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Lubelski Węgiel
Lubelski Węgiel Bogdanka S.A.

Ostrołęka Terminates the Agreement with Bogdanka

Wednesday, 2012-10-31
Bogdanka Has a Firm Opinion on the Market

The Management Board of Lubelski Węgiel Bogdanka S.A. hereby announces that on 30 October 2012 it was informed about the termination of a Long-Term Agreement on power coal supplies to a power unit in Elektrownia Ostrołęka S.A. currently under construction. Under the Agreement, the supply of coal and operation of Unit C in Ostrołęka, with power of approx. 1,000 MW, were expected to commence in 2016 and remain in force for a period of 19 years.

At the same time, the Ostrołęka Power Plant requested to hold negotiations aimed at terminating the Agreement before the lapse of the 3-year termination period.

The Management Board informs you that already on the stage of preparing the provisions of the agreement for the future coal supplies, it took account of a high risk of the agreement failure, as it provided for the obligation to obtain financing for the investment.

Other long-term agreements concluded by the Company with Elektrownia Ostrołęka S.A. for coal supplies to the existing power units are being executed on an ongoing basis and without any interference.

“We held and still hold a firm opinion on the market reality. The Management Board of Bogdanka took account of the fact that not all of the planned investments in new power units may enter the implementation stage. Therefore, by securing coal sale in connection with the planned increase in exploitation, we entered into conditional agreements for coal supplies to the planned power units with entities such as Elektrownia Ostrołęka from the Energa Group, Elektrownia Północ from the Kulczyk Holding Group and Elektrownia Kozienice from the Enea Group. In the last situation mentioned, the contractor even physically entered the construction site. Nothing indicates that the construction of Elektrownia Północ may cease. The Management Board of Energa, as it stems from the public information, also has not resigned from implementing their investment, but only had frozen it until winning a strategic investor,” informs Zbigniew Stopa, the acting President of the Management Board of LW Bogdanka S.A.

“Information on withdrawal from the energetic project in Ostrołęka appeared on the market already in September 2012, so the termination of the Agreement for coal supplies that we received is only its natural consequence. By no means does it influence the plans for implementation of the Company’s development goals. Due to an increase in the exploitation effectiveness and a steady increase of our competence advantages, in a long run we are confident of sale of our coal in the Polish commercial power sector,”
adds Z. Stopa.

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