Energa S.A.

Regulatory Filings • Sep 19, 2016

Current report no.: 34/2016

Preparation Date: 19.09.2016

Subject: Signing of the Letter of Intent on coal supply to the OstrołękaB power plant and the planned Ostrołęka C power plant

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

The Management Board of Energa SA (Company) hereby reports that on 19September 2016, the Company signed a Letter of Intent with Polska GrupaGórnicza Sp. z o.o. (PGG) on launching cooperation in the supply of coalto the existing Ostrołęka B power plant and the planned Ostrołęka Cpower plant, guaranteeing stable supply of coal at an effective pricethat would optimize the operating costs of the planned Ostrołęka C powerplant.

The parties intend to enter into a long-term contract to supply coal tothe Ostrołęka C power plant, which will contribute to ensuring therequired profitability of the Ostrołęka C power plant construction andoperation project, as one of the elements of the business justificationfor the decision to build the power plant.

The parties intend to ensure sales of coal produced by PGG through acoal supply contract for Ostrołęka C power plant (approximately 2million tons per year, for 30-40 years). In the contract, the Partieswill employ a coal pricing formula that will ensure the requiredprofitability of the project and allocate future benefits from marketand regulatory mechanisms dedicated to conventional power production,such as the capacity market or awarding of free CO2 emission allowancesbetween the Parties to the contract.

The Parties assume that the coal supply contract for the Ostrołęka Bpower plant (about 1 million tons per year) will ensure stable,long-term supply of coal at good prices based on current market prices.