Poland's government is thinking of sacking the chief executive and most of the management of Lotos, Polish media reported on Saturday. Parkiet quoted a senior Law and Justice party source as saying that the scenario of the dismissal of Pawel Olechnowicz and the majority of the management board will be implemented, and Puls Biznesu, on its Website also cited a senior party official as saying Mr Olechnowicz might submit his resignation at the group's next supervisory board meeting, planned for late January. But Mr Olechnowicz, appointed by the previous leftist government in 2002 and reappointed in mid-2006, told Parkiet he had no intention to step down.
Our view: The rumors on potential management reshuffles in the Polish oil sector are circulating for a long time on the market. This is clearly a risk factor for the sector and now for Lotos in particular. Although we heard similar rumors on the dismissal of Mr Olechnowicz in the autumn last year the State Treasury finally supported him. Following the decision market calmed down expecting that the management can focus on strategy and daily operation instead of defending itself from politicians. The renewal of the debate should have a slight negative impact on the share price.