Polish companies are expanding into Ukraine

Polish companies are continuing their expansion plans in Ukraine, ignoring the recent diplomatic dispute between Warsaw and Kiev, Bloomberg reports, according to Agerpres.

The development bank BGK SA has registered several applications for financing projects in the infrastructure and energy sectors from local companies in recent months, said the deputy director of the credit institution, Marta Postula.

"Contractors are coming back to us and now the portfolio of projects is even larger,” Postula said in an interview given on the occasion of the conference for the Reconstruction of Ukraine, held on June 25-26, in Gdansk. "This means that they have done market reconnaissance, often have a Ukrainian partner and have knowledge of projects in the energy and infrastructure sectors,” the BGK official added.

The Polish companies' plans contrast with a diplomatic row over World War II that erupted last month after Ukrainian President Volodymyr Zelensky decided to name a military unit after the Ukrainian Insurgent Army (UPA), a nationalist organization founded in 1942 and held responsible in Poland for the deaths of more than 100,000 Poles. In response, Polish President Karol Nawrocki announced the withdrawal of Poland's highest state decoration, the Order of the White Eagle, which had been awarded to Zelensky. Several Ukrainian and Polish politicians have returned various decorations they had received to the other country. However, for Polish companies competing for a slice of what the World Bank estimates will be a $524 billion post-war reconstruction effort, political frictions are taking a back seat. "We only do business and during the meetings no one mentioned politics. Everyone is looking at the numbers,” said Marta Postula.

The Polish state-controlled BGK acts as a reference institution for financing local companies through preferential loans, trade support instruments and participation in the Ukraine Facility.

Last year, a contact point launched by BGK collected initial project proposals worth between 500 million zlotys ($134 million) and 600 million zlotys. Now, backed by a new financing guarantee of 195 million euros ($223 million) from the European Commission, Polish companies are coming back to BGK with concrete proposals.

Marta Postula expects the first financing agreements for energy investments, such as biogas plants, to be signed soon, adding that the final involvement of Polish companies will likely exceed initial estimates.

A crucial advantage is being the first mover. During the Gdansk conference, Ukraine signed 160 agreements with global partners worth more than 10 billion euros to support its economy, defense and infrastructure.

Polish companies are making moves to win contracts in Ukraine. Construction companies Budimex SA, Polimex-Mostostal SA and state-owned AMW Sinevia have agreed to cooperate in bidding for infrastructure projects, while Polish utilities PGE SA, Tauron Polska Energia SA, Enea SA and Energa SA have signed a similar pact for energy projects. In parallel, Polish oil company Orlen SA is strengthening its cooperation with Ukrainian group Naftogaz, while PZU SA has already bought Ukraine's largest insurance company.