues in 2022 (year on year).

    The Union of Entrepreneurs and Employers calls for the extension of EU sanctions to cover a ban on exports of Russian food products to the territory of the Community and – in the longer term, depending on the situation on the EU market – exports of fertilisers.

     

    See more: 05.04.2023 Position of the Union of Entrepreneurs and Employers: Let’s impose sanctions on exports of Russian food to the EU

    We need a strategy to restore Poland’s importance on the international arena!

    Posted on by Weronika Marzec

    Warsaw, 5th April 2023

    We need a strategy to restore Poland’s importance on the international arena!

    On 4th April at 3 pm, a conference inaugurating the Agenda Poland 2030 project was held in the Freedom Lounge. During the meeting, issues that are essential from the perspective of Poland were discussed, including national security, as well as how to respond to future challenges.

    The dynamics of events that transpired in recent years are but a historical opportunity that is opening up for Poland. Not only our prosperity and security, but also the political order of the whole of Europe and its relations with what will emerge from Russia in the future may depend on how we make use of Poland’s growing significance in Europe today. The strategic goal of Polish policy should be to create a permanent Berlin-Warsaw-Paris axis within which decisions would be made on the most important aspects of European foreign and economic policies, as well as concerning the model of EU cooperation. To achieve this, Poland must be wealthy and strong. We want to help build it; therefore, we updated the programme of the Polish Agenda regarding the critical areas of the functioning of the state.

    The first Agenda Poland was published 4 years ago. You can find it on our website: agendapolska.wei.org.pl. A number of our postulates resulting from that analysis of the political and economic situation were taken into consideration, while others over time have become even more urgent and are still waiting for their implementation. The experience of the first Agenda Poland gave us not only a wealth of knowledge, but also faith that even the most ambitious and seemingly abstract goals can be achieved. The project, to which we invite not only our experts, but all those who see the uniqueness of the moment and the opportunities ahead of Poland, will be widely consulted and will not be limited to pure theory, but also practical ideas for its implementation.

    The following are our key postulates:

    1. The most urgent task for the state is to restore the authority and dignity of the judiciary. Things have gone so far that the only option available is the Zero Option, which includes, among other things, the liquidation of the Constitutional Tribunal and the State Tribunal, and a transfer of their powers to the Supreme Court; the appointment of a new National Justice Board whose members would be appointed in equal numbers of 5 persons by the judiciary itself, the President of the Republic of Poland and the academic community, and 3 persons by the government of the Republic of Poland, the parliamentary opposition, and civic society (Social Dialogue Council, Commissioner for Human Rights). The National Justice Board should deal with disciplinary matters and carry out the decommunisation of the judiciary.
    2. EDUCATION AND HIGHER EDUCATION. Radical reforms are necessary that will encourage the creativity, entrepreneurship, and inventiveness of Poles. We postulate, among others, for the introduction of an Education Voucher and changes to the role of the state in education – the state should not organise, but finance education, while schools ought to be transferred (excluding real estate) to parents, teachers, private companies, associations, local governments, foundations etc. by way of tenders.
    3. The role of the state in healthcare ought to be changed from running hospitals, clinics, and medical facilities to financing healthcare for citizens. Furthermore, universal health insurance should be introduced, which the state would purchase for each citizen in the insurance company of their choosing. Insurers must organise themselves into a Reinsurance Fund in the event of bankruptcy of one of them.
    4. If we are to quickly catch up with wealthy Western economies in terms of development and have the necessary funds for national defence, it is necessary to radically deregulate the economy according to the EU+0 formula, and to make the labour market more flexible. It is also necessary to introduce fundamental stability of the legal system. New economic regulations should only enter into force once a year, after a vacatio legis of at least twelve months.
    5. SOCIAL POLICY. We are changing the model of social policy to a fully automated one. Both the available IT tools and data collected by the National Revenue Administration and the Social Insurance Institution are sufficient for this purpose. We eliminate the human factor in the social benefits’ process. Mechanisms for benefits valorisation should also be automated. We exclude affluent people from the support system, and at the same time we introduce the “one zloty for one zloty” rule so that exceeding the income threshold per family member is not tantamount to the loss of the entire benefit, but only its reduction in proportion to exceeding said threshold.
    6. A key security objective is Poland’s ability to defend itself. At the same time, we draw attention to the necessity of the greatest possible involvement of the Polish defence industry. The potential of the Polish economy and science should be used to the maximum extent in defence of Poland. Purchases from foreign “shelves” should be limited to the absolute minimum.

