Garus said the privatisation of DEC, which owns 11,500 rail tankers and transported 14 million tonnes of liquid fuels in 1998, would be completed late this year or in 2000.

"A strategic, industrial investor is usually needed when a firm lacks know-how and that we have," Garus told Reuters.

"We would therefore prefer financial investors... Privatisation through flotation on the bourse would be in second place in our preferences," he added.

Garus said his company had started privatisation talks with U.S and European investment banks. The European Bank for Reconstruction and Development has expressed interest in the sell-off, he said.

State-run oil holding group Nafta Polska, which owns DEC and is preparing it for a sell-off, said earlier that all privatisation scenarios werestill possible.

"Any method ensuring the development of DEC is possible. It can be either the bourse, a strategic investor or a mixed method," Maciej Gieraj, Nafta director, told a news conference.

He said Nafta was likely to chose an official adviser in the DEC privatisation in mid-July. The adviser will determine DEC's value and suggest the best method of its sell-off, he added.

DEC, the full name of which is Dyrekcja Eksploatacji Cystern, was carved out of state-owned liquid fuels retailer CPN SA in 1997 as part of the government's oil sector reform.

DEC, which inherited its nearly monopolist position in fuels rail transport from the pre-1989 communist era, turned to a 4.6 million zloty loss last year from an 8.3 million profit in 1997. Its sales rose to 348 million zlotys from 282.5 million zlotys.

The company said the 1998 loss was due to costly investment in a liquid gas venture. The company, which employs 1,300 people, forecast its 1999 net profit would reach 12 million zlotys on sales of 400million zlotys. "But the net profit could be higher, as in the first five months we netted 9.5 million zlotys," said Garus.

He said DEC planned to expand operations by carrying products other than fuels, such as grains, paper, cars or white goods. The firm does not plan to compete with the State Railways (PKP) in lucrative steel and coal transport. DEC planned to offer more services abroad, Garus said.