Current Report No. 49/2016

Date of preparation: 8 December 2016

Subject: Signing of an Investment Agreement with Enea S.A. regarding involvement in pre-construction work and in the construction and operation of a new power unit at the Ostrołęka Power Plant

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

In reference to Current Report No. 44/2016 dated 30 November 2016, the Management Board of ENERGA SA (“Company”, “ENERGA”) hereby reports that on 8 December 2016 the Company entered into an Investment Agreement (“Agreement”) with Enea S.A. and Elektrownia Ostrołęka SA (“Parties”) regarding the execution of the Ostrołęka C project (“Project”, “Investment”, “Ostrołęka C”). The subject matter of the Agreement is the preparation, construction and operation of a 1,000 MW-class coal-fired power unit.

According to the signed Agreement, in principle, the cooperation will be structured around three stages: Development Stage – until an instruction is issued to the general contractor to commence the work; Construction Stage – until Ostrołęka C is commissioned for commercial operations; and Operation Stage – commercial operation of Ostrołęka C. Upon completion of the Development Stage the Parties are obligated to participate in the Construction Stage provided that the Project is profitable and the Project funding does not breach the Parties’ covenants.

It is estimated that Energa’s capital expenditures until the end of the Development Stage will total approx. PLN 27 million.

In order to execute the Investment Project, Energa SA will dispose of the shares in Elektrownia Ostrołęka SA, constituting 50% in the share capital, to Enea SA, in the amount of approx. PLN 101 million. The condition precedent for entry of the Investment Agreement into effect is the approval of UOKiK’s President for the concentration involving acquisition of the shares of the special purpose vehicle for execution of the Project.

Based on specific assumptions (including appropriate participation of Energa, Enea and Financial Investors, if any) and assuming that the Capacity Market or other support mechanisms are introduced, Elektrownia Ostrołęka SA will be able to undertake the comprehensive execution of the Project.

The rules of cooperation adopted after signing the Investment Agreement should contribute to announcement of the tender to select the general contractor for the power unit before the end of 2016 in order to complete the Investment Project in the second half of 2023.