PGE Polska Grupa Energetyczna S.A.

Related Party Transaction • Jun 23, 2021

Signing of a contract for construction of gas and steam CHP plant inSiechnice (New Czechnica CHP plant)

The Management Board of PGE Polska Grupa Energetyczna S.A. ("PGE"), withreference to the current report no. 11/2021 of the subsidiary ZespółElektrociepłowni Wrocławskich KOGENERACJA S.A., informs that theManagement Board of Zespół Elektrociepłowni Wrocławskich KOGENERACJAS.A. (the "Company") has disclosed that on June 23, 2021 the Company hasconcluded an agreement (the "Agreement") with syndicate of companiesPolimex Mostostal S.A. (Consortium Leader) and Polimex Energetyka sp. zo.o. (Consortium Partner) (later jointly referred to as the"Contractor") for construction of gas and steam CHP plant in Siechnice(New Czechnica CHP plant) for the Company.

Subject matter of the Agreement is realisation by the Contractor ofturn-key construction of CCGT unit with a total gross capacity of 179.4MWe and 162.9 MWt, heat accumulator and four water boilers with totalcapacity of 152 MWt. New units will replace currently existing hardcoal-fired CHP plant. The value of the Agreement for construction of CHP(EPC agreement) amounts to PLN 1 159 180 000.00 net, (i.e. PLN 1 425 791400.00 gross).

In connection with the EPC agreement, a LTSA (Long-Term ServiceAgreement) was also signed with regard to service for 103 monthsstarting from the commissioning date of the units. The value of the LTSAamounts to PLN 25 027 789.80 net and EUR 20 717 846.68 net, i.e. PLN 30784 181.45 gross and EUR 25 482 951.42 gross. Total value of allconcluded agreements amounts to approx. PLN 1 278 353 828.68 net, i.e.PLN 1 572 375 209.28 gross (according to the average EUR/PLN exchangerate on June 21, 2021).

The EPC agreement provides for contractual penalties for the Contractorrelated to, among others, failure to meet the deadline for commissioningof the unit, failure to comply with the guaranteed technical parameters,failure to deliver the guaranteed level of availability during theguarantee period. The total sum of contractual penalties resulting fromthe above failures is limited to 25% of the net value of the EPCAgreement.

In addition, the Company reserved the right to charge a contractualpenalty for withdrawal from the contract for reasons attributable to theContractor amounting to 10% of the net value of remuneration.

The project schedule provides for the commissioning of the CCGT unit inthe second quarter of 2024.