    We encourage you to have a look at the full contents of our Agenda, which can be found HERE.

    Until now, these were Germany and France who decided the fate of Europe. Paradoxically, the geopolitical turmoil we are witnessing today means that Poland will be able to join these two countries, provided it introduces appropriate internal reforms. The outline of such reforms was presented by the Warsaw Enterprise Institute, the WEI Centre for Strategic Studies, the Union of Entrepreneurs and Employers, and the Consumers Forum on 4th April 2023 at 3:00 p.m. at the Liberty Lounge.

    During the conference, Adam Eberhadt, Director of the Centre for Strategic Studies, pointed out that the European Union is not about establishing dogmas, but pursuing a flexible form of cooperation. Poland’s strength lies in its initiative-taking policy and ability to build coalitions with the strongest European countries. This was the case recently with Internal combustion engine vehicles. As a country, we will become a valuable partner for Berlin and Paris, but only if we cooperate with them and stand together against them.

    Cezary Kaźmierczak – President of the Union of Entrepreneurs and Employers said that when it comes to the economy, we are successfully catching up with wealthy Western countries. However, we are hindered in this race by a tragic tax system, bad economic law, and legal instability. These obstacles must be removed so that we can start acting faster, because it gives us a position in conversations with the Germans or the French. If we have a solid economy and an army, it will be possible to achieve the goal.

    Tomasz Wróblewski – President of the Warsaw Enterprise Institute, in turn, stated that the goal is to create an agenda that everyone can make use of, which will determine our prospects and directions of action. Differences in society will always be there, but maybe when we engage in a strategy that deals with matters and not people, there will be less hatred.

    Agnieszka Plencler – President of the Consumers’ Forum Foundation took up the topic of consumer choices vs. civic choices. Consumers, expecting social leadership in business, want to know the values and missions of brands, but in demanding situations, the price becomes the most important criterion for them. The citizen, on the other hand, choose the opposite, turning off rational thinking in a crisis situation and following emotions. This is how elections are held, people do not consider the politicians’ postulates of, and give in to empty promises. Consumers learn that when they pay, they demand, and the citizen pays, but does not account for efficiency.

    A new health platform – the Health Forum of the Union of Entrepreneurs and Employers

    Posted on by Weronika Marzec

    Warsaw, 5th April 2023

    A new health platform – the Health Forum of the Union of Entrepreneurs and Employers

    Healthcare has always been a challenge for experts, representatives of government and local government institutions, medical specialists, representatives of patients’ organisations, but also entrepreneurs and employers themselves. Health is and should be treated as the foundation of all values. But it also is an important branch of the economy. In response to the enormous needs of all stakeholders on the medical market and the challenges it faces, the Union of Entrepreneurs and Employers brought to life the Health Forum.

    Daily problems of Polish healthcare are issues that concern us all and further deepen the need dialogue within the sector. These problems include, among others, the lack of reimbursement for treatment of given patients, employers’ costs related to employees on sick leave, queues to specialists, staff shortages, digitisation, and finally the effects of various pandemics, wars and their impact on medicine supply chain safety are.

    “There is much to be done in healthcare. This is a particularly sensitive area that requires careful consideration of the views of all parties involved. Therefore, the Health Forum of the Union of Entrepreneurs and Employers, being a completely new health platform is an optimal place to exchange experiences, to present the postulates of various entities, to advocate ideas, and develop the best solutions with the possibility of their implementation in health policy,” says Aleksandra Sienkiewicz, Director of the Health Forum.

    The goal behind establishing the Forum is to promote the postulates of rational systemic reforms and an attractive regulatory and institutional environment for companies from the universally understood health sector, which will ultimately translate into change that will benefit everyone. The Union’s Health Forum focuses on the organisation of an expert discussions on a broad spectrum of issues related to healthcare, from prevention to treatment, taking into account the financial and regulatory environment. As part of the Forum, we will publish commentaries, positions, and reports that help draw attention to current problems and find the best approach to difficulties in each area of healthcare in Poland.

