Energa S.A.

Regulatory Filings • Nov 30, 2016

Current Report No. 45/2016

Date of preparation: 30 November 2016

Subject: Consent given by the ENERGA SA Supervisory Board to sign along-term coal supply agreement with PGG

Legal basis: Article 17 Section 1 of the Market Abuse Regulation -confidential information

In reference to current report no. 36/2016 dated 14 October 2016, theManagement Board of ENERGA SA ("Company", "ENERGA") reports that on 30November 2016 the Company's Supervisory Board gave consent to incur aliability through entering into a Long-Term Coal Supply Agreement("Agreement") by subsidiary Elektrownia Ostrołęka SA with Polska GrupaGórnicza Sp. z o.o. ("PGG").

The initialed Agreement provides for supply of the base volume ofapprox. 2 million tons p.a. to the planned Ostrołęka C power plant byPGG. The Agreement has a 10-year term, starting from the date ofcommencement of operations of the aforementioned power plant. Accordingto the provisions of the document, there is a possibility of extendingit for the next 10 years with the consent of the Parties.

In accordance with the initialed Agreement, the pricing formula for thecoal purchased for the Ostrołęka C power plant will depend onprofitability of the Ostrołęka C project, ensuring its economicoptimization. The formula links the cost of coal to a specified rate ofreturn on the investment and provides for an appropriate mechanism forsharing the future benefits from the capacity market and potential awardof free CO2 emission rights.

The Agreement will be performed according to the prices calculated inaccordance with the formula for each quarter, but for the needs ofestimation of the value of the Agreement for its 10-year term, the pricewas calculated according to the average value of the Polish Steam CoalMarket Index (PSCMI1) from September 2016 and the volume of supplies of2 million tons per annum; the value of the Agreement at real prices fromSeptember amounts to PLN 3.9 billion.

The effective date and performance of the Ostrołęka C coal supplyagreement will depend on fulfillment, among others, of the followingconditions precedent:

a)Issue of an instruction to the General Contractor to commence the works

b)Financial closing, i.e. confirmation by Elektrownia Ostrołęka SA, ofconclusion of all agreements required to finance the construction andcommencement of operation, and fulfillment or waiver of all conditionsprecedent for commencement of the use of the funds under such agreements.

The next step will involve execution of the Long-Term Agreement by thesubsidiary Elektrownia Ostrołęka SA and PGG.