Orlen started the large Olefina III project during the presidency of Daniel Obajtek. Now the company is wondering what it will do with it, and one of the scenarios is to completely suspend the investment. “Making the scope more realistic CostThis variant indicates an increase in investment outlays and project-related costs to approximately PLN 45-51 billion and a postponement of the completion date by another 3 years,” the company writes in a press release.
Orlen may suspend a large investment
Orlen is considering “only two variants” of the large-scale project being implemented at the plant in Płock: optimizing the project and stopping it or temporarily suspending it. These scenarios are the result audits the investment itself and analyzes of the market and macroeconomic situation.
The new management verified the business assumptions of the project and came to the conclusion that the previous team had incorrectly estimated the investment costs. According to the company, “the entire infrastructure needed for its operation has never been valued before.” Neither at the very beginning, nor in June last year, when the cost of the project had already tripled, to PLN 25 billion, and the implementation time was extended by three years.
Orlen does not even intend to analyze the option of implementing investments in the current scope – because it would cost, as we mentioned above, even over billions of zlotys.
– The investment in its current scope, taking into account its constantly increasing costs, the delayed implementation date and the lack of promising prospects for the petrochemical sector in Europe, has no business justification and cannot be continued. We have committed that the business decisions we make will be well-thought-out, rational and transparent. Therefore, we have carefully analyzed all scenarios for this investment, especially the variant left by the previous management, and we draw conclusions from them – says Ireneusz Fąfara, president of Orlen, quoted in the release.
Daniel Obajtek has already explained himself
The topic of problems with Olefins III appeared two days ago ago. Orlen then published its earnings estimates for the third quarter of this year. He informed about accounting write-offs for a total value of PLN 3.5 billion. Nearly one billion relates to the loss of value of fixed assets of the petrochemical segment, in connection with, among others, expenditure on the construction of the Olefins III complex.
Daniel Obajtek has not yet commented on the latest announcement, but he replied a few months ago to the declaration of the new president. In August, Ireneusz Fąfara said in an interview with PAP Biznes that Orlen was analyzing a gigainvestment. He stated that its initiation was not based on rational premises, and the cost increased from PLN 8 to 25 billion. Obajtek then stated that when the project was launched, its cost was estimated at PLN 13.5 billion, not PLN 8 billion, and its increase was related to the coronavirus pandemic, the war in Ukraine and changes in macroeconomic factors.
A town with controversy
Foreign workers were brought in to carry out the investment (including India), for which Orlen built an entire container town for several thousand people. There have been reports – in a journalistic investigation conducted by “Gazeta Wyborcza” and “Attention!” TVN, that workers live there in poor conditions. Daniel Obajtek also spoke about Olefin III and foreign workers during his testimony before the Sejm investigative committee on the so-called visa scandal. He then said, among other things, that the material about the conditions in the container town was prepared four months after he ceased to be the president of Orlen.