    Position of the Union of Entrepreneurs and Employers (ZPP) regarding the Regulation of the Minister of Development and Technology on the Ban on the Import of Agricultural Products from Ukraine

    Posted on by Weronika Marzec

    Warsaw, 17 April 2023 

     

    Position of the Union of Entrepreneurs and Employers (ZPP) regarding the Regulation of the Minister of Development and Technology on the Ban on the Import of Agricultural Products from Ukraine

     

    • On April 15, 2023, the Regulation of the Minister of Development and Technology on the Ban on the Import of Agricultural Products from Ukraine was published in the Official Journal of the Republic of Poland.
    • The products covered by the ban are grains, sugar, hay, seeds, hops, flax and hemp, fruits and vegetables, processed fruit and vegetable products, wine, beef and veal, milk and dairy products, pork, lamb and goat meat, eggs, poultry meat, ethyl alcohol of agricultural origin and bee products.
    • According to the Union of Entrepreneurs and Employers, closing Polish borders to Ukrainian food will have long-term negative consequences for trade between our countries. It will fail to utilize this potential for the Polish economy.
    • The ZPP’s position is that the ban on Ukrainian transit goods also deprives Polish entrepreneurs and all of us of the chance to create a global food distribution center in Poland. It is an essential step towards building Polish economic sovereignty throughout Europe and taking the initiative away from the largest economies in the Union.
    • There is a risk that Russia will use the growing grain crisis not to renew the grain agreement with Ukraine, which expires on May 18 this year and allows Ukraine to transport grain by sea. Russia is interested in further destabilizing our neighbor’s economic situation and exacerbating tensions between EU countries and Ukraine.
    • International law experts point to the inconsistency of the Polish government’s decision with EU law. Today, importers and exporters affected by restrictions on importing goods from Ukraine may be able to claim compensation for resulting losses.
    • According to the Union of Entrepreneurs and Employers, the mechanisms that would solve the current pathological situation in the Polish agricultural market are the introduction of a deposit mechanism for imported goods, the rationalization of control systems for imported food quality, and allowing only those goods, that meet the highest quality standards in the Community to be exported to the EU.

    On April 15, 2023, the Official Journal of Laws of the Republic of Poland published a regulation by the Minister of Development and Technology regarding the ban on the import of agricultural products from Ukraine. According to the content of the law, a ban on the import of agricultural products listed in the annex to the regulation from the territory of Ukraine to the territory of the Republic of Poland is established until June 30, 2023. The banned products include grains, sugar, dried fodder, seeds, hops, flax and hemp, fruits and vegetables, products from processed fruits and vegetables, wines, beef and veal, milk and dairy products, pork, lamb and goat meat, eggs, ethyl alcohol of agricultural origin and bee products.

    The Union of Entrepreneurs and Employers negatively reacts to the content of the regulation, stating that the drastic measures adopted were designed only with a short-term perspective in mind. The long-term effects of the decision will destabilize the food trade in the region and have negative consequences for the supply of food to consumer markets. The imposed ban will also be a destabilizing factor in the agricultural market and a source of tension in Poland’s relations with the European Commission.

    We understand the urgent need to help Polish agricultural enterprises, which have found themselves in a difficult situation due to the uncontrolled inflow of agricultural raw materials from Ukraine. Especially since the problems today are concentrated – as was previously the case – in the grain production sector and other categories of products, with particular emphasis on poultry meat. The economically, legally, and politically unprepared broad ban is contrary to the interests of our country.

    The Union of Entrepreneurs and Employers was surprised by the information that the transit of all categories of goods listed in the regulation is also subject to the ban. Considering practical and economic aspects, we negatively assess both the import and transit bans. It is precisely transit that allows Poland to use its potential as a link between Eastern Europe and ports in the EU, with a unique role for Gdańsk. Poland can therefore act as an intermediary for Ukrainian agricultural products, placing them on the global market. It is the responsibility of state institutions to organize transit in such a way that it does not lead to the destabilization of the domestic agricultural market. The lack of transparency in the Polish government’s decision may affect our country’s economic relations. We believe the planned visit to Poland by the Ukrainian Minister, responsible for the agricultural economy, will allow for a compromising solution to the transit problem. Moreover, the legal transit of Ukrainian grain through Poland has recently become a source of income for many Polish enterprises. Today, with one decision, we can deprive ourselves of the chance to become a kind of hub that could reap long-term profits from cooperation with Ukraine.

