[Premium] Tough Times for Engie on Eve of New Chair

French Engie is expected to welcome its new chairman Jean-Pierre Clamadieu at a shareholders' meeting May 18, and say adieu to its veteran incumbent Gerard Mestrallet. 

Mestrallet oversaw the merger of Gaz de France with Suez which he then ran, a few years after GDF entered the original Nord Stream 1 venture in 2005, with 9%. 

Clamadieu, who is the CEO of Belgian chemicals firm Solvay, takes up his non-executive role as Engie is reducing its carbon footprint, having divested its upstream and is expected shortly to complete the sale of its LNG business. Sticking out as an obvious exception is the expansion of Nord Stream: Nord Stream 2, on which Engie has already spent around €400mn ($478mn).

The timing of the handover is awkward, as Engie now faces a renewed attack from the Polish anti-trust agency which is using every means to block Nord Stream 2, now being funded by Gazprom (50%) and five European gas companies: Uniper and Wintershall from Germany; Engie; and Austrian OMV. The Polish authority launched May 9 a second attack, its first having succeeded in blocking the formation of a joint venture linking the six companies. In the wake of that defeat the five western companies found an alternative structure for financing their 10% stakes, using bonds.

In its latest announcement, the Polish authority identified them as Dutch or – in the case of Engie – Swiss companies.

Given favourable tax regime in the Netherlands and Switzerland, the Polish authority is apparently using every weapon at its disposal to stop Nord Stream 2, a source told NGW May 11, by trying to undermine strong public support for Nord Stream 2 in France, Germany and Austria. Even if that attempt fails, it has at least drawn public attention to the corporate side of the issue: "Why else identify the country? I’m not sure Emmanuel Macron would be happy to see a French company getting its NS2 bonds interest in Switzerland. Nor Angela Merkel: she has fought for NS2 but German taxpayers might not benefit."

The Polish move follows the publication last year of investigations by the European Commission into Engie's multi-billion euro use of tax loopholes in Luxembourg.

Several of the companies targeted by the Polish authority's legal move have told NGW that they had received official notice from the authority; however they have declined to comment on their likely response. Engie had not commented to NGW on its use of a Swiss subsidiary at time of press.