Decision to suspend the financing of Ostrołęka C

ENEA S.A. and Energa S.A., the two energy companies involved in the construction project of Ostrołęka C Power Plant, have jointly agreed to suspend the project’s financing. The Management Board of Elektrownia Ostrołęka Sp. z o.o., the Special Purpose Vehicle (SPV) established to implement the project, will inform about the decision the project’s General Contractor, the consortium of GE Power and Alstom Power Systems, and the consortium of Torpol and Zakłady Automatyki Kombud who were tasked with the redevelopment of the railway infrastructure for operational purposes of the Ostrołęka C Power Plant.

Pursuant to a new memorandum of understanding signed between ENEA and Energa, both parties agreed to suspend the financing of Ostrołęka C Power Plant project due to significant changes in the project’s market environment combined with difficulties in obtaining external financing. The dynamically changing market situation requires further analyses, including of the project’s technical and economic parameters.

The planned changes in the European Union’s policy with respect to the energy sector, including the release of the EU’s Green Deal, the new Energy Lending Policy of the European Investment Bank and the public tender offer to purchase 100% of Energa shares announced by PKN Orlen, are all important circumstances that have had a considerable impact on the decision to suspend the project’s financing.

The decision to suspend the project’s financing may also result in the suspension of the Ostrołęka C construction works. The contract concluded by the SPV with GE Power and Alstom Power Systems provides for a possible temporary suspension of performance, in part or in whole, of the obligations arising out of the contract. The maximum total period of suspension during the entire project implementation, during which the contract may not initiate the procedure leading to a withdrawal from the contract, is 90 days.

Under the contract, the deadline for completion of the project is 56 months, as from the date of issuing the notice to proceed. The suspension period provided for in the contract does not automatically mean a change in the date of the project completion by the general contractor.

As of 31 January 2020, the project’s implementation progress stands at 5% as measured by the ratio of completed and paid for tasks to the total project value.

The memorandum of understanding does not affect the validity of the existing project financing memoranda, of which the companies reported earlier.