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Current Report No.: 21/2021

Title: Signing of documents regarding the settlement of the Coal-Fired Project executed as part of the Ostrołęka C Project and the execution of the Gas-Fired Project in Ostrołęka
Date: 2021.25.06
Report no.:  Current Report No.: 21/2021

Current Report No.: 21/2021

Date of Preparation: 25 June 2021

Issuer's Abbreviated Name: ENEA S.A.

Legal Basis: Article 17(1) of the Market Abuse Regulation - confidential information

Subject: Signing of documents regarding the settlement of the Coal-Fired Project executed as part of the Ostrołęka C Project and the execution of the Gas-Fired Project in Ostrołęka

Body of the report:

The Management Board of ENEA S.A. ("Issuer") hereby reports that it has obtained information about the signing, on 25 June 2021, between Elektrownia Ostrołęka Sp. z o.o. (the Issuer's related party, hereinafter referred to as "EO" or the "Coal-Fired Project Employer") and CCGT Ostrołęka Sp. z o.o. (hereinafter referred to as "CCGT Ostrołęka" or the "Gas-Fired Project Employer") on one side, and GE Power sp. z o.o. with its registered office in Warsaw, GE Steam Power Systems S.A.S. (formerly: ALSTOM Power Systems S.A.S.) with its registered office in Boulogne-Billancourt, France (collectively referred to as the "Coal-Fired Project Contractor") and General Electric Global Services GmbH with its registered office in Baden, Switzerland (jointly with GE Power sp. z o.o. referred to as the "Gas-Fired Project Contractor") on the other side, of the "Amendment document to the contract of 21 July 2018 for the construction of the 1000 MW Ostrołęka C Power Plant" ("Contract Amendment Document"), along with the Gas Annex, simultaneously executed by the respective parties, along with the Service Agreement and the Coal-Fired Project Settlement Agreement, the basic features of which are presented below by the Issuer.

I. In accordance with the Contract Amendment Document:

1) the terms and conditions for the execution of the investment project covered by the contract of 12 July 2018 for the construction of the 1000 MW Ostrołęka C Power Plant entered into by and between the Coal-Fired Project Employer and the Coal-Fired Project Contractor ("Contract"), following the change in the technology and the reaching of an agreement on the subject matter of the investment project as the construction of a combined cycle power plant (in place of a coal-fired power plant), that is the Gas-Fired Project, is specified in an annex to the Contract entitled "Contract for the construction of a combined cycle power plant" ("Gas Annex"), which replaces the existing provisions of the Contract in their entirety;

2) the parties to the Gas Annex responsible for the execution of the Gas-Fired Project will be the Gas-Fired Project Contractor as the contractor and the Gas-Fired Project Employer as the investor (ordering party);

as a result, General Electric Global Services GmbH with its registered office in Baden, Switzerland, has replaced the previous participant on the Contractor's side, while EO, acting as the employer, has been replaced by CCGT Ostrołęka Sp. z o.o., with EO no longer being a participant in the Gas-Fired Project and, as a consequence, having no rights or obligations under the Gas Annex;

3) the terms and conditions for the settlement of works completed during the performance of the Contract, preceding the suspension of its performance (see the Issuer's Current Report No. 5/2020 of 14 February 2020) and following the suspension period until the entry into force of the decision to change the technology and define the subject matter of the investment project as the construction of a combined cycle power plant (in place of a coal-fired power plant - see the Issuer's Current Report No. 21/2020 of 2 June 2020), are governed by the agreement entered into by and between EO and the Coal-Fired Project Contractor regarding the settlement of the Coal-Fired Project under the Contract for the construction of the Ostrołęka C Power Plant ("Settlement Agreement").

II. The Settlement Agreement governs the rights and obligations of both EO and the Coal-Fired Project Contractor chiefly in respect of the settlement of works completed by the Coal-Fired Project Contractor as part of the execution of the project, in the area of construction works until their cessation due to the suspension of the performance of the Contract, maintenance and protection activities carried out during the Contract suspension period and works related to the completion of works dedicated to the execution of the Coal-Fired Project. Under the agreement, accounts for the execution of the Coal-Fired Project will be settled by the end of 2021, and the total amount payable by EO to the Coal-Fired Project Contractor, taking into account the expenditures incurred to date, will not exceed PLN 1.35 billion (net of VAT).

Please be advised that the specific structure of the Contract Amendment Document is intended to enable the execution of the Gas-Fired Project by CCGT Ostrołęka Sp. z o.o. as a company that will replace EO in the execution of the investment project in Ostrołęka, because the Issuer and Energa S.A. (as shareholders of EO), on 22 December 2020, entered into agreements (as was disclosed by the Issuer in Current Report No. 56/2020 of 22 December 2020), in which ENEA S.A. confirmed its withdrawal from participation in the Gas-Fired Project, and at the same time the parties agreed that the Gas-Fired Project would be executed by a company to which the assets for the execution of the Gas-Fired Project would be transferred. CCGT Ostrołęka Sp. z o.o. has been established as a special purpose vehicle dedicated to the performance of one of the said agreements (the Split-Up Agreement). Accordingly, on 25 June 2021, it entered into an agreement with EO to acquire EO's enterprise, to enable the execution of the Gas-Fired Project, as was disclosed by the Issuer in Current Report No. 20/2021 of 25 June 2021.

The structure of the Contract Amendment Document along with the related Settlement Agreement fulfills the need to perform another agreement entered into on 22 December 2020, the execution of which was disclosed by the Issuer in Current Report No. 56/2020 of 22 December 2020. The signing of the said agreement followed from the performance of the agreement of 22 December 2020 entered into by and between the Issuer and Energa S.A. on cooperation in the settlement of the Coal-Fired Project, that is the Settlement Agreement, providing that the costs of the Coal-Fired Project would be settled pro rata by the parties thereof (Energa S.A. and the Issuer) in accordance with existing rules and within the limits adopted in the agreement entered into by and between the Issuer and Energa S.A. on 30 April 2019, the execution of which was disclosed by the Issuer in Current Report No. 12/2019 of 30 April 2019. The Issuer will report on the final settlement of all costs related to the Coal-Fired Project in a separate current report.

The Issuer is in the process of reviewing the anticipated extent of the impact of this event on its financial performance in the current reporting period.

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