33.5 Events after the reporting date

Entering into an investment agreement with Ørsted regarding an offshore wind farm project

On February 10, 2021, PGE CG companies and Ørsted signed an agreement in which they agreed on their participation in two offshore wind farm construction projects at the level of 50%. Previously implemented by PGE, these projects are Baltica 2 (with a planned capacity of about 1.5 GW) and Baltica 3 (with a planned capacity of about 1 GW).

PGE Baltica 6 sp. z o.o., PGE Baltica 5 sp. z o.o. (subsidiaries of PGE) (“Existing Partners”), Orsted Baltica 2 Holding sp. z o.o. Orsted Baltica 3 Holding sp. z o.o. (subsidiaries of Ørsted Wind Power A/S (“OWPAS”), hereinafter jointly referred to as the “Investors”), Elektrownia Wiatrowa Baltica – 2 sp. z o.o.  (“EWB2”) and Elektrownia Wiatrowa Baltica – 3 sp. z o.o.  (“EWB3”) entered into an investment agreement providing for the Investors’ investments in the Baltica 2 and Baltica 3 projects.

The investment agreement sets out the legal framework governing the establishment of a joint venture between PGE and OWPAS to prepare, construct and operate the Baltica 2 and Baltica 3 offshore wind farms.

As part of the Investment Agreement, the Investors undertake to acquire newly created shares in EWB2 and EWB3, representing 50% of their total share capital and entitling the Investors to 50% of the votes in the governing bodies of each company. After the transaction has been completed 50% of shares in EWB2 and EWB3 will be held by the respective Existing Shareholder and the remaining 50% of shares will be held by the respective Investor.

The total acquisition price for the newly created shares in EWB2 and EWB3 will be the equivalent of PLN 657 million. Furthermore, after the final investment decision is issued, the Investors may be required to make additional contributions to both companies, subject to the fulfilment of certain conditions.

The completion of the transaction is subject to the fulfilment of certain conditions precedent, including the approval of the President of the Office for Competition and Consumer Protection.

The Investment Agreement provides that a number of additional transaction documents will be signed by the relevant parties at the time of transaction completion. These documents include the EWB2 Shareholders’ Agreement and the EWB3 Shareholders’ Agreement, as well as agreements setting out the principles for the joint management of the project, regulating, among others, such matters as the corporate governance of the companies, the parties’ obligations to provide financing and other support to the companies, restrictions on the transferability of shares and the consequences of breach and change of control, the provision of development services to the companies and the provision of loans by the shareholders.

Information for the purpose of disclosing, in the stock exchange report, the Czech Republic’s legal action against Poland for the extension of the concession for the continued operation of the Turów Lignite Mine

The decision of the Climate Minister of March 20, 2020 extended the concession for PGE GiEK S.A. for the extraction of and associated minerals from the „Turów” lignite deposit by 6 years. On September 30, 2020, the Czech Republic filed a letter with the European Commission under Article 259 of the Treaty on the Functioning of the European Union (“TFEU”) constituting a legal action against Poland for the extension of the operating concession for the Turów power complex. The allegations against Poland concerned the issuance of administrative decisions allowing the continuation of mining operations at the Turów lignite mine.  The decisions of the Polish authorities were allegedly in breach of EU law, including the Water Framework Directive, the Directive on the assessment of the effects of certain plans and programmes on the environment, the Directive on public access to environmental information and the Directive on the assessment of the effects of certain public and private projects on the environment.

On December 17, 2020, the European Commission issued a reasoned opinion in which it shared some of the Czech allegations, while indicating that the extension of the operation of the Turów lignite mine did not cause a breach of the Water Framework Directive. The European Commission also stressed that some of the other allegations of the Czech party proved to be incorrect.

On 22 February 2021, the Czech government decided to file a suit against the Republic of Poland. The suit was referred to the European Court of Justice on February 26, 2021. The case was entered in the court register.

The Member States are parties to the proceedings, which excludes the possibility of participation of natural and legal persons, even if the case concerns their activities directly. The Group expects a summary of the plea to be published in the coming weeks. The European Court of Justice will rule first on the application of interim measures.

The operation of the Turów lignite mine is conducted in compliance with the provisions of national law and European environmental standards. In PGE’s opinion, there are no grounds for the suspension of the operation of the Turów power complex. A possible future settlement of the dispute will be disclosed in future financial statements.

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