Current Report No. 34/2016

Belongs to:

  • Reports

Current report no.: 34/2016

Preparation Date: 19.09.2016

Subject: Signing of the Letter of Intent on coal supply to the Ostrołęka B power plant and the planned Ostrołęka C power plant

Legal basis: Article 17 Section 1 of the Market Abuse Regulation – confidential information

The Management Board of Energa S.A. (Company) hereby reports that on 19 September 2016, the Company signed a Letter of Intent with Polska Grupa Górnicza Sp. z o.o. (PGG) on launching cooperation in the supply of coal to the existing Ostrołęka B power plant and the planned Ostrołęka C power plant, guaranteeing stable supply of coal at an effective price that would optimize the operating costs of the planned Ostrołęka C power plant.

The parties intend to enter into a long-term contract to supply coal to the Ostrołęka C power plant, which will contribute to ensuring the required profitability of the Ostrołęka C power plant construction and operation project, as one of the elements of the business justification for the decision to build the power plant.

The parties intend to ensure sales of coal produced by PGG through a coal supply contract for Ostrołęka C power plant (approximately 2 million tons per year, for 30-40 years). In the contract, the Parties will employ a coal pricing formula that will ensure the required profitability of the project and allocate future benefits from market and regulatory mechanisms dedicated to conventional power production, such as the capacity market or awarding of free CO2 emission allowances between the Parties to the contract.

The Parties assume that the coal supply contract for the Ostrołęka B power plant (about 1 million tons per year) will ensure stable, long-term supply of coal at good prices based on current market prices.

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