Enea terminated the coal supply contract with LW Bogdanka

The energy group decided to terminate the multiannual contract for fuel supplies concluded with the supplier in 2010. Enea decided that the coal from Lublin is too expensive for the company and the present contract and the partner's no negotiation flexibility give no chances for the needed reductions which are in line with the market situation.

The existing contract does not allow Enea for obtaining the fuel at prices which are biding today on global markets and on the domestic market. In the company's assessment, all the negotiation possibilities regarding the contractual terms have been exhausted. The next rounds of talks have not brought results which are satisfactory for the energy concern.

- We cannot afford such an expensive coal, and commercial terms of the existing contract diverge significantly from the current market situation. The fact at what prices and under which terms we are purchasing the fuel considerably affects energy prices and we are still responsible for the reliability of supplies of cheap energy to 2.5 mln Customers.  Therefore, we terminated the contract and will search for new ways of guaranteeing coal at optimum prices. The termination of the agreement will contribute to a long-term improvement in the competitiveness of our whole Group – emphasises Paweł Orlof, vice-president of Enea. - We are still bound by another agreement with Bogdanka relating to future supplies of coal for the needs of a 1,075 MW unit which is being constructed which will start operation in 2017 – he adds.

The period of a 2 years' notice will commence on 1 January 2016, which means that the agreement will expire on 1 January 2018.  

The fifteen years' contract for coal supplies from the Lublin mine to the largest Polish bituminous coal fired power plant located in the Mazovia was signed on 4 March 2010. Enea is the key customer for the mine's products and Bogdanka is the largest supplier of fuel for the concern.