6.3.2. Other provisions
Provision for certificates of origin and energy efficiency certificates
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| Accounting policies | Material estimates |
| If at a reporting date the number of certificates in not sufficient to meet the requirements stipulated in the Energy Law and the Energy Efficiency Act, the Group recognises a provision for cancellation of certificates of origin and energy efficiency certificates or for the payment of emission charge, whichever of the two is lower.
The provision is measured based on the carrying amount of the certificates held and the then current price (on the Polish Power Exchange) of certificates which should be additionally purchased to meet the cancellation requirement resulting from the volume of electricity sales to end users. The provision and the registered certificates of origin disclosed under inventories (see Note 6.2.1) are accounted for at the time of registering their cancellation in the Register of Certificates of Origin maintained by the Polish Power Exchange (PPE). |
The provision is recognised as at the end of reporting period, based on the amounts of electricity, heat and gas fuel sold to end users, and the amount of electricity generated and used for company’s own purposes, taking into consideration the applicable unit emission charge or price of a certificate on the PPE. |
Provision for liabilities associated with exploration work abroad
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| Accounting policies | Material estimates |
| In 2013, the Parent recognised a provision for liabilities associated with the exploration work carried out by POGC Libya B.V., PGNiG’s subsidiary.
Owing to the Force Majeure risk present in Libya, POGC Libya B.V. has suspended its operating activities. Therefore, the Parent has been maintaining a provision for licence obligations under licence agreements concluded with the Libyan government. |
The amount of the provision is based on the obligations contracted under the licence agreements, but not met. |
Provision for environmental liabilities
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| Accounting policies | Material estimates |
| The Group recognises a provision for the cost of identification and reclamation of ground and water contamination, required under the applicable laws. The provision recognised for such liabilities reflects estimated costs projected to be incurred, which are estimated and reviewed periodically based on current prices. | The amount of the provision is based on the estimates of future reclamation costs, which largely depend on the applied discount rate and the estimate of time when the cash flows are expected to take place. |
Provision for claims under extra-contractual use of land
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| Accounting policies | Material estimates |
| In the ordinary course of business, the Group installs technical equipment used for transmission and distribution of gas on land owned by third parties, which are often natural persons. Where possible, at the time of installing the elements of the infrastructure, the Group enters into agreements establishing standard land easements and transmission easements.
The Group recognises a provision for claims under extra-contractual use of land. The provision for claims under extra-contractual use of land is estimated in respect of those claims which have been confirmed to be valid (the claimant presented a legal title to land) and in the case of which correspondence has been exchanged with the claimant in the last three years. |
The Group estimates the provision for claims under extra-contractual use of land based on an estimate survey made by an expert appraiser, or its own valuation, taking into account the size of the controlled area in square meters, the amount of annual rent per square meter for similar land in a given municipality, and the period of extra-contractual use of land (not more than ten years).
If it is not possible to obtain reliable data required to apply the method described above, the Group analyses submitted claims on a case-by-case basis. As the amounts used in the above calculations are arrived at based on a number of variables, the actual amounts of compensation for extra-contractual use of land that the Group will be required to pay may differ from amounts of the related provisions. |
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| Provision for certificates of origin and energy efficiency certificates | Provision for liabilities associated with exploration work abroad | Provision for environmental liabilities | Provision for UOKiK fine* | Provision for claims under extra-contractual use of land | Other provisions | Total | ||
|---|---|---|---|---|---|---|---|---|
| As at Jan 1 2015 |
228 | 164 | 94 | 60 | 87 | 282 | 915 | |
| Recognised provision taken to profit or loss | 214 | 18 | 4 | 11 | 18 | 47 | 312 | Nota 3.3. |
| Provision reversal taken to profit or loss | (30) | – | – | – | (59) | (57) | (146) | Nota 3.3. |
| Used provisions | (197) | – | – | (6) | – | (26) | (229) | |
| Other changes | – | – | – | – | – | (3) | (3) | |
| As at Dec 31 2015 |
215 | 182 | 98 | 65 | 46 | 243 | 849 | |
| non-current | – | 4 | 90 | – | 25 | 69 | 188 | |
| current | 215 | 178 | 8 | 65 | 21 | 174 | 661 | |
| As at Jan 1 2016 |
215 | 182 | 98 | 65 | 46 | 243 | 849 | |
| Recognised provision taken to profit or loss | 150 | 12 | 31 | – | 8 | 119 | 320 | Nota 3.3. |
| Provision reversal taken to profit or loss | (38) | – | (18) | (55) | (19) | (76) | (206) | Nota 3.3. |
| Used provisions | (184) | – | – | – | – | (33) | (217) | |
| Changes in the Group | – | – | – | – | – | 8 | 8 | |
| Other changes | – | – | 6 | – | 1 | (3) | 4 | |
| As at Dec 31 2016 |
143 | 194 | 117 | 10 | 36 | 258 | 758 | |
| non-current | – | 4 | 95 | – | 24 | 75 | 198 | |
| current | 143 | 190 | 22 | 10 | 12 | 183 | 560 |
*For more information, see Section 6.4.2 of the Directors’ Report on the operations of PGNiG S.A. the PGNiG Group.
