8.9.2. Other information
Execution of gas fuel supply contract and Individual Contracts with Grupa Azoty S.A.
On April 13th 2016, PGNiG S.A. concluded a Framework Agreement for the sale of gas fuel and bilateral Individual Contracts with Grupa Azoty S.A. and its subsidiaries: Grupa Azoty Zakłady Azotowe Puławy S.A., Grupa Azoty Zakłady Chemiczne Police S.A., Grupa Azoty Zakłady Azotowe Kędzierzyn S.A., Grupa Azoty Kopalnie and Zakłady Chemiczne Siarki Siarkopol S.A. (Customers).
The Framework Agreement provides for a uniform procedure for the conclusion and termination of Individual Contracts to be followed by all Customers, and describes the procedures for order placement, payments, suspension and limitation of supplies, renegotiation clauses, and rules for joint settlement of supplies.
An Individual Contract is a contract for specific supplies under the Framework Agreement, concluded for a definite time, in the form of a sale contract or comprehensive contract, specifying the quantities, timetable, index-linked price formulae, and detailed commercial terms of gas fuel supplies to a Customer.
The Framework Agreement was concluded for an indefinite term and its provisions apply to supplies made since April 1st 2016, while Individual Contracts provide for various supply periods, with the longest period ending on September 30th 2019.
The estimated aggregate value of the Framework Agreement and Individual Contracts is approximately PLN 3.3bn, and the maximum volume of supplies over the entire term of the agreement is 4.5 bcm.
Execution of investment agreement concerning operations of Polska Grupa Górnicza
On April 26th 2016, PGNiG TERMIKA S.A. signed an agreement to launch operations of Polska Grupa Górnicza Sp. z o.o. (the „Agreement”).
The parties to the Agreement are Kompania Węglowa S.A., Polska Grupa Górnicza Sp. z o.o. (“PGG”), Węglokoks S.A., Towarzystwo Finansowe Silesia Sp. z o.o. (“TFS”), Fundusz Inwestycji Polskich Przedsiębiorstw Fundusz Inwestycyjny Zamknięty Aktywów Niepublicznych (“FIPP”), PGNiG TERMIKA S.A., Energa Kogeneracja Sp. z o.o., PGE Górnictwo i Energetyka Konwencjonalna S.A. (“PGE GiEK”) (TFS, FIPP, PGNiG TERMIKA S.A., Energa Kogeneracja Sp. z o.o. and PGE GiEK are jointly referred to as the “Investors”), Alior Bank S.A., Bank BGŻ BNP Paribas S.A., Powszechna Kasa Oszczędności Bank Polski S.A., Bank Zachodni WBK S.A., Bank Gospodarstwa Krajowego S.A. and trade unions operating at Kompania Węglowa S.A. (all jointly referred to as the “Parties”).
In the Agreement, the Parties confirmed the rationale for establishing PGG, whose operations will be based on selected mining assets to be acquired from Kompania Węglowa S.A. (11 mines, four plants, and mine and plant support functions).
In the Agreement, the Investors undertook to purchase PGG shares for a total of PLN 2.4bn, of which PLN 1.8bn is to be contributed in cash and the balance in the form of conversion of TFS’s and Węglokoks S.A.’s claims into equity.
PGNiG TERMIKA S.A., as one of the Investors, undertook to purchase PGG shares for PLN 500m.
On April 28th 2016, PGNiG TERMIKA signed an agreement setting out the terms of financial investment in PGG, particularly the terms of acquisition of 5,000,000 shares in PGG for a total amount of PLN 500m (the “Investment Agreement”).
For more information, see Note 5.1.3. and Note 6.1. of the Directors’ Report on the operations of PGNiG S.A. and the PGNiG Group.
In the consolidated financial statements of the PGNiG Group, the interest in PGG is accounted for with the equity method.
