Energa S.A.

Regulatory Filings • Jun 25, 2021

Current Report No. 25/2021

Date: 25 June 2021

Subject: Signing of documents regarding the settlement of the CoalProject as part of the Ostrołęka C Project and the implementation of theGas Project in Ostrołęka

Legal basis: Article 17(1) MAR - inside information.

The Management Board of Energa SA ("Issuer") hereby announces that ithas become aware of the signing on 25 June 2021 between ElektrowniaOstrołęka Sp. z o.o. (an entity related to the Issuer, hereinafterreferred to as "EO" or "Contracting Party of the Coal Project") and CCGTOstrołęka Sp. z o.o. (a 100% subsidiary of the Issuer, hereinafterreferred to as "CCGT Ostrołęka" or "Contracting Party of the GasProject"), on the one side, and GE Power sp. z o.o. with its registeredoffice in Warsaw, GE Steam Power Systems S.A.S. (former business name:ALSTOM Power Systems S.A.S.) with its registered office inBoulogne-Billancourt, France (collectively referred to as the "CoalProject Contractor") and General Electric Global Services, GmbH with itsregistered office in Baden, Switzerland (together with GE Power sp. zo.o. collectively referred to as the "Gas Project Contractor") on theother side of the "Contract Amendment Document of the contract dated 12July 2018 for the construction of the Ostrołęka "C" Power Plant with acapacity of 1,000 MW" ("Contract Amendment Document"), together with theGas Annex together with the Service Agreement and the Agreementconcerning the settlement of the implementation of the Coal Project,concurrently concluded by the parties duly identified, the essentialcharacteristics of which are set out below by the Issuer.

I. In accordance with the Contract Amendment Document:

1) terms and conditions of execution of the investment project coveredby the contract dated 12 July 2018 for the construction of the Ostrołęka"C" Power Plant with a capacity of 1,000 MW concluded between theContracting Party of the Coal Project and the Contractor of the CoalProject ("Contract") after a change of technology and agreement on thesubject matter of the investment as construction of a gas-steam powerplant (in place of a coal-fired power plant), i.e. the Gas Project, isspecified in the annex to the Contract entitled "Contract forconstruction of a gas-steam power plant" ("Gas Annex"), which replacesthe existing provisions of the Contract in their entirety;

2) the parties to the Gas Annex who are responsible for the execution ofthe Gas Project will be the Gas Project Contractor as the contractor andthe Contracting Party of the Gas Project as the investor (contractingparty);

consequently: General Electric Global Services, GmbH with its registeredoffice in Baden (Switzerland) entered in place of the previousparticipant on the side of the Contractor, CCGT Ostrołęka Sp. z o.o.entered in place of the contracting party EO, and EO is not aparticipant in the Gas Project and consequently will not have any rightsor obligations arising from the Gas Annex;

3) terms and conditions of settlement of works performed under theContract before its suspension (vide Issuer's current report No. 9/2020dated 14 February 2020), and after the suspension until theimplementation of the decision on changing the technology anddetermining the subject of the investment as the construction of agas-steam power plant (instead of a coal-fired power plant - videIssuer's current report No. 51/2020 dated 2 June 2020) is regulated bythe agreement between EO and the Contractor of the Coal Projectconcerning the settlement of the Coal Project within the Contractconcerning the construction of the Ostrołęka "C" Power Plant ("Agreementregarding Settlement").

II. The subject matter of the Gas Annex is the construction of a 745 MWenet gas-fired combined cycle gas turbine (CCGT) power plant for theestimated amount of approx. PLN 2.5 billion to be located in Ostrołękaon a site originally used for the coal-fired unit project. The unit willbe powered by high-methane natural gas. It will be designed andconstructed as a single-shaft unit: with one gas turbine, a recoveryboiler, a condensing steam turbine unit and a wet fan cooler. Theproject will be implemented as a "brown field" project - making maximumuse of the construction infrastructure completed for the Coal Project.The Contract will be performed on a "turnkey" basis, covering theperformance of all works including, but not limited to, design,obtaining replacement administrative decisions on behalf of the GasProject Contracting Party, deliveries, civil works, assembly, trial run,obtaining the final occupancy permit decision, commissioning, stafftraining. The building permit design will be developed by the GasProject Contracting Party and the Gas Project Contractor willincorporate it into the design, update or supplement it and update thedecisions and construction permit held. The schedule for theimplementation of the Gas Project provides for the commencement ofconstruction works by the end of 2021, and the commissioning of thepower plant in 2025. The signing of the above Gas Annex is part of theintroduction of the procedure for amending the Contract, pursuant to theprovisions governing its amendments. The amendment was initiated by EOon the basis of the decision of the shareholders of 2 June 2020 (videthe aforementioned current report of the Issuer No. 51/2020 dated 2 June2020).

III. The Agreement regarding Settlement regulates the rights andobligations of EO and the Coal Project Contractor mainly with respect tothe settlement of the works performed by the Coal Project Contractor inthe implementation of the Coal Project, with respect to the constructionworks until they are suspended as a result of the suspension of theContract, the preservation and security activities performed during thesuspension of the Contract and the works related to the completion ofthe works dedicated to the implementation of the Coal Project. Pursuantto this agreement, settlement of the Coal Project will take place by theend of 2021 and the total amount that EO will be required to pay to theCoal Project Contractor will not exceed PLN 1.35 billion (net).

The Issuer explains that this particular construction of the ContractAmendment Document is aimed at enabling the execution of the Gas Projectby CCGT Ostrołęka Sp. z o.o, as the company that will replace EO in theimplementation of the investment located in Ostrołęka, because theIssuer and ENEA S.A. (as the shareholders of EO) concluded on 22December 2020 agreements (which was reported by the Issuer in currentreport No. 84/2020 of 22 December 2020), where ENEA S.A. confirmed itsstatement on withdrawal from the participation in the Gas Project, andat the same time determined that the Gas Project should be implementedby the company to which the assets serving the implementation of the GasProject are transferred. CCGT Ostrołęka Sp. z o.o. was established as aspecial purpose vehicle dedicated to the performance of one of theabove-mentioned agreements (Division Agreement); therefore, on 25 June2021 entered into a sales agreement with EO in order to acquire the EOenterprise allowing the implementation of the Gas Project, which isreported in the Issuer's current report No. 24/2021 of 25 June 2021.

Construction of the Contract Amendment Document, together with theassociated Agreement regarding Settlement fulfils the need to implementthe second agreement from among those entered into on 22 December 2020,of which the Issuer reported in current report No. 84/2020 of 22December 2020. The signing of the above agreement is tantamount to theperformance of the agreement entered into on 22 December 2020 betweenthe Issuer and ENEA S.A. to cooperate in the settlement of the CoalProject, that is, the Settlement Agreement providing that the costsrelated to the Coal Project will be settled proportionally by theparties to this agreement (ENEA S.A. and the Issuer) according to theexisting rules and within the limits adopted in the agreement concludedbetween the Issuer and ENEA S.A. on 30 April 2019, which was reported bythe Issuer in current report No. 7/2019 of 30 April 2019. The Issuerwill announce the final settlement of all costs associated with the CoalProject in a separate current report.