East European Energy

GAO provided information on the: (1) steps being taken to address Poland's energy needs and the resulting potential trade and investment opportunities for U.S. firms; (2) impediments to realizing possible U.S. trade and investment opportunities; and (3) current status of U.S. programs to support Poland's energy sector.

GAO found that: (1) due to a recession and an economic restructuring, Poland estimated that its energy production would need to increase 24 percent within 10 years and 54 percent within 20 years in order to supply the energy needed for economic growth; (2) to meet its energy needs, Poland needed to improve its use of coal as a basic fuel, modernize its power generation and distribution infrastructure, find alternatives to meet its growing energy demands, and encourage businesses and individuals to become more energy efficient; (3) Poland's plans to address its energy needs could open trade and investment opportunities for U.S. firms, depending on the speed of Poland's energy price reforms and the availability of government or private financing; (4) Poland's restrictive labor laws, undeveloped banking system, poor communications system, and lack of property ownership laws presented trade and investment risks to U.S. firms; (5) the U.S. government developed several plans to help firms mitigate those economic and legal risks by sharing the costs of feasibility studies for investment and providing trade credit guarantees and insurance; (6) restrictions in the Agency for International Development's Trade Credit Insurance program limited the ability of U.S. firms to arrange financing for sales to Poland's energy sector, since such sales would require long-term financing and such projects typically involved the public sector; (7) U.S. agencies also initiated programs to help Poland's energy sector make the transition to a market economy, demonstrate clean coal technologies and energy efficiency, and provide information on conservation techniques; and (8) the Department of State established an interagency process to ensure that agency programs met Polish energy needs.