    Creating the right environment to transit Ukrainian goods through Poland is complex. In achieving the necessary scale, an important role is played by rail transportation, which requires the use of transshipment terminals. Poland has appropriate infrastructure in this area and can still handle additional orders. In the longer term, managing transit and increasing its scale will require investment in infrastructure and rolling stock in Poland. Domestic and foreign capital companies are keenly interested in this direction, and our conversations indicate that agricultural producers from western Ukraine would like to conduct transit through Poland permanently. In this context, importing agricultural products from Ukraine is also an opportunity to develop the domestic economy. Poland can build a supply chain and infrastructure (warehouses, port expansion, storage facilities) to allow us to be present in international markets. We can aspire to trade grains on a global scale beyond the EU.

    The selection of product categories included in the regulation is also absurd, with particular consideration given to wine, which plays a marginal role in Polish-Ukrainian trade. Russia could also use the growing grain crisis not to extend the existing grain agreement, which allows Ukraine partial transport of grain by sea until May 18 of this year. Russia will undoubtedly use the situation to destabilize the economic situation of our neighbor further. The lack of the possibility to export Ukrainian grain by waterway may translate into an even more significant oversupply of grain in Europe, disrupting the region’s price situation for a long time. It is also a threat to the food supplies of countries currently dependent on imports of Ukrainian grain, and thus a return to the situation at the beginning of Russia’s armed invasion of Ukraine.

    The Polish government should demand the application of EU safeguard measures, which involve the implementation of temporary import restrictions to protect the European industry from sudden increases in imports that could cause serious harm to European producers. However, the European Commission makes such decisions, and the use of protective measures is limited and subject to regular assessment. International law experts point out the inconsistency of the decision taken by the Polish government with EU law. Importers and exporters affected by restrictions on importing goods from Ukraine may seek compensation for resulting losses.

    The Union of Entrepreneurs and Employers, in their statement from March 30, already indicated that a critical mechanism for improving the problematic situation would be the introduction of a deposit system for Ukrainian grain exported to Poland. The export of Ukrainian agricultural products is usually carried out by companies specializing in exports, which have the necessary capital to secure the proper transit of goods. Using a temporary system of security deposits would allow for the continued clearing of Ukrainian grain corridors, which is necessary for the context of the Russian invasion, while also securing the interests of Polish farmers. The deposit would be refunded immediately after the grain leaves the territory of Poland. This solution would eliminate the risk of paying further compensation to Polish producers in the future, initiate a process of price stabilization on the Polish market, and ensure continuity of export for Ukrainian agricultural companies. We understand that from a purely technical perspective, the term “temporary deposit” does not appear in the nomenclature adopted in the Union Customs Code. However, the situation could lead to developing a parallel solution with a similar scope that would relieve Poland and other countries bordering Ukraine without any reputational and economic damage as it is happening today.

    With real support from the European Union, Poland should also implement effective control mechanisms to ensure that only goods from farms meeting the stringent standards applicable in the Community are sold on the territory of the EU. This requirement should apply to all product categories imported by EU member states. The problems currently glaringly present in the grain market are already visible in the poultry sector. 

    Organizing the import of Ukrainian grain into Poland also requires clarification, as it raises many legal questions. We need to unravel the path that led to the pathological situation in the agricultural product market to proceed to implement steps as far-reaching as the regulation in question. Otherwise, thousands of enterprises will become prisoners of the condition they were entangled in by influential players who bend the law and the ill-conceived decision of the European Union to introduce duty-free trade in food with Ukraine without creating parallel redistributive mechanisms to relieve the countries in our region.

    The Union of Entrepreneurs and Employers understands the intentions of the legislator. However, it cannot accept the form of their enforcement, which would have negative consequences for both the Polish and Ukrainian sides, undermining the good relations that have been achieved thanks to Poland’s engagement in helping war-torn Ukraine.

     

    See more: 17.04.2023 Position of the Union of Entrepreneurs and Employers (ZPP) regarding the Regulation of the Minister of Development and Technology on the Ban on the Import of Agricultural Products from Ukraine

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