Current Report No.: 21/2020
Current Report No.: 21/2020
Date of Preparation: 2 June 2020
Issuer's Abbreviated Name: ENEA S.A.
Subject: Information on the completion of analyses and the signing of an additional tripartite agreement in connection with the execution of the Ostrołęka C project
Legal Basis: Article 17 Section 1 of the Market Abuse Regulation - confidential information
Body of the report:
With reference to Current Report No. 4/2020 of 13 February 2020, the Management Board of ENEA S.A. ("Company") hereby reports that on 2 June 2020 it accepted the final report on analyses conducted in cooperation with Energa S.A. ("Energa") regarding technical, technological, economic, organizational and legal aspects and potential continuation of funding for the project involving the construction of a new coal-fired unit in the form of the planned Ostrołęka C power plant in Ostrołęka with a capacity of approx. 1,000 MW (Project).
The conclusions drawn from the analyses do not justify the continuation of the Project in its current form, that is as a project aimed at the construction of a power plant that would generate electricity in a hard coal firing process. The factors leading to the said conclusions include:
(i) regulatory changes at the level of the European Union and lending policies adopted by a number of financial institutions, resulting in a significantly greater availability of funding for energy projects based on the firing of natural gas rather than coal;
(ii) acquisition of control over Energa by Polski Koncern Naftowy ORLEN S.A. ("PKN ORLEN") whose strategy does not provide for investing in electricity generation projects based on the firing of coal.
At the same time, the technical analysis confirmed the feasibility of an optional construction of a power plant that would generate electricity in a natural gas firing process ("Gas Project") at the current site of the coal-fired unit being constructed.
Accordingly, the Company's Management Board made a decision to continue the construction of the generating unit in Ostrołęka based on the assumption of changing the generating process from the firing of coal to the firing of natural gas.
On 2 June 2020, a trilateral agreement was entered into by and between the Company, Energa and PKN ORLEN, whereby the following key principles of cooperation in the Gas Project were defined:
- with the reservations referred to below, continuation of cooperation between the Company and Energa within the framework of the existing special purpose vehicle, namely Elektrownia Ostrołęka sp. z o.o. ("Elektrownia Ostrołęka"), along with settlement, between the Company and Energa, of costs related to the Project and settlements with the contractors involved in the execution of the Project, in accordance with existing rules,
- inclusion of PKN ORLEN in the Gas Project as a new partner potentially playing a role therein,
- participation of ENEA S.A. in the Gas Project as a minority partner with limited financial exposure, as a result of which the Company will not be included in the pool of parties exercising joint control over Elektrownia Ostrołęka,
- subject to obtaining the necessary corporate approvals, signing of a new partners' agreement on the execution of the Gas Project in accordance with the foregoing principles of cooperation,
- taking steps to obtain funding for the Gas Project by Energa in cooperation with PKN ORLEN.
The signing of the new partners' agreement on the execution of the Gas Project in accordance with the foregoing principles of cooperation will be announced by the Company in a separate current report.